FINDING 2025-002 Subject: Child Nutrition Cluster - Allowable Costs/Costs Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation's salary ordinance for classified staff reported the beginning wage rate and not the current wage rate. As a result, 11 of the 13 payroll disbursements sampled for classified employees did not agree with the School Corporation's salary ordinance, which totaled $714. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation was not aware of the need for reporting the current wage rate within its salary ordinance. Effect Payroll disbursements for classified employees paid from the grant did not agree with the School Corporation's salary ordinance. As a result, known questioned costs of $714 were identified in the Condition and Context. Questioned Costs Known questioned costs of $714 were identified as described above in the Condition and Context. Recommendation We recommended that the School Corporation's management report the current wage rate within its salary ordinance and establish effective internal controls to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's salary ordinance for classified staff reported the beginning wage rate and not the current wage rate. As a result, six of the seven payroll disbursements sampled for classified employees did not agree with the School Corporation's salary ordinance, which totaled $952. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation was not aware of the need for reporting the current wage rate within its salary ordinance. Effect Payroll disbursements for classified employees paid from the grant did not agree with the School Corporation's salary ordinance. As a result, known questioned costs of $952 were identified in the Condition and Context. Questioned Costs Known questioned costs in the amount of $952 were identified as described above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 18 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that School Corporation's management report the current wage rate within its salary ordinance and establish effective internal controls to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-004 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Local Education Agencies must set aside at least 20 percent of ESSER III (ARP) funding for evidence-based activities to address learning loss. According to guidance from the Indiana Department of Education, summer programming, afterschool, and extended school day are examples, but they are not the only allowable activities to address learning loss and accelerate learning. Additionally, allowable activities that are deemed necessary to carry out the activities to address learning loss, such as transportation or staffing, may also be budgeted as an activity to address learning loss. Although the School Corporation budgeted 20 percent of its program expenditures for learning loss activities in its grant application, it did not differentiate, code, or track learning loss expenditures separately from non-learning loss activity expenditures. As a result, we could not identify whether 20 percent of the $684,357 total ESSER III allocation received by the School Corporation was used for learning loss activities. The lack of effective internal controls and noncompliance were systemic issues both during the audit period and since the beginning of the grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 19 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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). . . ." Section 2001(e)(1) of the ARP Act states in part: "A local educational agency that receives funds under this section— (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups . . ." Cause The School Corporation's financial management system was not set up to separately track program expenditures relating to learning loss activities. Effect As a result of the School Corporation not separately tracking program expenditures relating to learning loss activities, we were unable to obtain sufficient appropriate audit evidence on which to base our opinion on the School Corporation's compliance with the earmarking requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management develop policies and procedures to separately track program expenditures relating to learning loss activities. In addition, we also recommended that the School Corporation's management establish effective internal controls to ensure that compliance with the earmarking requirement is documented and maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.