oversight

Florida: Final Recovery Act Expenditures Supplemental Report

Published by the Department of Education, Office of Inspector General on 2013-06-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                   UNITED STATES DEPARTMENT OF EDUCATION
                                                        OFFICE OF INSPECTOR GENERAL

                                                                                                                  AUDIT SERVICES
                                                                                                               New York Audit Region


                                                                              June 27, 2013


                                                                                                                  Control Number
                                                                                                               ED-OIG/A02M0009

Dr. Tony Bennett
Commissioner
Florida Department of Education
Turlington Building, Suite 1514
325 West Gaines Street
Tallahassee, Florida 32399

Dear Commissioner Bennett:

As part of a nationwide U.S. Department of Education (Department) Office of Inspector General
(OIG) review of final expenditures under the American Recovery and Reinvestment Act of 2009
(Recovery Act), we reviewed expenditures at Miami-Dade County Public Schools
(Miami-Dade). The objective of the nationwide audit was to determine whether selected local
educational agencies (LEAs) obligated and spent final Recovery Act funding on reasonable,
allocable, and allowable activities in accordance with applicable Federal requirements. OIG
plans to issue an audit report to the Department to present the results of the nationwide audit.

The purpose of this final audit report, “Florida: Final Recovery Act Expenditures Supplemental
Report,” is to separately address fiscal and management controls at Miami-Dade so that the
Florida Department of Education (Florida SEA) can take appropriate corrective action. Our
review covered January 1 through December 31, 2011, Recovery Act expenditures for the State
Fiscal Stabilization Fund, Education Stabilization Fund (ESF); Elementary and Secondary
Education Act of 1965 (ESEA) Title I, Part A (Title I); and Part B of the Individuals with
Disabilities Education Act (IDEA) grant programs.



                                                      BACKGROUND 



The Department awarded $488,581,873 in Recovery Act Title I funds and $625,539,420 in
Recovery Act IDEA funds to the Florida SEA. The Department also awarded $1,754,577,912 in
ESF funds to the Florida SEA. Across the three grants, the Florida SEA awarded Miami-Dade
about $428 million, as shown in Table 1. The grant period for each of these grants ended
September 30, 2011. The Title I, IDEA, and ESF programs had an obligation deadline of
September 30, 2011.



 The Department of Education's mission is to promote student achievement and preparation for global competitiveness by fostering educational
                                                   excellence and ensuring equal access.
Final Report
ED-OIG/A02M0009                                                                     Page 2 of 12

              Table 1: Recovery Act Grant Award Amounts for Miami-Dade
                        Recovery Act Grant     Miami-Dade
                        Title I                 $ 99,027,779
                        IDEA                   $ 89,162,412
                        ESF                    $239,713,997
                        Total                  $427,904,188
                        Source: Grant information provided by the Florida SEA.



                                     AUDIT RESULTS



Miami-Dade generally obligated and spent Recovery Act Title I, IDEA, and ESF funds awarded
in accordance with applicable laws, regulations, guidance, and program requirements for our
audit period. However, we found that Miami-Dade did not perform due diligence when
reviewing and approving a transaction which resulted in an improperly classified Title I
expenditure. Also we found that Miami-Dade could not reconcile the Recovery Act Title I and
IDEA grants for our audit period.

FINDING NO. 1 – Miami-Dade Did Not Properly Report its Recovery Act Expenditures

Miami-Dade Misclassified $400,482 in Transportation Expenditures as Supplies

Miami-Dade charged its Recovery Act Title I supply account for $400,482 of transportation
costs. Miami-Dade initially charged the costs to its general fund transportation abatement
account and then made an adjusting journal entry that transferred the cost to the Recovery Act
Title I supply account. Miami-Dade officials indicated that the transportation costs included
personnel costs, as well as materials and supplies, including fuel. We determined that the
expenditure was solely for bus rental expenses for the 2011 summer school program and that no
personnel, supplies or material costs were part of this expenditure.

