Finding Text
Finding 2022-003 Equipment and Real Property Management Education Stabilization Fund (ESSER) ? ALN# 84.425 Criteria: Pursuant to 2 CFR part 200 section 439, capital expenditures for equipment are allowable as direct costs, provided that items with a unit cost of the lessor of $5,000 or the entity?s capitalization threshold have the prior written approval of the Federal awarding agency or pass-through entity. Furthermore, section 313(d)(1) specifies that property records must be maintained that include a description of the property, a serial or identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property. Condition: During testing, it was noted the District purchased two pieces of equipment over the capitalization threshold using ESSER funds without receiving prior approval from the Pennsylvania Department of Education. These assets were also not included in the District?s property records. Cause: Due to staff oversight, the District was not aware that certain costs needed to be pre-approved under the grant. Effect: Internal controls are not functioning as designed and the District is not in compliance with equipment and real property management requirements of the program. Questioned Costs: None Recommendation: The District should establish procedures to ensure all equipment purchased with grant funding is appropriately approved prior to purchase and property records are maintained in sufficient detail to allow for the adequate tracking of all equipment purchased with grant funds. Management?s Response: The District obtained guidance from PDE resources on the approval process for equipment over the capitalization threshold when utilizing ESSER funds. The District further identified its capitalization threshold of $1,500 is lower than the standard minimum capitalization threshold of $5,000. The capitalization policy will be updated. The value of any single item for inclusion in the fixed assets accounts shall be not less than $5,000 and have an estimated useful life of one (1) year or more.