Finding Text
Material Weakness/Noncompliance Finding Number: 2022-001 Assistance Listing Number and Title: AL #84.425D COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: 2022 Federal Agency: US Department of Education Compliance Requirement: Equipment Pass-Through Entity: Ohio Department of Education Repeat Finding from Prior Audit? No 2 CFR ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR ? 200.313(c) through (d) which require that: (c) Equipment must be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award or, when appropriate, under other Federal awards; however, the non-Federal entity must not encumber the equipment without prior approval of the Federal awarding agency. (d) Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: 1. 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 Federal award identification number), who holds title, the acquisition date, 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 sales price of the property. 2. A physical inventory of the property must be taken and the results reconciled with the property records at least once every 2 years. 3. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. 4. Adequate maintenance procedures must be developed to keep the property in good condition. 5. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures), ESF funds may be used for these purposes. Recipients and subrecipients may use ESF funds to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. In addition, with prior approval by the ED or the pass-through entity, recipients and subrecipients may use ESF funds to purchase real property and perform construction for improvements to land, buildings, or equipment that meet the overall purpose of the ESF program, which is ?to prevent, prepare for, and respond to? the COVID-19 pandemic. In addition to the guidance noted above, the Uniform Guidance at 2 CFR ? 200.407 requires prior written approval from either the Department or the State (Governor or SEA, as applicable) for certain costs, such as the purchase of real property; equipment and other capital expenditures; entertainment costs; and travel costs. The School District failed to properly track assets purchased or improvements completed with ESF (specifically Elementary and Secondary School Emergency Relief or ESSER) funds in their Equipment Inventory System. This resulted in unrecorded assets of approximately $209,788 purchased with ESSER Funds not recorded in the inventory system. This would not allow for proper tracking as required above. This was the result of the School District Treasurer not adding all assets to the system. The School District also did not receive proper approval before the purchase of Phenomenal Aire Units. We recommend the School District Treasurer review the Equipment Inventory System and adjust it to include all assets purchased with ESSER Funds. We further recommend the School District ensure it receives all proper approvals as required for any capital asset expenditures purchased with ESSER funds. Officials? Response: Moving forward the School District Treasurer will make sure and double check all inventory purchased with ESSER Funds are in the inventory system if it is over the capital asset threshold. Also, she will make sure all capital asset expenditures purchased with ESSER funds have proper approval.