Finding Text
1. Noncompliance/Material Weakness - Inventory
Finding Number: 2024-001
Assistance Listing Number and Title: AL #84.425 – COVID 19 Education
Stabilization Fund
Federal Award Identification Number / Year: S425D210035 / 2024
Federal Agency: U.S. Department of Education
Compliance Requirement: Equipment and Real Property Management
Pass-Through Entity: N/A
Repeat Finding from Prior Audit? No
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313 (d)(1) and (2), which indicates property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property purchased with Federal funds must be taken and the results reconciled with the property records at least once every two years.
The District purchased and installed new HVAC units during fiscal year 2024. $566,723 of the total $914,441 used for the purchase involved COVID-19 American Rescue Plan- Elementary & Secondary Emergency Relief funds.
Due to deficiencies in inventory controls, these assets were not added to the District's inventory system as of June 30, 2024. Failing to record equipment purchased with Federal funds does not allow for proper asset tracking, as required. The understatement of $914,441 to Capital Assets, was not material to the financial statements.
Also, there was no indication that a physical inventory of the property acquired under the Elementary and Secondary School Emergency Relief (ESSER II, AL number 84.425D) and American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER), AL number 84.425U) had been performed within the preceding two years.
Noncompliance with the requirements of Federal grants may result in the loss of current or future federal funding and possible questioned costs in future audits.
The District should ensure all equipment purchased with Federal funds are recorded on the capital asset listing and denote the asset was purchased with Federal Funds.
Physical inventories should be performed, at a minimum, once every two years to ensure compliance with Federal requirements and verify that assets held per the capital asset listing actually exist. This will help detect errors, fraud, theft, or omissions.