GAO Review of LEA Controls over and Uses of Recovery Act Education Funds (Avery County Schools)
GAO-10-746R: Published: Jul 9, 2010. Publicly Released: Jul 9, 2010.
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The American Recovery and Reinvestment Act of 2009 (Recovery Act) mandates GAO to review states' and localities' use of funds made available under the act. Since April 2009, GAO has published bimonthly reports on our findings related to federal, state, and local implementation of the Recovery Act. Currently, we are examining the efforts of selected states and local educational agencies (LEA) to ensure appropriate uses of Recovery Act funds. In North Carolina, we have been reviewing efforts undertaken by the North Carolina Department of Public Instruction (DPI) and selected LEAs to administer and oversee the use of Recovery Act funds under the State Fiscal Stabilization Fund (SFSF) education stabilization funds; Title I of the Elementary and Secondary Education Act of 1965 (ESEA Title I), as amended; and Part B of the Individuals with Disabilities Education Act (IDEA); as amended. As part of this effort, we met with various DPI staff and, from February 1 through 3, 2010, we visited Avery County Schools (ACS) to review and test the adequacy of controls and procedures in place pertaining to Recovery Act funds for these three federal programs. During our visit, we interviewed finance and program officials regarding internal controls, procurement procedures, and use of Recovery Act education funds. We also reviewed a nonstatistical sample of 13 expenditures of Recovery Act funds for goods and services under these three programs. As of January 27, 2010, ACS spent about $755,000 in Recovery Act funds. We primarily focused our work on two expenditures in our sample that ACS officials reported as their largest Recovery Act nonsalary expenditures. These two expenditures totaled nearly $105,000. We conducted our work from February 1, 2010, to April 20, 2010, in accordance with generally accepted government auditing standards. The purpose of this report is to bring to the attention of DPI our findings related to ACS.
In the course of our work, we observed that ACS has an internal control system in place for processing purchasing documents and payments of invoices. However, we found a weakness in the procurement processes related to the Recovery Act expenditures that we reviewed. Specifically, we found the following: For its two largest Recovery Act purchases, ACS staff could not provide documentation to show that the district obtained multiple bids or price quotes for contracts for goods and services. ACS's two largest purchases with Recovery Act funds were for student assessment software and handheld computer devices entitled "Wireless Generation" that were purchased with ESEA Title I and IDEA Part B Recovery Act funds for $91,058.98 and a teacher planning software and professional development package entitled "Rubicon" for which the district used $13,680.00 of its ESEA Title I Recovery Act funds. Regarding both purchases, ACS officials acknowledged that their procurement processes were not in compliance with state management directives for Recovery Act funds or with ACS's purchasing policy, at the time, to solicit bids or obtain price quotes for purchases costing $10,000 or more. For these two contracts, ACS officials did not maintain documentation of multiple bids or price quotes for contracts purchased with Recovery Act funds. ACS officials provided what appeared to be two conflicting justifications for electing not to follow the above-referenced state management directives. Officials said that one reason they did not obtain multiple price bids or quotes was that they considered aspects of the contracts to be "purchased services" (i.e., software subscriptions), which are not required to be competed under the LEA's purchasing policy. However, ACS officials also said that the district did not obtain multiple price quotes for the equipment associated with the "Wireless Generation" purchase because they believed that only one vendor could provide the service and equipment.