Finding Text
2022-001 The District did not have adequate internal controls to ensure compliance with federal requirements for allowable activities and costs.
Assistance Listing Number and Title: 84.425 COVID -19 Education Stabilization Fund
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public Instruction
Pass-through Award/Contract Number:
COVID-19, 84.425D-120182
COVID-19, 84.425D-120498
COVID-19, 84.425U-138114
COVID-19, 84.425U-140001
COVID-19, 84.425U-140600
COVID-19, 84.425U-137051
COVID-19, 84,425U-712113
Known Questioned Cost Amount: $25,903
Prior Year Audit Finding: N/A
Background
The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $8,594,626 in federal funding under its ESF awards. This included $4,451,082 in the Elementary and Secondary School Emergency Relief (ESSER I and II) Fund subprogram (84.425D), and $4,143,544 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III) subprogram (84.425U).
Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. The Office of Superintendent of Public Instruction (OSPI) establishes the indirect cost rate for each award, and school districts cannot exceed this approved rate when claiming reimbursement. If there are changes to the rate during a multi-year award, districts must adjust the amount claimed, if needed, to ensure they do not exceed the approved rate.
Description of Condition
Although the District’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and allowable costs requirements, it charged the incorrect indirect cost rate for its ESSER II award (84.425D).
Cause of Condition
Management and staff did not know the District needed to manually adjust its OSPI-issued unrestricted indirect cost rate for ESSER awards that covered two fiscal years. Instead, the District relied on the rate posted in the iGrants system.
Effect of Condition and Questioned Costs
We reviewed all indirect costs charged to the program. We found the District charged $25,903 more in indirect costs than allowable because it did not use the correct rate for its ESSER II award. We are questioning these costs.
Federal regulations require the State Auditor’s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures.
Recommendation
We recommend the District ensure it uses the correct OSPI-issued unrestricted indirect cost rate for the fiscal period when charging costs to federal awards.
District’s Response
The Bellevue School District concurs with this finding. The Budget Department’s internal procedures will be updated to include instructions for budget analysts to verify the correct indirect rate is used when preparing and reviewing grant claims. A shared document showing the historical indirect rates will continue to be updated annually and used as a reference to verify the correct rate is used in any given fiscal year. When preparing claims for reimbursement, a budget analyst will compare the indirect rate that is hard-coded in OSPI’s iGrants claim system to the calculated maximum indirect rate allowable for the fiscal year in which expenditures are incurred to ensure the correct indirect rate is used. When reviewing the claims for reimbursement, the reviewer will check the grant claim for accuracy, including verifying the indirect rate on the grant claims agrees to the calculated maximum indirect rate allowable.
Auditor’s Remarks
We appreciate the steps the District has taken to address the issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.