LITTLE ROCK SCHOOL DISTRICT

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 6001 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 Criteria or specific requirement: Purchases of equipment and other capital expenditures require the written approval of the Federal awarding agency or pass-through entity, as specified in Office of Management and Budget (OMB) 2 CFR section 200.439. Condition: In our test of equipment purchases from the COVID-19 Education Stabilization Fund, we identified the purchase of 447 pieces of equipment with unit costs greater than the $5,000 threshold for which the District did not obtain prior written approval from the Arkansas Division of Elementary and Secondary Education. Retroactive approval was subsequently obtained from DESE during audit fieldwork. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $2,859,534 were paid from the COVID-19 Education Stabilization Fund. Questioned costs: The amount of questioned costs was $2,859,534. Context: We examined all capital expenditures of the COVID-19 Education Stabilization Fund totaling $4,660,482. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District will continue to monitor internal controls in regards to use of ESSER funds and ensure all prior approvals are granted by DESE before purchasing of capital assets with a unit value equal to or greater than $5,000.