Per Title 34 of the Code of Federal Regulations (C.F.R.) § 76.702, States and LEAs must use
fiscal control and fund accounting procedures to ensure Federal funds are properly disbursed and
accounted for. According to Miami-Dade’s approval process the assistant controller needed to
review and approve journal entries that were equal to or greater than $5,000 before posting them
to the accounting system.

Miami-Dade’s controller stated that Miami-Dade made an error in classifying the transaction.
Although we noted from documents received that Miami-Dade required four levels of approval
for reclassification of expenditures, we found that Miami-Dade did not perform due diligence in
the review and approval process because the approval screen included a note in the comments
section that clearly identified that the expenditure was for transportation costs. As a result,
Miami-Dade improperly classified $400,482 in transportation costs by charging these costs as
supplies to Recovery Act Title I funds.
Final Report
ED-OIG/A02M0009                                                                        Page 3 of 12

While the transportation cost was an allowable expenditure, the misclassified transportation cost
was ultimately reported to the Department and to the Recovery Act website as a $400,482
supplies expenditure. This misreporting impacted the Department’s Recovery Act goal to foster
accountability and transparency in government spending.

Miami-Dade Reporting of Recovery Act Expenditure Data Could Not be Reconciled

For our audit period of January 1, 2011, through December 31, 2011, we could not determine if
Miami-Dade provided accurate quarterly recipient reporting as required in Section 1512 (c) of
the Recovery Act. Although Miami-Dade was able to reconcile the Recovery Act Title I and
IDEA funds for the overall grant period of April 30, 2009, to December 31, 2011, Miami-Dade
could not reconcile Recovery Act Title I and IDEA expenditures for our audit period. As a
result, we were unable to determine whether expenditure reports provided to the Florida SEA
and ultimately to the Recovery Act website, FederalReporting.gov, were complete and accurate.

One of the Department’s Recovery Act goals was to foster accountability and transparency in
government spending. To ensure transparency and accountability of Recovery Act spending,
Section 1512 (c) requires that recipients of Recovery Act funding report on the use of such
funding no later than the 10th day after the end of each calendar quarter. Thus, the Florida SEA
was required to collect from LEAs and maintain relevant information that Section 1512 (c)
required, including information on the amount of Recovery Act funds expended or obligated to
projects or activities, in order to fulfill its reporting obligations to the Department. The Florida
SEA used its Cash Advance and Reporting of Disbursements System (CARDS) to provide
Florida LEAs with information on the financial status of projects that were awarded with Federal
funds. In addition, Miami-Dade reported cumulative expenditures on a monthly basis to the
Florida SEA through CARDS.

Before beginning fieldwork, OIG asked Miami-Dade to provide detailed expenditure reports for
our audit period. Miami-Dade provided a detailed expenditure report from its accounting system
for transactions that were posted from January 1, 2011, through December 31, 2011. However,
Miami-Dade could not reconcile the expenditures recorded in its accounting system with the
expenditures reported in CARDS. As a result, detailed expenditure data from Miami-Dade’s
accounting system did not match to program expenditures reported in CARDS. For our audit
period, we found that Miami-Dade could not match expenditures totaling about $2.3 million for
Recovery Act Title I funds and about $1.2 million for Recovery Act IDEA.

Miami-Dade stated that the discrepancy was due to timing differences between the expenditures
that it reported in CARDS and when such expenditures were recorded in Miami-Dade’s
accounting system. When asked to provide the reconciled expenditure data for Recovery Act
Title I and IDEA funds for our audit period, Miami-Dade stated that it could not provide the data
because quarterly or monthly reconciliations were not performed. Therefore, Miami-Dade did
not compare or reconcile Recovery Act funds expended to Recovery Act funds reported to the
Florida SEA on at least a quarterly basis.

