FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-008 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, Special Education Preschool Grants Assistance Listing Number: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01, 21611-109-PN01, 21619-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (c) 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: (e) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (f) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (i) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up 100% of the program costs charged to the Special Education grants. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: Yes, see Finding 2020-006 Recommendation: We recommended management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-009 Subject: Special Education Cluster (IDEA) ? Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Material Weakness 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). . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, 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 or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Condition: 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 compliance requirements listed above. Cause: The School Corporation had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the compliance requirements listed above. Effect: The School did not comply with the earmarking requirements of the compliance requirements listed above. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: A proportionate share of special education funds was earmarked to the local private school. The School Corporation could not provide support to substantiate that non-public services were provided. For the special education grant awards that were fully expended during the audit period, the School Corporation did not expend the minimum required amount on services for non-public students with disabilities. Identification as a repeat finding: Yes, see Finding 2020-005 Recommendation: We recommended the School Corporation?s management establish a system of internal controls and maintain adequate supporting documentation to ensure compliance with the grant agreement and the Earmarking compliance requirements. In addition, we recommended the School Corporation improve communication with the local private school to ensure the proportionate share is fully expended, or a waiver with adequate documentation is filed. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-008 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, Special Education Preschool Grants Assistance Listing Number: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01, 21611-109-PN01, 21619-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (c) 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: (e) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (f) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (i) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up 100% of the program costs charged to the Special Education grants. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: Yes, see Finding 2020-006 Recommendation: We recommended management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-008 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, Special Education Preschool Grants Assistance Listing Number: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01, 21611-109-PN01, 21619-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (c) 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: (e) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (f) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (i) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up 100% of the program costs charged to the Special Education grants. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: Yes, see Finding 2020-006 Recommendation: We recommended management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-005 Subject: COVID-19 ? Education Stabilization Fund ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Material Noncompliance Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (b) 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: (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (h) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: (a) The School Corporation planned to utilize a portion of the grant funds for chiller repairs and included the costs in the award budget. The School Corporation subsequently also received insurance proceeds for a portion of the repair costs. (b) The School Corporation's management had not designed or implemented internal controls over payroll disbursements which would have ensured compliance with the compliance requirements listed above. Effect: (a) The School Corporation received a grant payment for expenses that were subsequently also recovered from insurance proceeds. Therefore, the school has overdrawn ARP ESSER funds by that amount. Noncompliance with the grant agreement and the compliance requirements could result in the future loss of funds to the School Corporation. (b) The failure to establish an effective internal control system over payroll disbursements could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: Known questioned costs of $106,755 were identified. Context: (a) During allowable cost testing for vendor disbursements, we noted a portion of ARP ESSER funds were utilized to repair the chiller at the middle and high schools. The School Corporation incurred a total of approximately $284,000 in chiller repair costs between September 2021 and May 2022 and requested reimbursement for those expenditures from ARP ESSER funds in full. In October 2021, the School Corporation received an insurance claim check in the amount of $106,755 to cover a portion of the repair costs. The School Corporation did not deduct the amount received through insurance from the amount requested for reimbursement from federal funds, resulting in an overpayment of federal funds during the audit period. (b) Additionally, the School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up approximately 45% of the program costs charged to the Education Stabilization Fund. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: No Recommendation: (a) We recommend management ensure any insurance proceeds or non-federal sources of funding are applied first to costs incurred before charging the costs to federal awards. (b) We recommend management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: ?The non-Federal entity must: ?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: "(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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at lease 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. . . . ? 