SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Franklin Pierce School District No. 402 September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: ECF2021104688 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $1,412,875 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $1,412,875 in ECF Program funds to purchase laptops and Wi-Fi hotspots for students and school staff. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Allowable activities and costs ECF Program recipients may only seek reimbursement for eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used solely at the school or held for future use (i.e., warehousing). Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Description of Condition Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District?s internal controls were ineffective for ensuring it documented the determination of actual unmet need and only requested reimbursement for equipment and services provided to students and school staff. Specifically, the District purchased laptops and Wi-Fi hotspots based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $1,412,875. However, the District did not maintain documentation showing it provided each laptop and Wi-Fi hotspot paid with program funds to a student or employee with unmet need. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need The IT Department managed the ECF Program, and staff thought the District was operating as the granting agency directed. Further, staff did not know about the requirement to request reimbursement only for actual unmet need, and thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement. Effect of Condition and Questioned Costs Allowable activities and costs/restricted purpose ? unmet need Because the District did not have documentation supporting whether it provided eligible equipment and services to students and school staff with actual unmet need, it cannot demonstrate compliance with the program?s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students? and staff?s actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District?s expenditures are allowable, we are questioning all unsupported costs. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. Recommendation We recommend the District work with the granting agency to determine audit resolution. We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment and services provided to students and staff with unmet need, and maintain documentation demonstrating compliance. District?s Response The District does not concur with the audit finding or the questioned costs. The District does agree that internal controls and processes could be improved, however this was during the pandemic and we believe the appropriate level of reporting would be a management letter because all costs were allowable and devices were only provided to those with unmet need. The primary premise of the audit finding was that the district did not have effective internal controls to appropriately document unmet need and to claim devices that met that requirement for reimbursement. The FCC, however, documented the following (FCC-CIRC21-93-043021) ?We think schools are in the best position to determine whether their students and staff have devices and broadband services sufficient to meet their remote learning needs, and we recognize that they are making such decisions in the midst of a pandemic. We, therefore, will not impose any specific metrics or process requirements on those determinations.? Franklin Pierce School District determined that it was necessary for all students, teachers, and paraeducators to have a district issued device in order to meet the increased challenges of providing safe and equitable access to education to all students during an ongoing pandemic and state of emergency. Student-owned devices were not guaranteed to have the curriculum specification requirements, the appropriate level of security, including web filtering to prevent malicious content which is a requirement of the FCC in order to comply with Children?s Internet Protection Act and be eligible for eRate funding. Remote learning required district students/staff to use district devices for various reasons including: ? Instruction: access to curriculum, supplemental resources, device specification to meet digital curriculum requirement and required software through district licenses. ? Support: the ability for technology staff to provide direct technical support through remote access that will allow students and staff to get back to instructions quicker. ? State Requirements: meeting state testing requirements, such as SBA which cannot be completed on a personal device. ? Safety and Security: implementing web filtering to ensure safe browsing, content monitoring for timely student and staff intervention and support and gave districts the ability to automatically authenticate student accounts to further prevent Zoom bombings. ? Equity: ensuring every student had the same level of access and provided access to accessibility tools not available on personal devices. Based on the guidance received we have spent all funds for allowable costs, and we believe that those costs were reasonable and necessary and for students with unmet needs. The number of devices that were in question was taken from the student/family survey which was provided to you upon your request during your audit process. The District has internal controls over asset inventory and provided equipment only to students and staff with unmet needs, and all costs were allowable, reasonable and necessary. Auditor?s Remarks The State Auditor?s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. SAO knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, SAO continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time. However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the award requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.