Finding Text
U.S. Department of Education 2022-005: Unallowable Costs Federal Agency: Department of Education Federal Program: COVID-19 Higher Education Emergency Relief Funds (HEERF)/Coronavirus Aid, Relief and Economic Security (CARES) Act ? Institutional Portion Assistance Listing Number: 84.425F Federal Award Identification Number and Year: P425F204159 - 2022 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: The Uniform Guidance Cost Principles described in 2 CFR Part 200, Subpart E, apply to the HEERF subprogram. Institutions generally have broad uses of funds. Some items of cost in Subpart E of the Uniform Guidance require prior approval under 2 CFR section 200.407 by ED. However, in its HEERF II FAQs published on January 14, 2021, and HEERF III FAQs published on May 11, 2021, ED waived prior approval for certain items of cost (as described in questions 20 and 45, respectively). Specifically, the HEERF grant funds must not be used for construction or purchase of real property. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: The District used grants fund for construction costs that were identified as delays, labor rate escalation and supply chain issues related to COVID-19. Questioned Costs: $614,352 Context: The District expended $5,888,620 in HEERF ? Institutional Portion funds for direct costs, lost revenue and bad debt write off during the fiscal year. Cause: Costs were identified on invoices and changes orders as COVID-19 related. The District had interpreted delayed costs related to COVID-19 as allowable. Effect: Noncompliance with allowable cost principles. Repeat Finding: This was not a finding in the prior year. Recommendation: Implement procedures to ensure all grant expenditures are reviewed by fiscal management for additional review. Views of responsible officials: Management concurs with the finding and plans to correct the finding.