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 4401 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 prior written 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 expenditures from the COVID-19 Education Stabilization Fund, we identified seven equipment purchases 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. These purchases had a total cost of $148,687. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $148,687 were paid from the COVID-19 - Education Stabilization Fund. Questioned costs: The amount of questioned costs was $148,687. Context: We examined all capital expenditures of the COVID-19 - Education Stabilization Fund totaling $973,158. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: Initial guidance for utilizing ARP/ESSER purchasing practices from the state department was that only Facilities and Transportation purchases required prior approval. It was our understanding that the items which are listed in the finding would not fall in that category even though they exceeded $5,000 pre-approval guidance. The state department issued a memo (COM-22-047) that clarified this issue and we are working to ensure that our purchasing practices changed after this memo was issued.