Per 34 C.F.R. § 76.702, States and LEAs must use fiscal control and fund accounting procedures
to ensure Federal funds are properly disbursed and accounted for. According to
34 C.F.R. § 76.730, records related to grant funds maintained by States and subgrantees should
fully show the amount of funds under the grant or subgrant, how the State or subgrantee used the
Final Report
ED-OIG/A02M0009                                                                         Page 4 of 12

funds, total cost of the project, the share of that cost provided from other sources, and other
records to facilitate an effective audit.

Although Miami-Dade was able to reconcile the Recovery Act Title I and IDEA funds for the
overall grant period, Miami-Dade could not reconcile Recovery Act Title I and IDEA funds for
our audit period. Since Miami-Dade was unable to provide a reconciliation of the accounting
system’s detailed expenditures to the program expenditures reported in CARDS during our audit
period, we were unable to determine whether expenditure reports provided were complete and
accurate. As a result, we could not determine whether the quarterly reporting to the Florida SEA
and ultimately to the Recovery Act website of Miami-Dade’s quarterly expenditures during our
audit period were accurate.

RECOMMENDATIONS

We recommend that the Assistant Secretary for the Office of Elementary and Secondary
Education, in conjunction with the Assistant Secretary for the Office of Special Education and
Rehabilitative Service, require the Florida SEA to require Miami-Dade to:

1.1	   Develop and implement adequate fiscal and management controls to maintain reliable
       financial records, to ensure compliance with applicable laws and regulations, and to
       achieve effective and efficient accounting practices.

Florida SEA and Miami-Dade Comments

The Florida SEA agreed with the factual information provided in the draft report; however,
because the finding identified control weaknesses for Miami-Dade, the Florida SEA requested
that we revise draft Recommendations 1.1 and 1.2 to direct them to Miami-Dade for corrective
actions. The Florida SEA did not address draft Recommendation 1.3. In addition, the Florida
SEA attached a response to our findings from Miami-Dade. The Florida SEA did not state
whether it agreed or disagreed with Miami-Dade’s comments.

Miami-Dade disagreed with the draft finding and did not comment on the draft
recommendations. Miami-Dade agreed it improperly classified $400,482 of transportation costs
to Recovery Act Title I funds as “supplies.” However Miami-Dade noted that the expenditure
was still allowable under the Title I Recovery Act grant.

Miami-Dade stated it provided reconciling items amounting to $2.3 million for Recovery Act
Title I and $1.2 million for Recovery Act IDEA. Miami-Dade stated the amounts resulted from
timing differences between Miami-Dade’s monthly closing dates and when it reports grant
expenditures in CARDS. Miami-Dade stated it provided reconciliations and detailed supporting
documentation of total expenditures recorded in its accounting system for the Recovery Act
Title I and IDEA grants to the Single Audit Reports and to CARDS for the entire grant award
period. Miami-Dade stated that the Florida SEA did not require its LEAs to perform
month-to-month reconciliations. In addition, Miami-Dade disagreed that it was difficult to
provide the month-to-month expenditure data for reconciling the Recovery Act Title I and IDEA
grants as a result of the migration to a new accounting system. Further, Miami-Dade stated that
the report should not reference the “Manual of Internal Fund Accounting” because it does not
address policies for Recovery Act funds.
Final Report
ED-OIG/A02M0009                                                                          Page 5 of 12


Miami-Dade disagreed with our draft finding on its internal control policy to account for
computer assets and requested that we remove it from the report. Miami-Dade stated that it
complied with applicable Florida statutes and administrative code related to recording and
inventorying property. Miami-Dade also stated that the safeguarding of all property is the
responsibility of administrators, that all nonconsumable items purchased with Title I funds are
labeled as Title I property, and that the Title I administration provided the auditors with a listing
of the schools that received the computers.

OIG Response

We considered the comments from the Florida SEA and Miami-Dade. We agreed with the
Florida SEA comments and revised the draft Recommendation so that it is directed to
Miami-Dade.