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 Equipment and Real Property Management compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 Equipment and Real Property Management. The School paid for chiller repairs and purchased a new air conditioning unit using education stabilization funds. These capital improvements were not added to a detailed listing of capital assets that 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), 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 the use and condition of the property. In addition, a physical inventory had not been taken in the past two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-007 Subject: COVID-19 ? Education Stabilization Fund ? Reporting 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): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 Reporting 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 was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards. The first report was for the period of March 13, 2020 to September 30, 2020 and was due by January 21, 2021. The second report was for the period of October 1, 2020 to June 30, 2021 and was due by May 13, 2022. The amounts reported as expended on the second report did not agree to the underlying expenditure records of the School Corporation. Per discussion with the Treasurer, the amounts reported on the second report were the appropriated amounts, not the actual amounts expended during the period. Therefore, the amounts on the report were overstated by approximately 25% for ESSER I and 280% for ESSER II compared to the correct amounts on the School Corporation?s records. Additionally, for both reports that were submitted, there was no documented review by someone other than the preparer of the report to ensure the information submitted was complete and accurate. Identification as a repeat finding: No. Recommendation: We recommended someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-005 Subject: COVID-19 ? Education Stabilization Fund ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Material Noncompliance Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (b) 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: (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (h) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: (a) The School Corporation planned to utilize a portion of the grant funds for chiller repairs and included the costs in the award budget. The School Corporation subsequently also received insurance proceeds for a portion of the repair costs. (b) The School Corporation's management had not designed or implemented internal controls over payroll disbursements which would have ensured compliance with the compliance requirements listed above. Effect: (a) The School Corporation received a grant payment for expenses that were subsequently also recovered from insurance proceeds. Therefore, the school has overdrawn ARP ESSER funds by that amount. Noncompliance with the grant agreement and the compliance requirements could result in the future loss of funds to the School Corporation. (b) The failure to establish an effective internal control system over payroll disbursements could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: Known questioned costs of $106,755 were identified. Context: (a) During allowable cost testing for vendor disbursements, we noted a portion of ARP ESSER funds were utilized to repair the chiller at the middle and high schools. The School Corporation incurred a total of approximately $284,000 in chiller repair costs between September 2021 and May 2022 and requested reimbursement for those expenditures from ARP ESSER funds in full. In October 2021, the School Corporation received an insurance claim check in the amount of $106,755 to cover a portion of the repair costs. The School Corporation did not deduct the amount received through insurance from the amount requested for reimbursement from federal funds, resulting in an overpayment of federal funds during the audit period. (b) Additionally, the School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up approximately 45% of the program costs charged to the Education Stabilization Fund. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: No Recommendation: (a) We recommend management ensure any insurance proceeds or non-federal sources of funding are applied first to costs incurred before charging the costs to federal awards. (b) We recommend management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: ?The non-Federal entity must: ?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: "(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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at lease 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. . . . ? 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 Equipment and Real Property Management compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 Equipment and Real Property Management. The School paid for chiller repairs and purchased a new air conditioning unit using education stabilization funds. These capital improvements were not added to a detailed listing of capital assets that 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), 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 the use and condition of the property. In addition, a physical inventory had not been taken in the past two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-007 Subject: COVID-19 ? Education Stabilization Fund ? Reporting 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): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 Reporting 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 was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards. The first report was for the period of March 13, 2020 to September 30, 2020 and was due by January 21, 2021. The second report was for the period of October 1, 2020 to June 30, 2021 and was due by May 13, 2022. The amounts reported as expended on the second report did not agree to the underlying expenditure records of the School Corporation. Per discussion with the Treasurer, the amounts reported on the second report were the appropriated amounts, not the actual amounts expended during the period. Therefore, the amounts on the report were overstated by approximately 25% for ESSER I and 280% for ESSER II compared to the correct amounts on the School Corporation?s records. Additionally, for both reports that were submitted, there was no documented review by someone other than the preparer of the report to ensure the information submitted was complete and accurate. Identification as a repeat finding: No. Recommendation: We recommended someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-005 Subject: COVID-19 ? Education Stabilization Fund ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Material Noncompliance Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (b) 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: (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (h) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: (a) The School Corporation planned to utilize a portion of the grant funds for chiller repairs and included the costs in the award budget. The School Corporation subsequently also received insurance proceeds for a portion of the repair costs. (b) The School Corporation's management had not designed or implemented internal controls over payroll disbursements which would have ensured compliance with the compliance requirements listed above. Effect: (a) The School Corporation received a grant payment for expenses that were subsequently also recovered from insurance proceeds. Therefore, the school has overdrawn ARP ESSER funds by that amount. Noncompliance with the grant agreement and the compliance requirements could result in the future loss of funds to the School Corporation. (b) The failure to establish an effective internal control system over payroll disbursements could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: Known questioned costs of $106,755 were identified. Context: (a) During allowable cost testing for vendor disbursements, we noted a portion of ARP ESSER funds were utilized to repair the chiller at the middle and high schools. The School Corporation incurred a total of approximately $284,000 in chiller repair costs between September 2021 and May 2022 and requested reimbursement for those expenditures from ARP ESSER funds in full. In October 2021, the School Corporation received an insurance claim check in the amount of $106,755 to cover a portion of the repair costs. The School Corporation did not deduct the amount received through insurance from the amount requested for reimbursement from federal funds, resulting in an overpayment of federal funds during the audit period. (b) Additionally, the School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up approximately 45% of the program costs charged to the Education Stabilization Fund. