Finding 556162 (2024-003)

50000 – Equipment and Real Property Management (Material Weakness in Internal Control over Compliance, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education (CDE) Program Name: Education Stabilization Fund Federal Financial Assistance Listing: 84.425U Compliance Requirement: F. Equipment and Real Property Management Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirements Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.439 requires the District to obtain written approval from the California Department of Education (CDE) prior to purchasing equipment for which the per unit costs exceeds $5,000. Condition The District expended $142,790 of ESSER III, ESSER III State Reserve Learning Loss and ESSER III State Reserve Emergency Needs funds on capital expenditures that were not preapproved by the pass-through agency, as required. The District did not have a preapproval from CDE. Cause The condition identified appears to have materialized due to oversight related to the requirements under Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.439. Effect The District currently assumes all the risk of non-compliance with requirements stated under Title 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.439 due to the lack of preapproval from the pass-through agency, as required. Questioned Costs As a result of the condition identified above, a total of $142,790 in questioned costs were identified. Context/Sampling The condition was identified as a result of inquiry with the District’s personnel and review of ESSER III, ESSER III State Reserve Learning Loss and ESSER III State Reserve Emergency Needs expenditures and related invoices. We have reviewed the entire population which is comprised of two transactions. The District did not have a preapproval from CDE for one of the transactions tested. Repeat Finding No. Recommendation The District should ensure all equipment purchases are subject to the pre-approval process as stated in Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.439 and implement procedures to address the deficiencies currently identified. Corrective Action Plan and Views of Responsible Official The purchase of all equipment will follow the pre-approval process stated in the Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.439 and implement procedures to address the deficiencies currently identified.