In response to Miami-Dade’s comments, we revised the draft finding for the improper
classification of transportation expenditures and the reporting of Recovery Act expenditures that
could not be reconciled. Also, we removed the reference to Miami-Dade’s “Manual of Internal
Fund Accounting”, March 17, 2004, and the draft report section that stated that Miami-Dade
could improve its internal control policy to account for computer assets. In addition, we
removed the related draft Recommendations 1.1 and 1.3.

We agree that the misclassified $400,482 Recovery Act Title I expenditure was still allowable
under the grant. However, the finding did not question the allowability of the purchase. As
stated in the finding, Miami-Dade misclassified the $400,482 transportation expense as if it were
for a supply expense in its accounting system. A review of the journal entry approval showed
that a Miami-Dade official reviewed and approved the journal entry. In addition, the comments
section of the journal entry clearly indicated that the expense was for transportation costs. As a
result, we determined that Miami-Dade did not perform due diligence in reviewing and
approving the journal entry document to ensure that Federal funds were properly disbursed and
accounted for, in accordance with 34 C.F.R. § 76.702.

Miami-Dade was unable to provide the reconciliation covering our audit period. We
acknowledged in our finding that Miami-Dade was able to reconcile the grant award in total.
However, without providing reconciliations at least quarterly, we could not determine whether
the Section 1512 (c) reporting to the Florida SEA and ultimately to the Recovery Act website of
Miami-Dade’s quarterly expenditures during our audit period were accurate.
Final Report
ED-OIG/A02M0009                                                                                    Page 6 of 12



                                                      SCOPE AND METHODOLOGY 



One objective of the nationwide audit of final Recovery Act expenditures was to determine
whether selected LEAs (including Miami-Dade covered by this report) obligated and spent final
Recovery Act funding in accordance with applicable Federal requirements. The purpose of this
supplemental report was to address our findings related to internal control weaknesses so that the
Florida SEA develops and implements appropriate corrective action.

Our review covered January 1 through December 31, 2011, and Recovery Act expenditures for
three education-related grants:1 (1) State Fiscal Stabilization Fund, Education Stabilization
Fund, 84.394; (2) Elementary and Secondary Education Act of 1965, Title I, Part A, 84.389; and
(3) Individuals with Disabilities Education Act, Part B, 84.391.

For the findings contained in this report, we interviewed the Florida SEA officials responsible
for administering and overseeing the three Recovery Act grants and reviewed State policies,
procedures, and guidance to gain an understanding of the processes and controls for monitoring
LEAs’ Recovery Act expenditures. At Miami-Dade, we interviewed officials responsible for
administering the Recovery Act grants. We also reviewed district policies and procedures to
gain an understanding of their processes for financial and inventory management and
procurement. In addition, we considered the results and findings of prior Single Audit reports as
well as State monitoring reports on Recovery Act plans and expenditures.

We performed a limited assessment of Miami-Dade’s policies and procedures by judgmentally
selecting samples of nonpersonnel expenditure transactions from July 1 through
December 31, 2011, to determine whether the costs charged to Recovery Act grants complied
with applicable Federal requirements. Using a risk-based approach, we sampled
10 nonpersonnel transactions totaling $3,868,939, from a universe of $7,065,483 for Title I, and
7 nonpersonnel transactions totaling $1,091,463, from a universe of $1,791,974 for IDEA.2

As stated in Finding No. 1, Miami-Dade was able to reconcile the accounting system
expenditures to the program expenditures reported in CARDS from FY 2009 to FY 2012.
Miami-Dade was also able to reconcile the Recovery Act Title I and Recovery Act IDEA
accounting system expenditures to program expenditures reported in CARDS for the month of
June 2011. However, after multiple requests for information regarding the reconciliation,
Miami-Dade did not provide adequate documentation for the reconciliation for the remaining
months of the audit period of January 1, 2011, through December 31, 2011; therefore, Miami-
Dade could not reconcile its accounting system expenditures to the program expenditures
reported in CARDS for our audit period. We conducted personnel and nonpersonnel testing
based on the universe of expenditures provided. Subsequently, Miami-Dade provided year-end
journalized transactions. We did not receive the year-end journalized transactions in time to be

