SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
Kent School District No. 415
September 1, 2021 through August 31, 2022
2022-003 The District did not have adequate internal controls for ensuring
compliance with allowable activities and costs, procurement, and
restricted purpose requirements.
Assistance Listing Number and Title: 32.009, COVID-19 – Emergency
Connectivity Fund Program
Federal Grantor Name: Federal Communications
Commission
Federal Award/Contract Number: CPF
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number:
N/A
Known Questioned Cost Amount:
Prior Year Audit Finding:
$9,289,675
N/A
Background
The Emergency Connectivity Fund (ECF) Program provides funding to meet the
needs of students and school staff who would otherwise lack access to connected
devices and broadband connections sufficient to engage in remote learning. This is
referred to as “unmet need.” In fiscal year 2022, the District spent $9,405,485 in
ECF Program funds to purchase tablets, mobile hotspots, routers, and broadband
services for students and school staff.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding grant requirements and monitoring the effectiveness of established
controls.
Allowable activities and costs
ECF Program recipients may only seek reimbursement for the eligible devices and
services provided to students and staff with unmet need. Recipients are prohibited
from seeking and receiving reimbursement for eligible equipment and services
purchased for use solely at the school or held for future use (i.e., warehousing).
Procurement
When using ECF Program funds to purchase eligible services and equipment, the
Federal Communications Commission (FCC) requires recipients to comply with all
applicable state or local procurement laws by obtaining quotes or following a
competitive bidding process, depending on the estimated cost of the purchase. State
law and District policy allows for the purchase of goods and services from contracts
awarded by another government or group of governments via an interlocal
agreement or contract, often referred to as “piggybacking.” If entering into such an
agreement, the District must confirm the awarding entity followed all procurement
laws and regulations applicable to the awarding entity when selecting the service
provider.
Restricted purpose – unmet need
When submitting applications to the FCC, schools only had to provide an estimate
of their students’ and staff’s unmet need. However, when requesting
reimbursement, the District could only request program funds for eligible
equipment and services provided to students and school staff with actual unmet
need.
Restricted purpose – per-user limitations
The FCC imposed per-location and per-user limitations to maximize the use of
limited funds. Under the program, eligible schools could only be reimbursed for
one connected device and Wi-Fi hotspot per student or school employee with unmet
need.
Description of Condition
Allowable activities and costs/restricted purpose – unmet need
The District estimated unmet need for eligible equipment and services when it
applied for ECF Program funds. However, our audit found the District’s internal
controls were ineffective for ensuring it documented the determination of actual
unmet need and only requested reimbursement for equipment and services provided
to students and school staff. Specifically, the District purchased tablet computers,
Wi-Fi hotspots and routers, based on its estimate of unmet need, and it requested
reimbursement for these purchases totaling $9,405,845. However, the District did
not maintain documentation showing it provided each tablet computer, Wi-Fi
hotspot, and router paid with program funds to a student or employee with unmet
need.
Procurement
Our audit found the District’s internal controls were ineffective for ensuring it
followed state law and its own policy when procuring equipment that it charged to
the ECF Program. Specifically, the District paid one contractor $9,062,998 for
tablet computers using a purchasing cooperative. However, the District did not
maintain documentation showing it verified the awarding entity met the most
restrictive procurement practices applicable to that entity. The District also paid
two contractors a total of $254,768 for mobile hotspots, but did not obtain quotes
from three or more qualified sources, as its policy requires.
Restricted purpose – per-location and per-user limitations
Our audit found the District’s internal controls were ineffective for demonstrating
it complied with the FCC’s per-location and per-user limitations. Specifically, the
District did not maintain documentation showing it monitored or had a tracking
process in place to ensure it only provided one device per user and location.
We consider these deficiencies in internal controls to be material weaknesses that
led to material noncompliance.
This issue was not reported as a finding in the prior audit.
Cause of Condition
Allowable activities and costs/restricted purpose – unmet need
District staff did not know about the requirement to request reimbursement only for
actual unmet need, and thought the estimate of unmet need provided during the
application process was sufficient to comply with this requirement. District staff
who were authorized to order eligible equipment and services did not know about
the required certifications stating that the District was only seeking reimbursement
for eligible equipment and/or services provided to students or employees with
unmet need.
Procurement
Staff did not know they needed to obtain procurement documentation from the
awarding agency to verify the process complied with procurement requirements
before purchasing. Staff also did not know they needed to retain documentation to
support the procurement history of the mobile hotspots purchased from the two
contractors.
