FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States; COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-004-ARP, 22619-004-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for school. The School Corporation did not obtain a waiver from the Indiana Department of Education (IDOE) for the 22611-004-ARP and 22619-004-ARP grant awards. The amount expended for proportionate share was less than the total amount required by the IDOE. The lack of internal controls and noncompliance was isolated to the 22611-004-ARP and 22619-004-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 COMMUNITY SCHOOLS OF FRANKFORT 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). . . ." 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: (g) Be adequately documented. . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Expenditures for nonpublic students were not properly tracked or expended as required. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation was not able to provide adequate documentation to support that nonpublic proportionate share expenditure requirements were met as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated based on expenses and supporting documentation for the expenses are retained for audit. 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: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States; COVID-19 - Special Education Grants to States; Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 23611-004-PN01, 22611-004-ARP, 23619-004-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls to ensure transactions made from the Special Education Cluster (IDEA) grant funds occurred within the appropriate period of performance. Claims for the special education programs were paid without a documented review or oversight to ensure the expenditures charged to each grant were within the allowed time frame. Although the reimbursement requests submitted to the Indiana Department of Education were prepared by the Director of Exceptional Needs and approved by the Assistant Superintendent of Finance and Operations, expenditures continued to be charged to grant funds outside the period of performance. Funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. The 23611-004-PN01, 22611-004-ARP, and 23619-004-PN01 grant awards still had expenditures charged to those grant funds after the ending date of the award's time frame. The lack of internal controls was isolated to 23611-004-PN01, 22611-004-ARP, and 23619-004-PN01 grant awards. 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). . . ." 34 CFR 76.709 states: "(a) If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year. INDIANA STATE BOARD OF ACCOUNTS 22 COMMUNITY SCHOOLS OF FRANKFORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The State shall return to the Federal Government any carryover funds not obligated by the end of the carryover period by the State and its subgrantees." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place and 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 2025-005 Subject: Special Education Cluster (IDEA) - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 23611-004-PN01, 24611-004-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The Individuals with Disabilities Education Act (IDEA) authorizes the special education grant programs. The Special Education Cluster (IDEA) includes two grant programs, the Assistance to States for Education of Children with Disabilities program (IDEA, Part B 611) and the Preschool Grants for Children with Disabilities program (Preschool 619). Part B 611 funds are for the excess costs of providing special education and related services for children with disabilities ages 3 through 21. Preschool 619 funds are for the excess costs of providing special education and related services for children with disabilities ages 3 through 5. INDIANA STATE BOARD OF ACCOUNTS 23 COMMUNITY SCHOOLS OF FRANKFORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation applies each year for special education grant funding through the Indiana Department of Education (IDOE). Each year's grant award is separate and distinct from any previous or subsequent special education award. The School Corporation is responsible for monitoring the program activities and maintaining adequate accounting records for each award. During the audit period, separate special education funds were set up in the financial accounting records for each grant award and expenditures were charged to each of those grant funds and later requested reimbursement from the IDOE for those expenditures. During the audit period, there were lump sum adjustments made to the special education funds to move disbursements between special education grant funds after the end of the grant periods. However, the adjustments were not supported by detail indicating which disbursements were moved. During fiscal year 2023-2024, $245,602 was moved from the 23611-004-PN01 program fund to the 24611-004-PN01 program fund. During 2024-2025, $53,475 was moved from the 23611-004-PN01 program fund to the 24611-004-PN01 program fund. 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 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. INDIANA STATE BOARD OF ACCOUNTS 24 COMMUNITY SCHOOLS OF FRANKFORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause Internal controls established by the School Corporation were not operating effectively. The School Corporation also did not properly monitor the recording of transactions to the appropriate grant year to ensure accuracy, which led to numerous adjustments. The School Corporation did not consistently maintain detailed documentation to support which transactions were being requested for reimbursement. Effect Without effective internal controls, the School Corporation cannot ensure that expenditures reimbursed are appropriate. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Recommendation We recommended that management of the School Corporation establish a system of internal controls to ensure that grant award funds are properly accounted for and supporting documentation is maintained for the reimbursement requests and adjustments. All expenditure and reimbursement activities should be identifiable to the applicable designated funds. Questioned Costs We identified $299,077 in questioned costs as noted above in the Condition and Context. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. INDIANA STATE BOARD OF ACCOUNTS 25 COMMUNITY SCHOOLS OF FRANKFORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation was maintaining a listing of capital assets acquired with ESSER federal awards, but the School Corporation did not provide evidence of oversight and review of the listing to ensure that the listing meets all the requirements of 2 CFR 200.313. Two of four capital assets purchased with ESSER funds were not included on the ESSER inventory listing. One additional capital asset purchase was included on the ESSER inventory but at an incorrect cost. 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 200.313(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. INDIANA STATE BOARD OF ACCOUNTS 26 COMMUNITY SCHOOLS OF FRANKFORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause A proper system of internal controls, including policies and procedures, that include oversite and review over the ESSER capital asset listing was not established. Effect Without the proper design or implementation of internal controls, including policies and procedures that provide segregation of duties and additional oversight, the internal control system was not effective in ensuring that all ESSER capital asset purchases were included on the listing. As a result, capital asset records were incomplete. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure ESSER capital asset records are accurate, complete, and include all the elements required by 2 CFR 200.313(d). Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.