                                                            
1
 We also provide the Catalog of Federal Domestic Assistance number assigned for grant-tracking purposes.
2
 We did not test ESF nonpersonnel expenditures because there were no transactions to test from July 1 through
December 31, 2011.
Final Report
ED-OIG/A02M0009                                                                        Page 7 of 12

included in our sample testing. Therefore, the journal entries were not included in the universe
of expenditures to derive our sample.

Because we judgmentally selected samples of personnel and nonpersonnel transactions, the
results presented in this report cannot be projected to the universe of expenditures for the period
covered by our testing. In addition, there is no assurance that the judgmental sample of
expenditures was representative of the entire universe. Therefore, the audit results cannot be
projected over the personnel and nonpersonnel universe of expenditures.

We relied on computer-processed data contained in the Florida SEA and Miami-Dade accounting
systems for purposes of determining Recovery Act grant awards, revenue, and expenditure
amounts. We reconciled the districts’ Recovery Act grant amounts with the overall amounts in
the Florida SEA’s accounting system. We also reviewed the fiscal years 2009, 2010, and 2011
Single Audit reports to identify findings at the Florida SEA or Miami-Dade related to internal
controls or other matters that might negatively affect data reliability. Based on our assessment,
we determined that the computer-processed data were sufficiently reliable for the purposes of our
review.

We performed fieldwork from April 10, 2012, through April 12, 2012, at the Florida SEA’s
office, located in Tallahassee, Florida, and from April 30, 2012, through May 4, 2012, and
May 21, 2012, through May 24, 2012, at Miami-Dade’s office, located in Miami, Florida. We
held our exit conference with the Florida SEA and Miami-Dade officials on October 15, 2012.

We conducted the audit work related to this supplemental report in accordance with generally
accepted government auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.


                               ADMINISTRATIVE MATTERS



Statements that managerial practices need improvements, as well as other conclusions and
recommendations in this report, represent the opinions of OIG. Determinations of corrective
action to be taken will be made by the appropriate Department of Education officials.

If you have any additional comments or information that you believe may have a bearing on the
resolution of this audit, you should send them directly to the Department action officials listed
below, who will consider them before taking final Departmental action on this audit.

                              Deborah S. Delisle
                              Assistant Secretary
                              Office of Elementary and Secondary Education
                              U.S. Department of Education
                              400 Maryland Avenue S.W., Room 3W315
                              Washington, DC 20202
Final Rep
        port
ED-OIG//A02M0009                                                                           Page 8 of 12


                                Miichael K. Yu udin
                                Accting Assistaant Secretaryy
                                Office
                                 f     of Special Educatioon and Rehabbilitative Serrvices
                                U.SS. Departmeent of Educatation
                                5500 12th Street S.W., Room  m 5107
                                Waashington, DC 20202


It is the policy of the U.S. Departtment of Edu ucation to exxpedite the resolution off audits by
initiating
         g timely actioon on the fin
                                   ndings and reecommendattions containned therein. Therefore,
receipt off your comm ments within 30 days wo ould be appreeciated.

In accorddance with th
                     he Freedom of Informatiion Act (5 U.S.C. §552), reports issuued by OIG are
availablee to memberss of the press and generaal public to tthe extent infformation coontained therrein
is not sub
         bject to exem
                     mptions in th
                                 he Act.




