Finding 619775 (2022-001)

Significant Deficiency
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2023-03-29
Audit: 45975
Organization: Horatio School District (AR)

AI Summary

  • Core Issue: The District purchased equipment costing over $5,000 without prior written approval, violating federal requirements.
  • Impacted Requirements: OMB 2 CFR section 200.439 mandates prior approval for capital expenditures from federal funds.
  • Recommended Follow-Up: The District should seek guidance from the Arkansas Division of Elementary and Secondary Education and strengthen internal controls for future expenditures.

Finding Text

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBERS 84.425D and 84.425U PASS-THROUGH NUMBER 6703 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-001 - Allowable Costs/Cost Principles Criteria or specific requirement: Purchases of equipment and other capital expenditures require the written prior approval of the Federal awarding agency or pass-through entity, as specified in Office of Management and Budget (OMB) 2 CFR section 200.439. Condition: In our test of equipment purchases from the COVID-19 Education Stabilization Fund, we identified the purchase of two pieces of equipment with unit costs greater than the $5,000 threshold for which the District did not obtain prior written approval from the Arkansas Division of Elementary and Secondary Education. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $19,403 were paid from the COVID-19 Education Stabilization Fund. Questioned costs: The amount of questioned costs was $19,403 Context: As a result of an examination of 3 checks (totaling $107,678) from a population of 40 checks (totaling $521,325), we identified 1 unauthorized purchase for 2 pieces of equipment totaling $19,403 that did not contain evidence of prior written approval from the pass-through agency. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The Horatio School District has received approval for all equipment greater than the $5000 threshold as required COM-22-047 since the purchase.

Categories

Questioned Costs Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Other Findings in this Audit

  • 43332 2022-001
    Significant Deficiency
  • 43333 2022-001
    Significant Deficiency
  • 619774 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.425 Covid-19 - Education Stabilization Fund $484,430
84.010 Title I Grants to Local Educational Agencies $270,034
10.553 School Breakfast Program $153,354
84.027 Special Education_grants to States $39,078
84.367 Supporting Effective Instruction State Grants $33,865
10.555 National School Lunch Program $25,298
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $12,284
84.358 Rural Education $11,704
84.365 English Language Acquisition State Grants $9,338
10.582 Fresh Fruit and Vegetable Program $8,585
84.424 Student Support and Academic Enrichment Program $6,763
84.173 Special Education_preschool Grants $4,748