Finding Text
2 CFR §400.1 gives regulatory effect to the Department of Agriculture for 2 CFR §200.439(b) which provides that the following rules of allowability must apply to equipment and other capital expenditures:
(1) Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity.
(2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity.
Furthermore, the School District’s Administration of Federal Grant Funds Policy (DECA) provides costs charged by the school system to a federal grant must be allowed under the individual program and be in accordance with the cost principles established in the Uniform Guidance, including how charges made to the grant for personnel are to be determined. Costs will be charged to a federal grant only when the costs is reasonable and necessary for the program, in compliance with applicable laws and regulations, allocable to the grant, adequately documented and consistent with School District policies and procedures that apply to both federally-funded and non-federally-funded activities.
During fiscal year 2023, the School District purchased a catering truck in the amount of $80,000 with commingled Child Nutrition Cluster monies without obtaining prior written approval from the Ohio Department of Education, the pass-through entity, or the Department of Agriculture, resulting in questioned costs of $80,000.
Failure to acquire prior written approval for capital expenditures with a unit cost of $5,000 or more from the Federal awarding agency or pass-through entity may result in expenditures that are not allowable under Federal awards.
We recommend the School District acquire prior written approval for capital expenditures with a unit cost of $5,000 or more to ensure compliance with federal award requirements.