Finding Text
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Significant Deficiency in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula)
Condition: Expenditures charged to the grant were not authorized in the grant budget.
Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”.
Cause: Management’s misunderstanding of costs allowed under this grant.
Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated.
Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget.
Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant.
Management’s Resp: Management is in agreement with this recommendation.