GLEN ROSE INDEPENDENT SCHOOL DISTRICT

2023-001- Allowable Activities/Allowable Costs- Non payroll expenditures Type of Finding: Significant Deficiency in Internal Controls over Compliance/ Noncompliance Federal Agency: U.S. Department of Education Federal Program Name: Education Stabilization Fund (ESF) COVID-19 Assistance Listing Number: 84.425D, U Pass-Through Entity: Texas Department of Education Pass-Through Number(s): All Pass-Through Numbers Present in the SEFA Award Period: Statistically Valid Sample: No, and not intended to be a Statistically Valid Sample. Criteria or Specific Requirements In accordance with 2 CFR 200 Subpart E, a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Condition During our testing over allowable activities/costs, we noted that the District prepaid for multiple years of a software subscription from ESSER II funds. Benefits not yet received may not be paid with ESSER funds; therefore, only one year of service per grant year is allowable. The portion of the payment that was for access to the software in Fiscal Year 2023 was allowable, but the portion of the payment for access to the software in Fiscal Years 2024 and 2025 was unallowable since the benefit was not yet received. Questioned Costs $37,650 Context The condition was identified as a result of dual-purpose test work performed for internal controls over compliance/compliance with the allowable activities and allowable costs requirements through review of supporting documentation of non-payroll expenditures. Once this was identified and communicated to the District, the District was able reclassify the portion of the payment that was for access to the software in fiscal years 2024 and 2025 to the General Fund prior to August 31, 2023. The District identified eligible expenditures recorded in the General Fund in Fiscal Year 2023 and reclassified to ESSER II to replace the unallowable expenditures. Cause Historically, the District has not prepaid for subscriptions that will be used in future years and was unaware that this was not allowed to be paid from federal funds. Effect The District did not comply with allowable activities and allowable costs requirements prescribed by 2 CFR Part 200 Uniform Guidance. Repeat Finding No Recommendation The District should review allowable activities and allowable costs requirements, and enhance controls to ensure compliance with the requirements. Views of Responsible Officials There is no disagreement with the audit finding. See corrective action plan.