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: No Recommendation: (a) We recommend management ensure any insurance proceeds or non-federal sources of funding are applied first to costs incurred before charging the costs to federal awards. (b) We recommend management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: ?The non-Federal entity must: ?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: "(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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at lease 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. . . . ? 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 Equipment and Real Property Management compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 Equipment and Real Property Management. The School paid for chiller repairs and purchased a new air conditioning unit using education stabilization funds. These capital improvements were not added to a detailed listing of capital assets that 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), 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 the use and condition of the property. In addition, a physical inventory had not been taken in the past two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Subject: Child Nutrition Cluster ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snack Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness 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. . . . 2 CFR 200.430(i) states in part: "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 (for IHE, this per the IHE?s definition of IBS); . . . . (iv) 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 a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which allocated using different allocation bases; or an unallowable activity and a direct or indirect costs activity. . . .? Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented adequate internal controls to ensure that payroll disbursements were only for food service-related services. Payroll disbursements comprise approximately 45% of the program costs charged to the Child Nutrition Cluster. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-21 year. Additionally, payroll disbursements for custodial employees were allocated to the Child Nutrition Cluster based on a percentage of the custodial employees? salaries. However, there were no time and effort logs or other documentation maintained to support the percentage of the custodial salaries allocated to the Child Nutrition Cluster. The custodial salaries make up approximately 3% of the total payroll disbursements charged to the Child Nutrition Cluster. This was an issue throughout the audit period. Identification as a repeat finding, if applicable: Yes, see Finding 2020-004 Recommendation: We recommended that management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Additionally, we recommended that the School maintain written documentation supporting the portion of salaries paid from the School Lunch fund for custodial personnel. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-008 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, Special Education Preschool Grants Assistance Listing Number: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01, 21611-109-PN01, 21619-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (c) 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: (e) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (f) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (i) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up 100% of the program costs charged to the Special Education grants. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: Yes, see Finding 2020-006 Recommendation: We recommended management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-009 Subject: Special Education Cluster (IDEA) ? Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Material Weakness 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). . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, 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 or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Condition: 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 compliance requirements listed above. Cause: The School Corporation had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the compliance requirements listed above. Effect: The School did not comply with the earmarking requirements of the compliance requirements listed above. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: A proportionate share of special education funds was earmarked to the local private school. The School Corporation could not provide support to substantiate that non-public services were provided. For the special education grant awards that were fully expended during the audit period, the School Corporation did not expend the minimum required amount on services for non-public students with disabilities. Identification as a repeat finding: Yes, see Finding 2020-005 Recommendation: We recommended the School Corporation?s management establish a system of internal controls and maintain adequate supporting documentation to ensure compliance with the grant agreement and the Earmarking compliance requirements. In addition, we recommended the School Corporation improve communication with the local private school to ensure the proportionate share is fully expended, or a waiver with adequate documentation is filed. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-008 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, Special Education Preschool Grants Assistance Listing Number: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01, 21611-109-PN01, 21619-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (c) 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: (e) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (f) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (i) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up 100% of the program costs charged to the Special Education grants. