Finding Text
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions.
Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested.
Questioned costs: $145,718.
Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity.
Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures.
Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance.
Repeat Finding: No.
Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program.
Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.