Enclosurre
Final Rep
        port
ED-OIG//A02M0009                                                                                                            Page 9 of 12


                                             En
                                              nclosure: Flo
                                                          orida SEA Comments



        FLORIDA DEPARTMENT OF EDUCATION

         STATE BoARD OF EDUCATION
                                                                                                                       Dr. Tony Bennen
         G.ARY CHARTRANl).      Clrai.r                                                                             Commissioner of Education

         Mtnlbers
         AJ)A G. ARMAS. M.JJ.

         SALLY BRADSHAW

         JOHNA.COWN

         BARBARA S. FEINGOLD

         JOHN R. PADGET

         I(,<TIJLEEN SIIM' I\.0..-N




         February 22, 2013


         Daniel Schultz
         Regional Inspector General for Audit
         U.S. Department of Education
         Office of Inspector General
         Financial Square, 32 Old Slip, 26tb Floor
         New York, NY 10005

         Dear Mr. Schultz:

         The following responses are provided with respect to the draft audit report, "Florida: Final Recovery Act
         Expenditures Supplemental Report," dated January 22,2013 .

         As noted in your January 22, 2013, letter, the findings of this report represent only those fmdings
         generated y field work conducted in fiami-Dade County Public Schools (Miami-Dade) and do not
         represent the entire state. We appreciate the opportunity to · c·o mrnent on the findings · arid
         recommendations as expressed in the draft audit report. Our response is directed primarily to the
         recommendations; however, Miami-Dade has prepared a response specific to the findings relevant to that
         local education agency (LEA). That response is enclosed for your cons:deration. In general, the Florida
         Department of Education (FDOE) agrees with the factual information provided in the report as it relates
         to the situation in Miami-Dade; however, we do have concerns with the approach taken in the
         recommendations.

         In this context, it is important to differentiate between the accounting systems and fiscal and management
         controls in place at the state level and those in place at the local level. These are separate and distinct
         systems. The finding ("Miami-Dade Had Internal Control Weaknesses in Accounting for its Recovery
         Act xpenditures") delineates three separate areas of concern. In each instance, the control weakness
         identified is specific to the circumstances in Miami-Dade and does not result from flaws or weaknesses in
         either the state's accounting system(s) or internal controls. The accounting system(s) and internal controls
         are rigorou ly audited every year by the Florida Auditor General in accordance with OMB Circular A-133.




                                      325 W. GATNBS STREET • TALLAHASSEE, FL 32399-0400 • (850) 245-0505 • www.fldoe.org
Final Rep
        port
ED-OIG//A02M0009                                                                                     Page 10 of 12


         Mr. Daniel Schultz
         February 22,2013
         Page Two


         Unlike the findings, the recommendations contained in this draft report recommend that the "Assistant
         Secretary for the Office of Elementary and Secondary Education, in conjunction with the Assistant
         Secretary for the Office of Special Education and Rehabilitative Services, reqoire the Florida SEA to"
          [emphasis added] take several actions that appear to be directed at the state-level acc.ounting system(s)
         and controls. One example provided is "updating its accounting system with adjusting journal voucher
         entries w eo applicable, io ensure that irs accounting y tem accurately identifies tbe source and use of
         Federal funds." This recommendation could be appropriate in the context of requiring the SEA to work
         with Miami-Dade to ensure that its accounting system accurately identifies the source and use of federal
         funds; but is simply not applicable to the SEA's accounting system which already provides for adjusting
         journal voucher entries. Thus, we respectively request that the recommendation and its sub-sections 1.1
         and 1.2 be revised as follows:

                 We recommend that the Assistant Secretary for the Office of Elementary and Secondary
                 Education, in conjunction with the Assistant Secretary for the Office of Special Education and
                 Rehabilitative Services, require the Florida SEA to:

                 1.1 Require Miami-Dade to make any necessary adjustments to its internal controls including, but
                     not limited to, updating its accounting system with adjusting journal voucher entries when
                     applicable, to ensure that its accounting system accurately identifies the 3ource and use of
                     federal education funds.