Restricted purpose – per-location and per-user limitations
Staff said they did not know the District could not provide more than one device
and/or connection per student and employee.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
Because the District did not have documentation supporting whether it provided
eligible equipment and services to students and school staff with actual unmet need,
it cannot demonstrate compliance with the program’s requirements. Given the
nature of the program and circumstances, it is likely that at least some of the
equipment and services the District charged to the award addressed unmet needs.
However, the lack of a documented assessment of students’ and staff’s actual unmet
need means that all costs are unsupported. Since we do not have a reasonable basis
for estimating how much of the District’s expenditures are allowable, we are
questioning all unsupported 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 does not have adequate documentation to
support expenditures.
Procurement
The District cannot demonstrate it complied with the procurement requirements.
Additionally, it cannot be sure all interested contractors had the opportunity to bid
and that it obtained the lowest price for the tablet purchases and wireless services.
Restricted purpose – per-location and per-user limitations
Because the District provided some students and staff more than one device and
received reimbursement for them, it did not comply with the FCC’s requirement.
As noted in the allowable activities and costs section above, we are questioning the
costs for these devices and services.
Recommendation
We recommend the District work with the granting agency to determine audit
resolution.
We further recommend the District establish and follow internal controls to ensure
staff fully understand the requirements for ECF awards. Specifically, the District
should:
• Request reimbursement only for eligible equipment provided to students or
staff with unmet need, and maintain documentation demonstrating
compliance
• Comply with state law and its own policy when procuring goods and
services paid with ECF Program funds, and keep documentation showing it
complied with procurement requirements
• Provide no more than one device per student and staff in compliance with
the ECF Program’s requirements
District’s Response
It is KSD’s position that all expenditures and actions associated with our
implementation of the Emergency Connectivity Fund (ECF) during the Pandemic
were entirely consistent with the spirit and intent of this emergency federal
program. KSD’s understanding is that a vast majority of districts audited in this
program are receiving findings, and that state officials are in discussions with the
Federal Communications Commission (FCC) to achieve greater regularity clarity
moving forward. The district appreciates the State Auditor’s acknowledgement in
a June 5th Seattle Times editorial that greater clarity would have prevented nearly
all of the issues confronting school districts in this most recent audit cycle. We
agree.
Under the emergency conditions of the Pandemic, KSD was approved for funding
by the Federal Communications Commission (FCC) and mobilized quickly to
provide the devices necessary to equip students and staff for an emergency remote
or hybrid program of instruction. Based on the instructional program design, the
district provided devices to students and staff who needed them based on a number
of factors, including whether they had a device to begin with, or whether their
existing device was up to technical standards, including whether it had all required
software and security features to support the program.
The district acknowledges that it is not able to produce the time-stamped
documentation required by SAO to verify the district’s process for determining
“unmet student need”; doing so would have apparently required a student-bystudent,
staff-by-staff signature certification process during a Pandemic period
where such methods would seem highly impractical. The district also
acknowledges that it did not request and retain the competitive bid documentation
from the purchasing cooperative used to procure some of the devices. Finally, it
acknowledges the limitations of our asset management inventory to prove, at a
historical moment in time, that we did not have multiple devices allocated to one
student, or any devices in temporary inventory that were funded with these ECF
funds. As a policy, KSD only allocates multiple devices to a student or staff person
when one is temporarily dysfunctional.
The ECF audit findings are an issue of statewide concern. We join the voices from
districts across the state asserting that more intergovernmental coordination could
have greatly reduced unintended impacts on school districts during this audit cycle.
Auditor’s Remarks
The State Auditor’s Office is sympathetic to the significant challenges the District
faced during the COVID-19 pandemic, and deeply respects its commitment to
student learning despite these challenges. SAO knows that in many cases,
governments across Washington received significant pandemic-era federal funds
without also receiving clear guidance on how to use them. Then, and now, SAO
continues to advocate for clear, timely guidance from federal agencies to make sure
Washington governments are not put in a difficult position at audit time.
However, when auditing federal programs of any kind, governments must provide
documentation to substantiate that they met the award requirements. As is our
practice and audit standards require, we will review the status of this finding during
our next audit. We value our partnership with the District in striving for
transparency in public service.
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 303 Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund,
describes the ECF Program requirements.