Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Education Stabilization Fund – Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D
Federal Award Numbers: S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness
Criteria: 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, a serial number
or other identification number, the source of funding for the property (including the FAIN), who
holds title, the acquisition date, and 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 sale price of the property.
(2) A physical inventory of the property must be taken and the results reconciled with the property
records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss, damage,
or theft of the property. Any loss, damage, or theft must be investigated.
(4) Adequate maintenance procedures must be developed to keep the property in good condition.
. . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the Equipment and Real Property
Management Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with the compliance requirements listed above.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation expended $94,444 on equipment/real property acquisitions during the
period under audit which was charged to the ESSER II (84.425D) grant award. While the School
Corporation did maintain a capital asset listing for the audit period, controls in place were not operating in
an effective manner to properly track federal equipment acquisitions. The School Corporation failed to
include the equipment/real property purchases on the capital asset listing. The School Corporation had
also not performed a complete physical inventory of capital assets during the audit period as required by
federal and state regulations.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommend the School Corporation maintain and update the capital asset listing
at least annually to include all equipment and real property acquisitions and review for potential capital
asset dispositions. The capital asset listing should include all required information to track capital asset
acquisitions purchased with federal funds. We also recommend the School Corporation conduct a physical
inventory of capital assets at least every two years and maintain documentation to support the process
undertaken to comply with federal and state regulations.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listing Number: 84.425D
Federal Award Numbers: S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements
Audit Findings: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
29 CFR 5.5 states in part:
a. The Agency head shall cause or require the contracting officer to insert in full in any contract in excess
of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and
decorating, of a public building or public work, or building or work financed in whole or in part from Federal
funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of
any contract of a Federal agency to make a loan, grant or annual contribution (except where a different
meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts
listed in §5.1, the following clauses…
(1) Minimum wages.
(i) All laborers and mechanics employed or working upon the site of the work (or under the United States
Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project),
will be paid unconditionally and not less often than once a week, and without subsequent deduction or
rebate on any account (except such payroll deductions as are permitted by regulations issued by the
Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe
benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those
contained in the wage determination of the Secretary of Labor which is attached hereto and made a part
hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and
such laborers and mechanics…
(3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy
of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract,
but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or
owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part:
In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by
the non-Federal entity under the Federal award must contain provisions covering the following, as
applicable. . . .
(D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation,
all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a
provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented
by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts
Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must
be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified
in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay
wages not less than once a week.. . .”
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions
– Wage Rate Requirements compliance requirements. The School Corporation did not include Davis Bacon
wage rate requirements in its contract with vendor which includes labor installation. The School Corporation
did not obtain the weekly payroll reports certifications from vendor installing equipment.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with the compliance requirements listed above.
Effect: The failure to design and implement an effective internal control system enabled material
noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and
Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal
funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation had one project during the audit period which included labor installation
costs which were charged to the ESSER II (84.425D) grant award. For the vendor selected for testing, the
School Corporation did not include federal wage rate requirement clauses in the contract with the vendor
and did not have an internal control designed to collect the weekly payroll reports certifications from vendors
and its subcontractors, as applicable, to comply with Davis Bacon wage rate requirements. The amount
disbursed for the project during the audit period which includes material and labor totaled $94,444.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommend the School Corporation include Davis-Bacon wage requirements in
vendor contracts which are federally funded and implement a formal process to ensure the required weekly
payroll report certifications are collected and reviewed by management to ensure compliance with the
federal wage rate requirements.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the eligibility compliance
requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with eligibility requirements.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation’s internal controls over eligibility included an annual approval of the food
service software’s eligibility guidelines and also a documented review of individual meal applications by
Food Service Department staff. During testing of eligibility, we noted 7 applications, out of 60 total students
tested for the audit period, that did not have a timely, documented review by Food Service Department
staff. The lack of review was isolated to fiscal year 2023. Additionally, there was no documented annual
review by School Corporation personnel of the fiscal year 2024 income eligibility guidelines used by the
food service software.