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: Yes, see Finding 2020-006 Recommendation: We recommended management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-008 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, Special Education Preschool Grants Assistance Listing Number: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-109-PN01, 21611-109-PN01, 21619-109-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (c) 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: (e) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (f) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (i) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not designed or implemented internal controls which would have ensured compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up 100% of the program costs charged to the Special Education grants. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: Yes, see Finding 2020-006 Recommendation: We recommended management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-005 Subject: COVID-19 ? Education Stabilization Fund ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Material Noncompliance Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (b) 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: (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (h) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: (a) The School Corporation planned to utilize a portion of the grant funds for chiller repairs and included the costs in the award budget. The School Corporation subsequently also received insurance proceeds for a portion of the repair costs. (b) The School Corporation's management had not designed or implemented internal controls over payroll disbursements which would have ensured compliance with the compliance requirements listed above. Effect: (a) The School Corporation received a grant payment for expenses that were subsequently also recovered from insurance proceeds. Therefore, the school has overdrawn ARP ESSER funds by that amount. Noncompliance with the grant agreement and the compliance requirements could result in the future loss of funds to the School Corporation. (b) The failure to establish an effective internal control system over payroll disbursements could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: Known questioned costs of $106,755 were identified. Context: (a) During allowable cost testing for vendor disbursements, we noted a portion of ARP ESSER funds were utilized to repair the chiller at the middle and high schools. The School Corporation incurred a total of approximately $284,000 in chiller repair costs between September 2021 and May 2022 and requested reimbursement for those expenditures from ARP ESSER funds in full. In October 2021, the School Corporation received an insurance claim check in the amount of $106,755 to cover a portion of the repair costs. The School Corporation did not deduct the amount received through insurance from the amount requested for reimbursement from federal funds, resulting in an overpayment of federal funds during the audit period. (b) Additionally, the School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up approximately 45% of the program costs charged to the Education Stabilization Fund. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: No Recommendation: (a) We recommend management ensure any insurance proceeds or non-federal sources of funding are applied first to costs incurred before charging the costs to federal awards. (b) We recommend management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: ?The non-Federal entity must: ?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: "(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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at lease 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. . . . ? 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 Equipment and Real Property Management compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 Equipment and Real Property Management. The School paid for chiller repairs and purchased a new air conditioning unit using education stabilization funds. These capital improvements were not added to a detailed listing of capital assets that 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), 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 the use and condition of the property. In addition, a physical inventory had not been taken in the past two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-007 Subject: COVID-19 ? Education Stabilization Fund ? Reporting 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): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 Reporting 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 was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards. The first report was for the period of March 13, 2020 to September 30, 2020 and was due by January 21, 2021. The second report was for the period of October 1, 2020 to June 30, 2021 and was due by May 13, 2022. The amounts reported as expended on the second report did not agree to the underlying expenditure records of the School Corporation. Per discussion with the Treasurer, the amounts reported on the second report were the appropriated amounts, not the actual amounts expended during the period. Therefore, the amounts on the report were overstated by approximately 25% for ESSER I and 280% for ESSER II compared to the correct amounts on the School Corporation?s records. Additionally, for both reports that were submitted, there was no documented review by someone other than the preparer of the report to ensure the information submitted was complete and accurate. Identification as a repeat finding: No. Recommendation: We recommended someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-005 Subject: COVID-19 ? Education Stabilization Fund ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Material Noncompliance Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (b) 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: (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (h) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: (a) The School Corporation planned to utilize a portion of the grant funds for chiller repairs and included the costs in the award budget. The School Corporation subsequently also received insurance proceeds for a portion of the repair costs. (b) The School Corporation's management had not designed or implemented internal controls over payroll disbursements which would have ensured compliance with the compliance requirements listed above. Effect: (a) The School Corporation received a grant payment for expenses that were subsequently also recovered from insurance proceeds. Therefore, the school has overdrawn ARP ESSER funds by that amount. Noncompliance with the grant agreement and the compliance requirements could result in the future loss of funds to the School Corporation. (b) The failure to establish an effective internal control system over payroll disbursements could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: Known questioned costs of $106,755 were identified. Context: (a) During allowable cost testing for vendor disbursements, we noted a portion of ARP ESSER funds were utilized to repair the chiller at the middle and high schools. The School Corporation incurred a total of approximately $284,000 in chiller repair costs between September 2021 and May 2022 and requested reimbursement for those expenditures from ARP ESSER funds in full. In October 2021, the School Corporation received an insurance claim check in the amount of $106,755 to cover a portion of the repair costs. The School Corporation did not deduct the amount received through insurance from the amount requested for reimbursement from federal funds, resulting in an overpayment of federal funds during the audit period. (b) Additionally, the School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up approximately 45% of the program costs charged to the Education Stabilization Fund. