Monitoring and Internal Controls
Describe how the SEA will implement appropriate fiscal monitoring of and internal controls for the ARP ESSER funds (e.g., by updating the SEA's plan for monitoring funds and internal controls under the CARES and CRRSA Acts; addressing potential sources of waste, fraud, and abuse; conducting random audits; or other tools). In this response, please describe the SEA's current capacity to monitor ARP ESSER; steps, if needed, to increase capacity; and any foreseeable gaps in capacity, including how the SEA will provide its LEAs with technical assistance in the anticipated areas of greatest need.
PDE will follow established internal controls and monitoring procedures in accordance with the Uniform Guidance, 2 CFR Part 200, and Federal Relief Funding requirements in accordance with the CARES Act, CRRSA, and the ARP Act.
Application Submission and Payment: PDE is using its eGrants system to collect all LEA required records under CARES, CRRSA, and ARP. The eGrants system is designed to allow licensed educational agencies and certain community-based programs within the commonwealth access to PDE grants. Through this system, the LEA can submit applications for funding, e-sign contracting documents, upload back-up documentation, submit program quarterly reports, and file final expenditure reports.
The eGrants system makes it possible for records pertaining to the ARP ESSER award under 2 C.F.R. § 200.334 and 34 C.F.R. § 76.730, including financial records related to the use of grant funds, to be retained separately from other grant funds, including funds that an SEA or LEA receives under the CARES Act and CRRSA.
Only an eGrants authorized user that is associated with an Agency or LEA that has an active Program/Project and the role of Agency Project Writer can upload documents to the project. The SEA staff then reviews and investigates the documents. Projects advance if the documents are complete and correct.
The grant process is as follows:
- PDE announces and releases grant application in eGrants;
- LEA completes application in eGrants;
- Prior to submission, LEA's board-approved designee signs off electronically on application (typically Superintendent or Chief Executive Officer);
- The program area reviews the grant application and returns it for corrections (if necessary). Otherwise, an approvable application goes to the division chief for electronic signature;
- Chief Counsel reviews and approves application for form and legality;
- The Office of Comptroller Operations completes the review of the application and fully executes the contract; and
- LEA receives its first monthly payment.
Payments for grants processed through eGrants are made monthly through PDE's Financial Accounting Information (FAI) System. The FAI system interfaces with PDE's financial accounting records system, SAP.
Monthly payments to LEAs are continuous and automatic based on quarterly financial reports collected through the FAI System. Through quarterly financial reporting, LEAs are required to report the amount of cash received, expended, and on hand. If the amount of cash-on-hand reported is determined to be too high, or the quarterly report is not submitted, monthly payments will be suspended until the next quarterly report is due.
Maintenance of Records: As part of the agreement and application for ARP ESSER Funding, LEAs agree and attest to cooperate with any examination of records with respect to such funds by making records available for inspection, production, and examination, and making authorized individuals available for interview and examination, upon the request of PDE and/or its Inspector General or any other federal agency, commission, or department in the lawful exercise of its jurisdiction and authority.
PDE maintains and retains types of records based on commonwealth Management Directive 210.5, Manuals 210.7 and 210.8, and its Agency Records Management Program. Contracts, applications, and quarterly program reports are stored in the eGrants System for six years after the term of the contract ends. PDE is also required to publicly release fully executed contracts via the e-Contract portal developed by the Pennsylvania Treasury Department.
SEA Monitoring: PDE will monitor funds and award payments through the FAI and the SAP Accounting System. PDE uses a system of sub fund and Internal Order Number tracking to identify and separately track each set-aside.
Procurement contracts, grants, and other documents supporting expenditures within PDE work through a tracking system with multiple levels of review to ensure the expenditures are allowable, reasonable, allocable, and necessary.
These funds will be subject to the annual commonwealth Single Audit conducted in conjunction with the Pennsylvania Auditor General's Office. In accordance with 2 CFR 200, Subpart F, PDE has established a process, led by PDE's Audit Coordinator, to review LEA Single Audit Reports that includes follow-up with the LEA on audit findings, collection of corrective action plans, and recovery of questioned costs.
LEA Monitoring and Risk Assessment: Monitoring to ensure compliance with existing federal guidelines typically occurs from January through May annually. LEAs complete an online self-assessment available within Pennsylvania's federal monitoring online system, Fedmonitor. All LEAs receive a unique username and password to access Fedmonitor.
LEAs are monitored cyclically or as needed based on risk. Beginning in 2021–22, all LEAs will be placed on a four-year monitoring cycle and will be monitored once between 2021–22 and 2024–25. Additionally, all LEAs are annually assessed for risk to prevent fraud, waste, and abuse. Those deemed to be medium or high risk on the LEA Risk Assessment will be monitored every year. Points range from 1–20, and most LEAs fall in the low-risk category, with a score of nine and under. Annually, the categories and points are evaluated to determine compliance with Uniform Grant Guidance.
LEAs are assigned points for the following factors to determine risk:
- Failure to submit federal grant applications by established deadlines;
- Failure to submit reports/plans by established deadlines which include:
- Pennsylvania Information Management System data collection;
- Performance Goal Output Reports; and
- Schoolwide plan(s);
- Previous year monitor/audit findings;
- Excessive federal program carryover Title I allocation. All LEAs receive at least one point for allocation; the higher the allocation, the higher the points;
- New entity;
- New federal program coordinators, business managers, and/or superintendent/chief executive officer; and
- New accounting software at the LEA.
SEA Internal Controls and Risk Mitigation
Current Practices. PDE's Compliance Office manages its internal control and risk management policies. In 2020, this office conducted a baseline enterprise risk management assessment in cooperation with a department-wide committee. This assessment allowed PDE to gain a high level and holistic view of risks and internal control weaknesses that have the potential to impact PDE.
The committee's activities included:
- Conducting enterprise risk management (ERM) surveys and strengths, weaknesses, opportunities, threats (SWOT) analyses;
- Utilizing ERM tools to determine and rank risks;
- Identifying risks to be reduced; and
- Developing or identifying internal controls to address them.
PDE has an internal practice that encourages employees to report deficiencies through the chain of command. If the deficiency involves the employee's direct supervisor, the employee may report to the next level or report the deficiency to the PDE Human Resources Liaison. This practice is communicated to new employees during PDE's onboarding process.
PDE has also undergone a process to implement standards for internal controls issued by the U.S. Government Accountability Office.
Future Practices. PDE is in the process of hiring a contractor to perform a thorough assessment of its current internal control environment and risk mitigations. The statement of work for the project requires a report that identifies areas where PDE has internal control gaps, weak policies, and ineffective processes. It will also ask the contractor to evaluate PDE's compliance with Uniform Guidance. The report will provide recommendations for improvement based on best practices and approaches in other states.
Using the administrative set-aside allocated in the 2021–22 enacted Pennsylvania state budget, PDE will use the report from the contractor to inform the executive team on what areas present the greatest risks and hire personnel to increase support for mitigating those risks. Potential hiring may include:
- Additional personnel in the Division of Federal Programs (responsible for at least 90 percent of the ARP ESSER Funds); and
- Additional personnel in the Office of Administration to monitor internal controls, review grant contracts for compliance with state and federal requirements, monitor expenditures, and assist with reporting requirements.
In addition, PDE will create a Coronavirus Emergency Response Monitoring Center to coordinate PDE's response to inquiries, federal reporting requirements, and to ensure that PDE is following all federal rules and regulations, including 2 CFR 200.