AICPA Special Education Support 2 — Questions and Answers
Question 1: Under IDEA Part B, how must local education agencies (LEAs) track and report federal special education funds to ensure compliance?
- Maintain separate fund accounting and submit annual performance reports to the state (Correct answer)
- Combine IDEA funds with general education funds in a single cost center
- Report only expenditures exceeding $50,000 to the state education agency
- Submit monthly cash flow statements directly to the U.S. Department of Education
Correct answer: Maintain separate fund accounting and submit annual performance reports to the state
LEAs must maintain separate fund accounting for IDEA Part B funds and submit annual performance reports to the state education agency as required by federal regulations.
Question 2: Which cost allocation method is most appropriate when a special education teacher provides services to students across multiple federal programs?
- Direct cost identification based on time-and-effort records (Correct answer)
- Allocate costs equally across all programs regardless of service time
- Charge all costs to the largest grant program
- Use prior-year actual costs as the sole basis for allocation
Correct answer: Direct cost identification based on time-and-effort records
Time-and-effort records support direct cost identification, which is required by federal Uniform Guidance (2 CFR Part 200) when employees work on multiple federal awards.
Question 3: A district receives a $500,000 IDEA Part B grant. The CFO wants to use $75,000 for general administrative overhead. What must be established first?
- An indirect cost rate approved by the cognizant federal agency (Correct answer)
- Board approval for the administrative transfer
- A separate bank account for overhead charges
- A written waiver from the state education department
Correct answer: An indirect cost rate approved by the cognizant federal agency
Charging indirect costs to a federal grant requires a federally approved indirect cost rate or a cost allocation plan negotiated with the cognizant agency.
Question 4: What is the 'maintenance of effort' (MOE) requirement as it applies to IDEA funding for a school district?
- The district must spend at least as much from local funds on special education as it did in the prior fiscal year (Correct answer)
- The district must maintain the same number of special education staff as in the prior year
- The district must keep special education facilities at the same condition as the prior year
- The district must spend federal IDEA funds within the same fiscal year they are received
Correct answer: The district must spend at least as much from local funds on special education as it did in the prior fiscal year
Maintenance of effort requires that LEAs not reduce local or state spending on special education below the prior year's level, ensuring federal funds supplement rather than supplant existing expenditures.
Question 5: During a Single Audit of a school district, the auditor identifies that IDEA funds were used to pay for general education textbooks. This is an example of:
- An unallowable cost that represents a material noncompliance finding (Correct answer)
- An allowable cost if prior written approval was obtained from the state
- A permissible blending of funds under the Every Student Succeeds Act
- A minor procedural error that does not require reporting
Correct answer: An unallowable cost that represents a material noncompliance finding
Using IDEA funds for general education materials that do not benefit students with disabilities is an unallowable cost and constitutes material noncompliance under the Single Audit Act.
Question 6: A special education coordinator submits expenses for an out-of-state professional development conference. Under Uniform Guidance, which condition makes this cost allowable?
- The travel is necessary, reasonable, and consistently applied per the entity's written travel policy (Correct answer)
- The conference is hosted by a national education association
- The trip is approved by the school board in a public meeting
- The total travel cost is below the program's single purchase threshold
Correct answer: The travel is necessary, reasonable, and consistently applied per the entity's written travel policy
Under 2 CFR Part 200, travel costs are allowable when they are necessary, reasonable, and conform to the entity's consistently applied written travel policy.
Question 7: Which financial statement presentation best reflects a not-for-profit school district's restricted IDEA grant funds under GASB standards?
- As a restricted fund balance in the governmental fund financial statements (Correct answer)
- As deferred revenue in the government-wide statement of net position until spent
- As unrestricted net assets since the grant has been awarded
- As a long-term liability until performance obligations are met
Correct answer: As a restricted fund balance in the governmental fund financial statements
Under GASB standards, unspent restricted grant revenues are presented as restricted fund balance in the governmental fund balance sheet until the qualifying expenditures occur.
AICPA Special Education Support 2
Under IDEA Part B, how must local education agencies (LEAs) track and report federal special education funds to ensure compliance?