Finding Text
U.S. DEPARTMENT OF EDUCATION Passed through the Massachusetts Department of Elementary and Secondary Education Education Stabilization Fund ? Federal Assistance Listing Numbers 84.425C, 84.425D, and 84.425W 2022-002: Controls for the Purchasing of Capital Equipment Compliance Requirement: Equipment/Real Property Management Type of Finding: Compliance and Internal Control over Compliance ? Other Matter Criteria or Specific Requirement: Grantees must obtain prior approval from the pass-through entity for capital expenditures related to general and special purpose equipment purchases. Condition: The Town did not have an adequate process to ensure that personnel responsible for grant compliance were aware of the need to obtain prior approval from the pass-through entity for capital expenditures related to the acquisition of general or special purpose equipment. As a result of our audit procedures, we noted the acquisition of two HVAC chillers that were charged to the grant where prior approval was not obtained from the pass-through entity. Questioned Costs: The Town expended a total of $2.1 million in Education Stabilization Funds in 2022, of which $457,000 was charged to supplies, materials and contracted services accounts. Of the total charged to supplies, materials and contracted services, $334,000 was selected for testing and $144,000 was spent on the purchase of two HVAC chillers without prior approval from the pass-through entity. Context: The Town used grant funds to purchase capital equipment without prior approval from the pass-through entity as required by federal and state guidelines. Effect: The Town is not in compliance with grant requirements for the acquisition of capital equipment. Cause: Lack of appropriate controls over charging expenditures to the grant, maintaining documentation for costs charged, and lack of knowledge over grant compliance requirements. The internal control process should include the education of personnel on grant compliance requirements and procedures to ensure that grant activity is spent in accordance with federal and state requirements. Recommendation: Management should implement internal controls to ensure that administrators are aware of all grant compliance requirements including the need to obtain prior written approval from the pass-through entity for capital expenditures paid from the Education Stabilization Fund grants. Views of Responsible Officials and Planned Corrective Actions: Management will implement internal controls to ensure that administrators are aware of all grant compliance requirements including the need to obtain prior written approval from the pass-through entity for capital expenditures paid from the Education Stabilization Fund grants. Management plans to implement these procedures in fiscal 2023.