                 1.2 Require Miami-Dade to make any necessary adjustments to its fiscal and management
                     controls to ensure the maintenance of reliable financial records and to achieve effective and
                     efficient accoun ting practices, including performing monthly reconciliations.

         Thank yo for your con ideration of these proposed revision . If you need additional information or have
         questions, please contact Martha Asbury, Assistant Deputy Commissioner, Finance and Operations at
         (850) 245-0420 or via email at Martha.Asbury@fldoe.org.




         TB/as

         cc:     Linda Champion, Deputy Commissioner, Finance and Operations
                 Martha Asbury, Assistru1t Deputy Commissioner, Finance and Operations
                 Mike Blackburn, Inspector General
                 David Guido, Chief, Bureau of Contracts, Grants and Procurement
                 Matt Kirkland, Comptroller
                 Alricky Smith, Director, Monitoring and Audit Resolution
Final Rep
        port
ED-OIG//A02M0009                                                                                         Page 11 of 12

                                 Miami-Dade County Public Schools (Miami-Dade)
                     Response to draft audit report "Florida: Final Recovery Act Expenditures
                                  Supplemental Report," dated January 22, 2013
                    Prepared by the U.S. Department of Education -Office of Inspector General

       Audit Period: January 1, 201-1 through December 31, 2011

       In reference to the draft audit report dated January 22, 2013, Miami-Dade respectfully disagrees with the
       finding and various comments throughout the report.

       The reference made on page 1, second paragraph, to internal control weaknesses at Miami-Dade , and the
       label to finding No. 1 on page 2, are inaccurate and without merit. Two of the three ite!'flS in the report are
       complet~ly misrep~esented, and the facts pertinent to the remaining item are not correctly stated either;
       hence, there is no merit to the use of this terminology on the draft report.

       On page 2, the auditorS base their finding on inaccuracies and misstatements. First, the auditors refer to
       the improper dassification of some Title I expenditures by Miami-Dade, v.tlen in actuality there was only
       one instance noted by the auditors. Second, the statement that Miami-Dade could not reconcile the
       Recovery Act Title I and IDEA Grants for the audit period is also a misstatement, since reconciliations for
       both Title I and IDEA for the audit period was provided by Miami-Dade on several occasions. Third , the
       reference to the statement that Miami-Dade did not maintain effective accountability over aff of its assets
       has no merit because Miami-Dade adheres to Section 274 .02, Florida Statutes that specifically addresses
       the threshol.d of $1,000.00 for recording Tangible Personal Property Ow~ed f>y Local Governments.

       Following are specific responses to each one of the items in the draft report:

       MDCPS Improperly Classified $400,482 in Transportation Expenditures as Supplies

        Miami-Dade acknowledges that this was a coding error in a single journal entry, where the District used the
        code for supplies (551 0) instead of purchased services (5330). Both supplies and student transportation
        were allowable expenditures under the Title I ARRA grant, and were approved in M·DCPS's grant
        application . The District fully expended Tille I ARRA furids in accordance with the grant award. The
        miscoding of the $400,482 resulted in eligible expenditures recorded in one category vs. another. This
      . single transaction represents .00026% of the full population of transactions during the audit period for the
        awards under review, and .09% of the total award amount.

      Miami-Dade assigns unique program numbers to record revenues and expenditures. Funds are never
      comingled and salary and non-salary expenditures are charged directly to the unique program number
      therefore accurately identifying the source and applications of Federal Funds.

       Miami-Dade Did Not Reconcile the Recovery Act Title I and IDEA Grants for Our Audit Period

      Miami-Dade does not agree with this statement as it contains several inaccuracies and irrelevant
      references. First, Miami-Dade prepared and provided the auditors a reconciliation of expenditures reported
      in the CARDS system to the General Ledger for the audit period of January 1 , 20 11 through December 31,
      2011 . In these reconciliations Miami-Dade presented to th.e auditors reconciling items amounting to $2.3
      million for Title I and $1 .2 million for IDEA and demonstrated that these ampunts resulted from timing
      differences.

