ISD #363 - NORTHOMELocal Government

Federal Program - Education Stabilization Fund (84.425) Period of Performance. Criteria - The District is required to submit a budget to the Minnesota Department of Education (MDE) prior to spending the Education Stabilization Grants. Condition - The budget for three grants were submitted and approved under the FY 2021 award, but the expenditures were to be incurred in FY 2022 award. The District received $588,257 on 12/1/21 and the District returned the award to the MDE on 8/10/22. The District also received $261,930 on 12/22/21, of which the District returned $113,627 on 7/13/22 because the District was not able to receive the bus in FY 2022. $148,303 was also returned on 9/22/22 for being entered into the incorrect fiscal year. Questioned Costs - None. Context - The District entered the budget and the expenditures in FY 2021, but the budget and expenditures should have been reported in FY 2022. Also, the District did not receive the bus, so there was no expenditure to report. Cause - Oversight by staff. Effect - The District received the grant award under the wrong year, so the award was returned to MDE. Repeat finding - No. Recommendation - We recommend the District implement procedures to ensure the budget and expenditures are reported in the correct year, and the expenditures are only drawn once the District has incurred the expenditures. Views of Responsible Officials and Planned Corrective Actions - The District agrees with the recommendation and will review its policies and procedures.

Federal Program - Education Stabilization Fund (84.425) Activities Allowed or Unallowed, Equipment and Real Property Management. Criteria - To ensure all expenditures charged to a program are allowable, the District should establish controls for approval of expenditures. In addition, the Minnesota Department of Education (MDE) requires all equipment purchases greater than $5,000 to receive preapproval of the equipment from MDE. Finally, all program expenditures should be coded to their specific finance and object codes to ensure accuracy of program expenditures. Condition - We tested 41 transactions and two of the transactions were not approved by the District. In addition, two equipment purchases greater than $5,000 did not receive pre-approval, but the equipment was approved by MDE at a later date. Budgeted expenditures in total agree with the actual expenditures, but the expenditures do not agree by object code (salary, supplies, etc.). Questioned Costs - None. Context - We tested 41 transactions and two of the transactions were not approved by the District. In addition, two equipment purchases greater than $5,000 did not receive pre-approval, but the equipment was approved by MDE at a later date. Budgeted expenditures in total agree with the actual expenditures, but the expenditures do not agree by object code (salary, supplies, etc.). Cause - Oversight by staff. Effect - There is an increased risk of unallowable costs being charged to grants. Repeat finding - No. Recommendation - We recommend the District obtain approvals prior to incurring the expenditures. The District should also report all expenditures to the correct finance and object code at the time the expenditure is incurred. Views of Responsible Officials and Planned Corrective Actions - The District agrees with the recommendation and will review its policies and procedures.