Finding 599496 (2022-003)

Finding 2022-003 Information on Federal Program: Assistance Listing 84.425 ? Education Stabilization Fund United States Department of Education Pass-Through Entity: Texas Department of Education Award Number: S425U210042 Compliance Requirements: Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control Over Compliance and Noncompliance (Questioned Costs over $25,000 for a Major Program) Criteria: As a condition of receiving Federal awards, non-Federal entities agree to comply with laws, regulations and the provisions of grant agreements and contracts, and to maintain internal control to provide reasonable assurance of compliance with these requirements. The Department of Education established ?allowable costs/cost principles? compliance requirement applicable to the Education Stabilization Fund which stipulates that direct costs be specifically identified and that services have been received prior to the reimbursement of expenditures. Condition: During the fiscal year ended August 31, 2022, the District did not have effective internal controls over compliance with the allowable costs/cost principles requirement described above. The District requested reimbursement from the ESF for $328,378 in expenditures for services that had not been received. Cause: The District did not have adequately designed controls in place to ensure compliance with the allowable costs/cost principles requirement. Effect or Potential Effect: The District was not in compliance with the allowable costs/cost principles requirement. Questioned Costs: $328,378 Context: Of the approximately $5.63 million reimbursed from the ESF, $328,378 in expenditures claimed for reimbursement were for services that had not been received. This was identified as a result of our audit procedures and the District adjusted the reported expenditures to reduce expenditures by this amount, and record the balance as "due to other governments" as of August 31, 2022. Recommendation: We recommend that the District review its internal controls over compliance to ensure controls are suitably designed and are in place to prevent, or detect and correct, noncompliance with applicable compliance requirements. Views of Responsible Officials and Planned Corrective Action Plan: See corrective action plan.