Information on the federal program:
Subject: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
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: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
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: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
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 – Internal Controls
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425U
Federal Award Numbers: S425U210013
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: For 2 of 3 sample items tested, we noted the School Corporation expended approximately
$22,000 and $67,000 on a new sign and servers, respectively. These assets were charged to the ESSER
III (84.425U) grant award. It was noted these capital asset acquisitions were not reported on the capital
asset listing for the School Corporation as of June 30, 2024. Additionally, we noted the School
Corporation’s capital asset listing did not contain all the required information, including the source of
funding for the property, outlined in the criteria above.
Identification as a repeat finding: No.
Recommendation: We recommend the School Corporation 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 funding.
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 and Years (or Other Identifying 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:
(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
w ages 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.
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: For 1 of 2 sample items tested, we noted the School Corporation expended approximately
$212,000 on science room improvements, which was funded with ESSER II (84.425D) grant awards. The
School Corporation did not properly include Davis-Bacon wage rate requirements in the vendor contract.
Additionally, the School Corporation did not obtain the weekly payroll reports certifications from the
construction vendor to monitor compliance with Davis-Bacon wage rate requirements. Therefore, no
review was performed to ensure that pay rates complied with the federal wage rate requirements. The
lack of controls and noncompliance was isolated to fiscal year 2023.
Identification as a repeat finding: No.
Recommendation: We recommend the School Corporation ensure vendor contracts with labor
installation in excess of $2,000 which are funded by federal grants including Davis Bacon Wage Rate
Requirement clauses and implement a formal process to ensure the required weekly payroll reports
certifications are collected and reviewed to ensure compliance with federal 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: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
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: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
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: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
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 – Internal Controls
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425U
Federal Award Numbers: S425U210013
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: For 2 of 3 sample items tested, we noted the School Corporation expended approximately
$22,000 and $67,000 on a new sign and servers, respectively. These assets were charged to the ESSER
III (84.425U) grant award. It was noted these capital asset acquisitions were not reported on the capital
asset listing for the School Corporation as of June 30, 2024. Additionally, we noted the School
Corporation’s capital asset listing did not contain all the required information, including the source of
funding for the property, outlined in the criteria above.
Identification as a repeat finding: No.
Recommendation: We recommend the School Corporation 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 funding.
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 and Years (or Other Identifying 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:
(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
w ages 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.
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: For 1 of 2 sample items tested, we noted the School Corporation expended approximately
$212,000 on science room improvements, which was funded with ESSER II (84.425D) grant awards. The
School Corporation did not properly include Davis-Bacon wage rate requirements in the vendor contract.
Additionally, the School Corporation did not obtain the weekly payroll reports certifications from the
construction vendor to monitor compliance with Davis-Bacon wage rate requirements. Therefore, no
review was performed to ensure that pay rates complied with the federal wage rate requirements. The
lack of controls and noncompliance was isolated to fiscal year 2023.
Identification as a repeat finding: No.
Recommendation: We recommend the School Corporation ensure vendor contracts with labor
installation in excess of $2,000 which are funded by federal grants including Davis Bacon Wage Rate
Requirement clauses and implement a formal process to ensure the required weekly payroll reports
certifications are collected and reviewed to ensure compliance with federal regulations.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the
finding and has prepared a corrective action plan.