      These timing differences are as a result of Miami-Dade annually published monthly closing dates. Month­
      end closing usually occurs the last Friday of the month , except for certain holidays and the end of the fiscal
      year which is always June 30tn. Miami-Dade reports grant expenditures in the CARDS system by the 201h
      of the month in compliance with the Florida Department of Education requirements. Therefore, there is
      always a timing difference between the CARDS reporting period and the month-end closing in the General
      Ledger. Miami-Dade reports expenditures on a reimbursement basis on CARDS .
Final Rep
        port
ED-OIG//A02M0009                                                                                       Page 12 of 12


       There is no Florida Department of Education requirement to do reconciliations on a month-to-month basis. ·
       Therefore Miami~Dade does not perform month-to-month reconciliations. However, expenditures are
       reported on the 20th of each month in the CARDS system based on the delta of expenditures in the general
       ledger between the current period and. the previous reported period .

       Miami-Dade provided reconciliations of total general ledger expenditures for both Title I and IDEA to the
       Single Audit RepOrts and the CARpS from inception to the end of the grant award with detailed supporting
       documentation. Th~se reco ciliations d~monstrate that Miami-Dade complied with laws, regulations and
       grant agreements.

       The auditor's comments pertaining to Miami-Dade's difficulty in providing data as a result of the migration
       to a new financial system are without merit. As a result of Miami-Dade's implementation of SAP, financial
       information for the programs under review was maintained in both the legacy system and the SAP system.
       The ability to grasp and understand information that was partially recorded in both legacy and SAP for the
       different time periods proved to be a complex task for the audit team.

       Miami-Dade maintains a sound internal control system as demonstrated in previous audits performed by
       independent external auditors as well as the State of Florida Auditor General. Miami-Da.de was recently
       recognized with a top national financial honor and received the "Award for Excellence in Financial
       Managemenr, a prestigious award from the Council of Great City Schools, previously awarded to only two
       school districts in the nation.

       The auditors' reference to Miami-Dade's "Manual of Internal Fund Accounting" in the draft audit report
       points to the audit team's difficulty in grasping the intricacies of Miami-Dade's financial systems, as the
       Manual of Internal Fund Accounting is not germane to grants since it only addresses policies and
       procedures for the School's Internal Funds. Furthermore, no American Recovery and Reinvestment funds
       flowed through the school's Internal Fund. ·

       Miami-Dade Could Improve its Internal Control Policy to Account for Computer Assets       "'

       Miami-Dade does not agree with this statement. Miami-Dade adheres to Florida Statutes 274.02 Record
       and Inventory of certain property, and Florida Administrative Code Rule Chapter 691-73.002 and 691 -
       73.003 that specifically addresses the threshold of $1 ,000.00 for recording Tangible Personal Property
       Owned by Local Governments.

       Miami-Dade's Property Manual delineates the responsibility of administrators for the safeguarding of all
       property, and steps to follow for those assets that because of their value are more subject to theft.
       Additionally, Title I Administration provided the auditors with a listing of the schools that received the
       computers and advised the auditors that all non-consumable items purchased with Title I funds are labeled
       as being Title I Administration property.

       This finding should be eliminated as it is based on inaccurate conclusions and opinions derived by flawed
       auditors' assumptions, specifically, simply because Miami-Dade avails itself of the opportunity to bl,IY in
       large quantities achieving economies of scale and making more efficient use of available funds, individual
       items are still below the threshold established in Florida Statutes 274.02 and are not subject to property for
       inventory purpose. Additionally, the statement by the ·auditors that Miami-Dade should improve its internal
       controls over computers is not supported by applicable laws and regulations. Specifically The Florida
       Stat!Jte and the Florida Administrative Code are actually more stringent than the Federal Regulations 34
       CFR, Sec. 80.3 which defines equipment as items with a value of $5,000.00 or more per unit.