Audit 393976

2025 – 001: Financial Statement Preparation and Audit Adjustments Type of Finding: • Material Weakness in Internal Control Over Financial Reporting Condition: The board and management share the ultimate responsibility for the School's internal control system. While it is acceptable to outsource various accounting functions, the responsibility for internal control cannot be outsourced. A material audit adjustment was proposed and posted through the audit process, including a corrective entry for accounts payable and construction in progress. The adjustment was a necessary step in ensuring the financial statements were fairly stated in accordance with accounting principles generally accepted in the United States of America. Criteria or specific requirement: In an ideal control setting, the School would have a comprehensive control procedure to ensure that the financial statements, including disclosures are complete and accurate. Such review procedures should be performed by an individual possessing a thorough understanding of applicable accounting principles generally accepted in the United States of America. Effect: It is possible that a misstatement of the School's financial statements could occur and not be prevented or detected by the School’s internal control. Cause: Due to change in management and turnover in office, the School’s controls were not able to detect the adjustments made as part of the audit. The School does not have a comprehensive review process to ensure that the financial statements, including disclosures, are complete, accurate, and supported by the School’s records. Repeat finding: Yes – 2024-001. Recommendation: We recommend that management review controls related to financial statement preparation review at the end of each period. Financial statement preparation should include a review of reconciliations and balances to ensure that financial statement line items are properly stated and classified. Internally prepared financial statements should also be thoroughly reviewed by members of the board and management outside the finance department on a periodic (monthly or quarterly). Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding.

2025 – 002: Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425 Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: 7000S425U210013 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: • Material Weakness in Internal Control Over Compliance • Material Noncompliance Criteria or specific requirement: Schools are required to maintain complete and accurate records for all transactions included in the population subject to audit. Documentation should be retained for the applicable record retention period and must be sufficient to support the allowability, accuracy, and completeness of reported transactions, including items from prior periods when they are included in the population under review. Condition: The population provided by the School for testing included items from both the current and prior fiscal years. However, the School did not provide the requested prior-year items included in the population. In addition, for two items selected from the current-year population, the School was unable to locate or provide sufficient supporting documentation to substantiate the transaction. Questioned costs: $936,724 Context: The School could not provide the supporting expenditure detail for previous years’ expenses claimed during the audit period or documentation for two the current year sample selections. Cause: Due to change in management and turnover in office, the School did not have adequate processes in place to ensure that prior-year documentation remains accessible when prior-year items are included in the audit population. Additionally, internal controls over documentation retention and retrieval for current-year transactions were not operating effectively. Effect: Because prior-year items included in the population were not provided, and two current-year items lacked supporting documentation, auditors were unable to fully verify the completeness and accuracy of the population. This limits assurance that all transactions included in the population were properly supported and compliant with applicable requirements. Repeat finding: No. Recommendation: We recommend the School strengthen its documentation retention and record management procedures to ensure that all transactions included in audit populations—regardless of fiscal year—are readily available and adequately supported. Management should also implement controls to verify that supporting documentation is complete and accessible prior to submission for audit. Views of responsible officials: There is no disagreement with the audit finding.

2025 – 003: Reporting Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425 Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: 7000S425U210013 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: • Material Weakness in Internal Control Over Compliance • Other Matters Criteria or specific requirement: Grantees must submit an annual performance report with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Amounts reports must be supported by the unit's records. Per 2 CFR 200.303, The non-Federal entity must: (a) Establish and maintain effective internal control over 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 of the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: While performing audit procedures, it was noted that the School did not file the required annual report that was due during the audit period. Questioned costs: None. Context: During audit testing, it was noted that the annual reporting was not completed by the School as required during the audit period. Cause: The reporting requirement was missed due to management’s oversight. Effect: The School has not fully followed compliance attributes with the reporting requirements set forth by the Compliance Supplement. Personnel need to reinforce policies to ensure control procedures are in place to ensure all required grant compliance items are reviewed, approved, and completed in accordance with grant requirements. Repeat finding: No. Recommendation: We recommend that the School implement procedures and controls to ensure the required reports are accurate and completed timely. Views of responsible officials: There is no disagreement with the audit finding.