Audit 344100

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: PPHF Geriatric Education Centers - Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program: PPHF Geriatric Education Centers Assistance Listings Number: 93.969 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Other Matters Condition and Context The University expended $831,232 in PPHF Geriatric Education Centers funds during the audit period. Of that amount, $309,264 was passed through to three subrecipients. As a pass-through entity, the University was required to identify the award and applicable requirements and monitor the subrecipient. Procedures to monitor its subrecipients included the following:  Reviewing financial and programmatic reports as required by the University.  Following up and ensuring the subrecipient takes timely and appropriate actions on all deficiencies pertaining to the federal award provided to the subrecipient detected through audits, on-site reviews, and other means.  Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient. INDIANA STATE BOARD OF ACCOUNTS 17 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two of the three subrecipients expended more than $750,000 in federal awards in fiscal year 2023, thus subjecting each to a Single Audit as required by the Uniform Guidance. As such, both subrecipients were required to submit a Single Audit report to the Federal Audit Clearinghouse (FAC) by March 31, 2024. The University should have expected that the two subrecipients would receive a Single Audit report as both subrecipients were subject to a Single Audit for multiple years leading up to 2023. However, the University did not obtain a copy of either subrecipient's 2023 Single Audit report. Obtaining and reviewing Single Audit reports of subrecipients is a required component of conducting proper monitoring of subrecipients. The lack of proper monitoring would not have allowed the University to follow up and ensure that the subrecipients took timely and appropriate action on all deficiencies pertaining to the federal awards passed through to the subrecipients from the University. In addition, it would not have allowed for the University to issue a management decision for audit findings pertaining to the federal award provided to the subrecipient within six months of acceptance by the FAC. The lack of effective internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to two of the University's three subrecipients during 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 200.332 states in part: "All pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: . . . (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.521(d) states in part: ". . . The federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The University's management had not designed or implemented a system of internal controls to ensure that subrecipient audit reports were received and reviewed. 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, subrecipients to whom payments were made were not adequately monitored. The failure to establish a sufficient system of internal controls allowed noncompliance with the grant agreements and the Subrecipient Monitoring compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the University's management establish a system of internal controls to ensure that subrecipient audit reports are received and reviewed, when required, to ensure that subrecipients are properly monitored in accordance with the federal regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: Student Financial Assistance Cluster - Special Tests and Provisions - Verification Federal Agency: U.S. Department of Education Federal Programs: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Pell Grant Program, Federal Direct Student Loans Assistance Listings Numbers: 84.007, 84.033, 84.063, 84.268 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Special Tests and Provisions - Verification Audit Finding: Material Weakness Condition and Context As a recipient of the Title IV funding from the Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study Program (FWS), Federal Pell Grant Program (Pell), and Federal Direct Student Loans program (direct loan), the University was responsible for designing and implementing effective internal controls. The University had developed a system of internal controls over these federal programs that included policies and procedures related to the Special Tests and Provisions - Verification compliance requirement. The University had designed a key internal control that one employee would perform the required verifications, and a second employee would then review a sample of those verifications. However, the internal control was not properly implemented or operating effectively as the University had not established proper segregation of duties. The same employee responsible for performing the verifications was also responsible for reviewing those verifications during the audit period without an independent oversight, review, or approval process involving a second employee. The lack of effective 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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The system of internal controls, as designed by the University's management, was not properly implemented due to a staffing shortage in the Office of Student Financial Assistance. As a result, the same employee performed and reviewed the required verifications. INDIANA STATE BOARD OF ACCOUNTS 16 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 University's management properly implement the system of internal controls as designed to ensure compliance with the Special Tests and Provisions - Verification compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: PPHF Geriatric Education Centers - Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program: PPHF Geriatric Education Centers Assistance Listings Number: 93.969 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Other Matters Condition and Context The University expended $831,232 in PPHF Geriatric Education Centers funds during the audit period. Of that amount, $309,264 was passed through to three subrecipients. As a pass-through entity, the University was required to identify the award and applicable requirements and monitor the subrecipient. Procedures to monitor its subrecipients included the following:  Reviewing financial and programmatic reports as required by the University.  Following up and ensuring the subrecipient takes timely and appropriate actions on all deficiencies pertaining to the federal award provided to the subrecipient detected through audits, on-site reviews, and other means.  Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient. INDIANA STATE BOARD OF ACCOUNTS 17 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two of the three subrecipients expended more than $750,000 in federal awards in fiscal year 2023, thus subjecting each to a Single Audit as required by the Uniform Guidance. As such, both subrecipients were required to submit a Single Audit report to the Federal Audit Clearinghouse (FAC) by March 31, 2024. The University should have expected that the two subrecipients would receive a Single Audit report as both subrecipients were subject to a Single Audit for multiple years leading up to 2023. However, the University did not obtain a copy of either subrecipient's 2023 Single Audit report. Obtaining and reviewing Single Audit reports of subrecipients is a required component of conducting proper monitoring of subrecipients. The lack of proper monitoring would not have allowed the University to follow up and ensure that the subrecipients took timely and appropriate action on all deficiencies pertaining to the federal awards passed through to the subrecipients from the University. In addition, it would not have allowed for the University to issue a management decision for audit findings pertaining to the federal award provided to the subrecipient within six months of acceptance by the FAC. The lack of effective internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to two of the University's three subrecipients during 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 200.332 states in part: "All pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: . . . (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.521(d) states in part: ". . . The federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The University's management had not designed or implemented a system of internal controls to ensure that subrecipient audit reports were received and reviewed. 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, subrecipients to whom payments were made were not adequately monitored. The failure to establish a sufficient system of internal controls allowed noncompliance with the grant agreements and the Subrecipient Monitoring compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the University's management establish a system of internal controls to ensure that subrecipient audit reports are received and reviewed, when required, to ensure that subrecipients are properly monitored in accordance with the federal regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.