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: No Recommendation: (a) We recommend management ensure any insurance proceeds or non-federal sources of funding are applied first to costs incurred before charging the costs to federal awards. (b) We recommend management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: ?The non-Federal entity must: ?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: "(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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at lease 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. . . . ? 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 Equipment and Real Property Management compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 Equipment and Real Property Management. The School paid for chiller repairs and purchased a new air conditioning unit using education stabilization funds. These capital improvements were not added to a detailed listing of capital assets that 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), 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 the use and condition of the property. In addition, a physical inventory had not been taken in the past two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-007 Subject: COVID-19 ? Education Stabilization Fund ? Reporting 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): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 Reporting 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 was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards. The first report was for the period of March 13, 2020 to September 30, 2020 and was due by January 21, 2021. The second report was for the period of October 1, 2020 to June 30, 2021 and was due by May 13, 2022. The amounts reported as expended on the second report did not agree to the underlying expenditure records of the School Corporation. Per discussion with the Treasurer, the amounts reported on the second report were the appropriated amounts, not the actual amounts expended during the period. Therefore, the amounts on the report were overstated by approximately 25% for ESSER I and 280% for ESSER II compared to the correct amounts on the School Corporation?s records. Additionally, for both reports that were submitted, there was no documented review by someone other than the preparer of the report to ensure the information submitted was complete and accurate. Identification as a repeat finding: No. Recommendation: We recommended someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-005 Subject: COVID-19 ? Education Stabilization Fund ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Material Noncompliance Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (b) 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: (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (h) Be adequately documented. . . . Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with the requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Cause: (a) The School Corporation planned to utilize a portion of the grant funds for chiller repairs and included the costs in the award budget. The School Corporation subsequently also received insurance proceeds for a portion of the repair costs. (b) The School Corporation's management had not designed or implemented internal controls over payroll disbursements which would have ensured compliance with the compliance requirements listed above. Effect: (a) The School Corporation received a grant payment for expenses that were subsequently also recovered from insurance proceeds. Therefore, the school has overdrawn ARP ESSER funds by that amount. Noncompliance with the grant agreement and the compliance requirements could result in the future loss of funds to the School Corporation. (b) The failure to establish an effective internal control system over payroll disbursements could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of funds to the School Corporation. Questioned Costs: Known questioned costs of $106,755 were identified. Context: (a) During allowable cost testing for vendor disbursements, we noted a portion of ARP ESSER funds were utilized to repair the chiller at the middle and high schools. The School Corporation incurred a total of approximately $284,000 in chiller repair costs between September 2021 and May 2022 and requested reimbursement for those expenditures from ARP ESSER funds in full. In October 2021, the School Corporation received an insurance claim check in the amount of $106,755 to cover a portion of the repair costs. The School Corporation did not deduct the amount received through insurance from the amount requested for reimbursement from federal funds, resulting in an overpayment of federal funds during the audit period. (b) Additionally, the School Corporation had not properly designed or implemented internal controls over recording transactions for payroll and fringe benefit disbursements to ensure the accuracy and classification of the payroll disbursements. Payroll disbursements make up approximately 45% of the program costs charged to the Education Stabilization Fund. One employee was responsible for processing payroll. Payroll reports were submitted to the School Board and Treasurer for review and approval; however, the reports only provided a total gross amount paid from each fund. The reports did not list the employees who were paid from the fund. In March 2021, the Treasurer implemented a review of the payroll distribution report, which is broken out by fund and individual employee. The lack of controls related to payroll disbursements was isolated to the 2020-2021 year. Identification as a repeat finding, if applicable: No Recommendation: (a) We recommend management ensure any insurance proceeds or non-federal sources of funding are applied first to costs incurred before charging the costs to federal awards. (b) We recommend management continue to document controls surrounding payroll disbursement through review of the payroll distribution report each pay period. Views of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.303 states in part: ?The non-Federal entity must: ?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: "(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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at lease 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. . . . ? 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 Equipment and Real Property Management compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 Equipment and Real Property Management. The School paid for chiller repairs and purchased a new air conditioning unit using education stabilization funds. These capital improvements were not added to a detailed listing of capital assets that 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), 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 the use and condition of the property. In addition, a physical inventory had not been taken in the past two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.