Finding Text
2023-007 Misclassification of Capital Purchases
CFDA Title: ESSER II and ARP ESSER III
CFDA Number: 84.425D & 84.425U
Federal Award Number and Year: 21-1207-92-2021 and 021-1207-93-2021
Name of Federal Agency: U.S. Department of Education
Name of Pass-through Entity: Montana Office of Public Instruction
Condition:
Copiers purchased with Education Stabilization Funds monies were classified as minor equipment instead of capital outlay.
Context:
We tested the significant claims charged to the Education Stabilization Funds programs during the audit of types of services allowed for the Education Stabilization Funds major program.
Criteria:
Internal control procedures should be in place to ensure purchases meeting the District’s capitalization policy are properly coded as capital outlay.
Effect:
Capital assets were understated and instructional expenses were overstated in the Government-wide Governmental Activities Statement of Activities $39,103. And in the Elementary Miscellaneous Programs fund capital outlay was understated and instructional expenditures regular were overstated by the same amount.
Cause:
An error in the coding for the copiers purchased with Education Stabilization Funds was made including budgeting these purchases as minor equipment in the OPI Egrant budget.
Recommendation:
The District should budget and expend monies, including the Education Stabilization Fund program monies, meeting the District capitalization policy of $5,000 as capital outlay.