FINDING 2023-003
Subject: Child Nutrition Cluster - Eligibility
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Number and Year (or Other Identifying Number): FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals.
Any child enrolled in a participating school who meets the applicable program's definition of "child,"
may receive meals under the applicable program. In the case of the National School Lunch Program and
School Breakfast Program, children belonging to households meeting nationwide income eligibility
requirements may receive meals at no charge or at a reduced price. Children who have been determined
ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their
meals. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster
program may be established by the submission of an annual application or statement which furnishes such
information as family income and family size. Local educational agencies, institutions, and sponsors then
determine eligibility by comparing the data reported by the child's household to published income eligibility
guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility
determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start
Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may
furnish documentation of its participation in one of these programs; or the school, institution, or sponsor
may obtain the information directly from the state or local agency that administers these programs. Certain
foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and
breakfasts. Direct certified households do not need to complete an application.
The Food Service Director was responsible for generating and reviewing the direct certification
report. The Food Service Director downloaded the direct certification report from the Indiana Department
of Education in July and then bi-monthly thereafter in fiscal year 2022-2023. The July report was provided
to the Information Technology (IT) department to upload into the School Corporation's software system;
whereas the bi-monthly reports were sent to the IT with a list of students to be added. Students were not
removed during the year. There was no review or approval process over the initial upload or any additional
uploads of direct certifications completed by the IT. In addition, there was no review or approval of the
direct certification data provided by the Food Service Director to the IT Department to ensure the student's
information added during the year is complete and accurate.
A sample of 40 students receiving free or reduced-priced lunches were selected for testing. Of the
40 students tested, the School Corporation could not provide documentation supporting the eligibility of the
student for 10 students. Of the 30 remaining students, the School Corporation could not provide documentation
that 1 student's benefits were calculated properly. Due to the lack of supporting documentation,
we were unable to determine if student's receiving free and reduced-price meals were eligible to receive a
free- or reduced-price meal.
In addition, there was no documented internal control to ensure that the eligibility parameters
entered into the School Corporation's computer software system were correct. Eligibility parameters were
entered into the system by one employee without an oversight or review process to verify the information
entered was accurate.
The lack of internal controls and noncompliance was isolated to fiscal year 2022-2023.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for Federal awards that are renewed quarterly
or annually, from the date of the submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
7 CFR 245.6(c)(4) states:
"Calculating income. The local educational agency must use the income information provided
by the household on the application to calculate the household's total current income. When a
household submits an application containing complete documentation, as defined in § 245.2
and the household's total current income is at or below the eligibility limits specified in the
Income Eligibility Guidelines as defined in § 245.2, the children in that household must be
approved for free or reduced price benefits, as applicable."
7 CFR 245.6(e) states:
"Recordkeeping. The local educational agency must maintain documentation substantiating
eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain,
except that if audit findings have not been resolved, the documentation must be maintained as
long as required for resolution of the issues raised by the audit."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. Policies reflect
the School Corporation's management statements of what should be done to effect internal controls, and
procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, student eligibility for free- or reduced-price meals could not be determined.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure student eligibility for free or reduced price
meals is accurately determined and that all documentation is retained.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003
Subject: Child Nutrition Cluster - Eligibility
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Number and Year (or Other Identifying Number): FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals.
Any child enrolled in a participating school who meets the applicable program's definition of "child,"
may receive meals under the applicable program. In the case of the National School Lunch Program and
School Breakfast Program, children belonging to households meeting nationwide income eligibility
requirements may receive meals at no charge or at a reduced price. Children who have been determined
ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their
meals. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster
program may be established by the submission of an annual application or statement which furnishes such
information as family income and family size. Local educational agencies, institutions, and sponsors then
determine eligibility by comparing the data reported by the child's household to published income eligibility
guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility
determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start
Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may
furnish documentation of its participation in one of these programs; or the school, institution, or sponsor
may obtain the information directly from the state or local agency that administers these programs. Certain
foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and
breakfasts. Direct certified households do not need to complete an application.
The Food Service Director was responsible for generating and reviewing the direct certification
report. The Food Service Director downloaded the direct certification report from the Indiana Department
of Education in July and then bi-monthly thereafter in fiscal year 2022-2023. The July report was provided
to the Information Technology (IT) department to upload into the School Corporation's software system;
whereas the bi-monthly reports were sent to the IT with a list of students to be added. Students were not
removed during the year. There was no review or approval process over the initial upload or any additional
uploads of direct certifications completed by the IT. In addition, there was no review or approval of the
direct certification data provided by the Food Service Director to the IT Department to ensure the student's
information added during the year is complete and accurate.
A sample of 40 students receiving free or reduced-priced lunches were selected for testing. Of the
40 students tested, the School Corporation could not provide documentation supporting the eligibility of the
student for 10 students. Of the 30 remaining students, the School Corporation could not provide documentation
that 1 student's benefits were calculated properly. Due to the lack of supporting documentation,
we were unable to determine if student's receiving free and reduced-price meals were eligible to receive a
free- or reduced-price meal.
