If your school district is subject to a single audit, pay special attention to ESSER

by Cathy L. Harlow

If your school district is required to do a single audit after receiving $750,000 or more in federal funding, you will want to pay special attention to your Elementary and Secondary School (ESSER) grants.

Because ESSER is a new program, it is a likely target for the compliance testing that is part of a single audit. The parameters for using these funds were intentionally broad, but you will still need to ensure you spend the money per the guidelines and ensure that you maintain supporting documentation.

To get an understanding of what your local auditors will be reviewing, it is a good idea to review Office of Management and Budget Compliance Supplement for ESSER funds.  This is updated annually.  At this time, the 2021 supplement has not been released but the 2020 supplement addendum can give you an idea of what to expect.  It can be located at https://www.whitehouse.gov/wp-content/uploads/2020/12/2020-Compliance-Supplement-Addendum_Final.pdf. 

Key Compliance requirements for ESSER funds

Allowable activities: Overall, the allowable uses for ESSER funds are very broad and were intended to address the financial impact of COVID-19 on your district, including:

• Developing preparedness and response efforts and coordinating these with state and federal health departments and other agencies.
• Giving principals the necessary resources and discretionary funds for their individual school.
• Programs addressing the needs of low-income students and/or students with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth.
• Planning for long-term closures (including on meeting IDEA requirements, providing online learning, and providing meals to students).
• Staff training on minimizing the spread of infectious disease
• Purchasing cleaning and sanitizing supplies.
• Purchasing educational technology -- hardware, software, and connectivity) -- for students and instructors.
• Mental health services and supports
• Summer learning and supplemental after-school programs, including providing classroom instruction or online learning.
• Other activities that are necessary to maintain the operation and continuity of services and the employment of existing staff.

 

Allowable costs:  It is important to remember that for costs to be allowable they must meet the basic guidelines as detailed in 2 CFR part 200 subpart E.  A couple important items to note:

• Even though the use of funds is very broad, Districts should ensure they are following appropriate procurement procedures for all purchases made with ESSER funds. The most restrictive requirements should be followed whether it is your local purchasing policy, the PA School Code, or federal Uniform Guidance requirements.  This would also apply to expenses which are subsequently reallocated to ESSER through a journal entry. 

• Districts are not required to maintain time distribution records to document personnel expenses charged to ESSER funds since the grant may be used to simply keep teachers and staff employed.

Equipment management:  Capital expenditures require prior approval from PDE either through the application approval or budget revision approval prior to expending funds on the project.  You should maintain all documentation regarding approval of the expense for your audit. Additionally, make sure you are properly inventorying and tracking capital equipment purchased with ESSER funds.

Ensuring the ESSER part of your single audit goes smoothly

• Maintain documentation including grant application and approval and any required reports you submitted.
• Make sure your quarterly and final expenditure reports agree with the general ledger. PDE has provided separate funding source codes for each pot of Covid funding to track expenditures.
• Communicate with your auditor regarding any questions about the use or accounting for ESSER funds. Early communication may prevent issues during the audit.

 

If you have questions about your single audit, ESSER or other federal or state programs, the expert team at Boyer & Ritter is ready to help.