Identification as a repeat finding, if applicable: No. Recommendation: We recommend School Corporation management review internal controls over
eligibility and ensure a documented review occurs annually of income eligibility guidelines used by the food
service software. We also recommend management document their review of applications entered into the
system and ensure applications are maintained to support eligibility determinations made.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Education Stabilization Fund – Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D
Federal Award Numbers: S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness
Criteria: 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, a serial number
or other identification number, the source of funding for the property (including the FAIN), who
holds title, the acquisition date, and 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 sale price of the property.
(2) A physical inventory of the property must be taken and the results reconciled with the property
records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss, damage,
or theft of the property. Any loss, damage, or theft must be investigated.
(4) Adequate maintenance procedures must be developed to keep the property in good condition.
. . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the Equipment and Real Property
Management Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with the compliance requirements listed above.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation expended $94,444 on equipment/real property acquisitions during the
period under audit which was charged to the ESSER II (84.425D) grant award. While the School
Corporation did maintain a capital asset listing for the audit period, controls in place were not operating in
an effective manner to properly track federal equipment acquisitions. The School Corporation failed to
include the equipment/real property purchases on the capital asset listing. The School Corporation had
also not performed a complete physical inventory of capital assets during the audit period as required by
federal and state regulations.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommend the School Corporation maintain and update the capital asset listing
at least annually to include all equipment and real property acquisitions and review for potential capital
asset dispositions. The capital asset listing should include all required information to track capital asset
acquisitions purchased with federal funds. We also recommend the School Corporation conduct a physical
inventory of capital assets at least every two years and maintain documentation to support the process
undertaken to comply with federal and state regulations.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.
Information on the federal program:
Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listing Number: 84.425D
Federal Award Numbers: S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements
Audit Findings: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
29 CFR 5.5 states in part:
a. The Agency head shall cause or require the contracting officer to insert in full in any contract in excess
of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and
decorating, of a public building or public work, or building or work financed in whole or in part from Federal
funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of
any contract of a Federal agency to make a loan, grant or annual contribution (except where a different
meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts
listed in §5.1, the following clauses…
(1) Minimum wages.
(i) All laborers and mechanics employed or working upon the site of the work (or under the United States
Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project),
will be paid unconditionally and not less often than once a week, and without subsequent deduction or
rebate on any account (except such payroll deductions as are permitted by regulations issued by the
Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe
benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those
contained in the wage determination of the Secretary of Labor which is attached hereto and made a part
hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and
such laborers and mechanics…
(3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy
of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract,
but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or
owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part:
In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by
the non-Federal entity under the Federal award must contain provisions covering the following, as
applicable. . . .
(D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation,
all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a
provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented
by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts
Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must
be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified
in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay
wages not less than once a week.. . .”
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions
– Wage Rate Requirements compliance requirements. The School Corporation did not include Davis Bacon
wage rate requirements in its contract with vendor which includes labor installation. The School Corporation
did not obtain the weekly payroll reports certifications from vendor installing equipment.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with the compliance requirements listed above.
Effect: The failure to design and implement an effective internal control system enabled material
noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and
Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal
funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation had one project during the audit period which included labor installation
costs which were charged to the ESSER II (84.425D) grant award. For the vendor selected for testing, the
School Corporation did not include federal wage rate requirement clauses in the contract with the vendor
and did not have an internal control designed to collect the weekly payroll reports certifications from vendors
and its subcontractors, as applicable, to comply with Davis Bacon wage rate requirements. The amount
disbursed for the project during the audit period which includes material and labor totaled $94,444.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommend the School Corporation include Davis-Bacon wage requirements in
vendor contracts which are federally funded and implement a formal process to ensure the required weekly
payroll report certifications are collected and reviewed by management to ensure compliance with the
federal wage rate requirements.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.