In addition, there was no documented internal control to ensure that the eligibility parameters
entered into the School Corporation's computer software system were correct. Eligibility parameters were
entered into the system by one employee without an oversight or review process to verify the information
entered was accurate.
The lack of internal controls and noncompliance was isolated to fiscal year 2022-2023.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for Federal awards that are renewed quarterly
or annually, from the date of the submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
7 CFR 245.6(c)(4) states:
"Calculating income. The local educational agency must use the income information provided
by the household on the application to calculate the household's total current income. When a
household submits an application containing complete documentation, as defined in § 245.2
and the household's total current income is at or below the eligibility limits specified in the
Income Eligibility Guidelines as defined in § 245.2, the children in that household must be
approved for free or reduced price benefits, as applicable."
7 CFR 245.6(e) states:
"Recordkeeping. The local educational agency must maintain documentation substantiating
eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain,
except that if audit findings have not been resolved, the documentation must be maintained as
long as required for resolution of the issues raised by the audit."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. Policies reflect
the School Corporation's management statements of what should be done to effect internal controls, and
procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, student eligibility for free- or reduced-price meals could not be determined.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure student eligibility for free or reduced price
meals is accurately determined and that all documentation is retained.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003
Subject: Child Nutrition Cluster - Eligibility
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Number and Year (or Other Identifying Number): FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals.
Any child enrolled in a participating school who meets the applicable program's definition of "child,"
may receive meals under the applicable program. In the case of the National School Lunch Program and
School Breakfast Program, children belonging to households meeting nationwide income eligibility
requirements may receive meals at no charge or at a reduced price. Children who have been determined
ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their
meals. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster
program may be established by the submission of an annual application or statement which furnishes such
information as family income and family size. Local educational agencies, institutions, and sponsors then
determine eligibility by comparing the data reported by the child's household to published income eligibility
guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility
determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start
Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may
furnish documentation of its participation in one of these programs; or the school, institution, or sponsor
may obtain the information directly from the state or local agency that administers these programs. Certain
foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and
breakfasts. Direct certified households do not need to complete an application.
The Food Service Director was responsible for generating and reviewing the direct certification
report. The Food Service Director downloaded the direct certification report from the Indiana Department
of Education in July and then bi-monthly thereafter in fiscal year 2022-2023. The July report was provided
to the Information Technology (IT) department to upload into the School Corporation's software system;
whereas the bi-monthly reports were sent to the IT with a list of students to be added. Students were not
removed during the year. There was no review or approval process over the initial upload or any additional
uploads of direct certifications completed by the IT. In addition, there was no review or approval of the
direct certification data provided by the Food Service Director to the IT Department to ensure the student's
information added during the year is complete and accurate.
A sample of 40 students receiving free or reduced-priced lunches were selected for testing. Of the
40 students tested, the School Corporation could not provide documentation supporting the eligibility of the
student for 10 students. Of the 30 remaining students, the School Corporation could not provide documentation
that 1 student's benefits were calculated properly. Due to the lack of supporting documentation,
we were unable to determine if student's receiving free and reduced-price meals were eligible to receive a
free- or reduced-price meal.
In addition, there was no documented internal control to ensure that the eligibility parameters
entered into the School Corporation's computer software system were correct. Eligibility parameters were
entered into the system by one employee without an oversight or review process to verify the information
entered was accurate.
The lack of internal controls and noncompliance was isolated to fiscal year 2022-2023.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for Federal awards that are renewed quarterly
or annually, from the date of the submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
7 CFR 245.6(c)(4) states:
"Calculating income. The local educational agency must use the income information provided
by the household on the application to calculate the household's total current income. When a
household submits an application containing complete documentation, as defined in § 245.2
and the household's total current income is at or below the eligibility limits specified in the
Income Eligibility Guidelines as defined in § 245.2, the children in that household must be
approved for free or reduced price benefits, as applicable."
7 CFR 245.6(e) states:
"Recordkeeping. The local educational agency must maintain documentation substantiating
eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain,
except that if audit findings have not been resolved, the documentation must be maintained as
long as required for resolution of the issues raised by the audit."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. Policies reflect
the School Corporation's management statements of what should be done to effect internal controls, and
procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, student eligibility for free- or reduced-price meals could not be determined.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure student eligibility for free or reduced price
meals is accurately determined and that all documentation is retained.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003
Subject: Child Nutrition Cluster - Eligibility
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Number and Year (or Other Identifying Number): FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals.
Any child enrolled in a participating school who meets the applicable program's definition of "child,"
may receive meals under the applicable program. In the case of the National School Lunch Program and
School Breakfast Program, children belonging to households meeting nationwide income eligibility
requirements may receive meals at no charge or at a reduced price. Children who have been determined
ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their
meals. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster
program may be established by the submission of an annual application or statement which furnishes such
information as family income and family size. Local educational agencies, institutions, and sponsors then
determine eligibility by comparing the data reported by the child's household to published income eligibility
guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility
determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start
Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may
furnish documentation of its participation in one of these programs; or the school, institution, or sponsor
may obtain the information directly from the state or local agency that administers these programs. Certain
foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and
breakfasts. Direct certified households do not need to complete an application.
The Food Service Director was responsible for generating and reviewing the direct certification
report. The Food Service Director downloaded the direct certification report from the Indiana Department
of Education in July and then bi-monthly thereafter in fiscal year 2022-2023. The July report was provided
to the Information Technology (IT) department to upload into the School Corporation's software system;
whereas the bi-monthly reports were sent to the IT with a list of students to be added. Students were not
removed during the year. There was no review or approval process over the initial upload or any additional
uploads of direct certifications completed by the IT. In addition, there was no review or approval of the
direct certification data provided by the Food Service Director to the IT Department to ensure the student's
information added during the year is complete and accurate.
A sample of 40 students receiving free or reduced-priced lunches were selected for testing. Of the
40 students tested, the School Corporation could not provide documentation supporting the eligibility of the
student for 10 students. Of the 30 remaining students, the School Corporation could not provide documentation
that 1 student's benefits were calculated properly. Due to the lack of supporting documentation,
we were unable to determine if student's receiving free and reduced-price meals were eligible to receive a
free- or reduced-price meal.
In addition, there was no documented internal control to ensure that the eligibility parameters
entered into the School Corporation's computer software system were correct. Eligibility parameters were
entered into the system by one employee without an oversight or review process to verify the information
entered was accurate.
The lack of internal controls and noncompliance was isolated to fiscal year 2022-2023.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for Federal awards that are renewed quarterly
or annually, from the date of the submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
7 CFR 245.6(c)(4) states:
"Calculating income. The local educational agency must use the income information provided
by the household on the application to calculate the household's total current income. When a
household submits an application containing complete documentation, as defined in § 245.2
and the household's total current income is at or below the eligibility limits specified in the
Income Eligibility Guidelines as defined in § 245.2, the children in that household must be
approved for free or reduced price benefits, as applicable."
7 CFR 245.6(e) states:
"Recordkeeping. The local educational agency must maintain documentation substantiating
eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain,
except that if audit findings have not been resolved, the documentation must be maintained as
long as required for resolution of the issues raised by the audit."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. Policies reflect
the School Corporation's management statements of what should be done to effect internal controls, and
procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, student eligibility for free- or reduced-price meals could not be determined.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure student eligibility for free or reduced price
meals is accurately determined and that all documentation is retained.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the purchase of goods and services that fell within the
small purchase threshold or were considered covered transactions.
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement
for property or services does not exceed the simplified acquisition threshold, which is set at
$250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana
Code has set a more restrictive threshold of $150,000, informal procurement methods are
permitted when the value of the procurement does not exceed $150,000. This informal process
allows for methods other than the formal bid process. The informal process is divided between
two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or
under, and small purchase procedures for those purchases above the micro-purchase
threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded
without soliciting competitive price rate quotations. If small purchase procedures are used,
then price or rate quotations must be obtained from an adequate number of qualified sources.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that proper procurement procedures for small
purchases were followed. A population of eight small purchase vendors was identified. All
eight were selected for testing. For all eight small purchases, totaling $180,015, the School
Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement,
which must include the reason for the procurement method used, was not available
for audit.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusions, collecting a certification from that vendor, or adding a clause or condition to the
covered transaction with that vendor.
The School Corporation had not designed or implemented internal controls, which would
consist of policies and procedures, to ensure that vendors were not suspended or debarred
prior to entering into a covered transaction. One covered transaction that equaled or exceeded
$25,000 was identified and selected for testing. Payments to the vendor, totaling $81,295,
were made without verifying if the vendor was suspended, debarred or otherwise excluded
from participation in federal awards.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use document procurement procedures, consistent with
the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(2) Small purchases –
(i) Small purchase procedures. The acquisition of property or services, the aggregate
dollar amount of which is higher than the micro-purchase threshold but does not
exceed the simplified acquisition threshold. If small purchase procedures are used,
price or rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, price or rate quotes were not obtained for small purchases and vendors to
whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or
otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal controls
and develop policies and procedures to ensure rate or price quotes are obtained for small purchases
and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise
excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005
Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Reporting, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit report regarding Special Tests and Provisions -
Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to reimbursement requests and verification of free and
reduced price applications.
Reporting
The School Corporation had not designed or implemented effective internal controls to ensure
that reimbursement requests were accurately submitted. The reimbursement requests were
prepared by one employee based on meals served without evidence of an oversight or review
process to ensure they were accurate.
Special Tests and Provisions - Verification of Free and Reduced Price
Applications (NSLP) (Applies to National School Lunch Program only)
The School Corporation had not designed or implemented effective internal controls to ensure
the verification of free and reduced price applications were accurately completed. One
employee selected and verified the required sample of approved free and reduced price applications
without an oversight or review process.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed and implemented by management of the
School Corporation, which would include segregation of key functions. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the School Corporation's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
A property record or capital asset listing which would include a description of the property, a serial
number or other identification number, the source of funding for the property (including the federal award
identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of
federal participation in the project costs for the federal award under which the property was acquired, the
location, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the use and condition of the
property.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property
(including the FAIN), who holds title, the acquisition date, cost of the property,
percentage of Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.