FINDING 2023-004
Finding Subject: COVID-19 - Education Stabilization Fund – Allowable Costs/Cost Principles
Summary of Finding:
Condition and Context
The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to
States and school districts to combat the effects of the coronav...
FINDING 2023-004
Finding Subject: COVID-19 - Education Stabilization Fund – Allowable Costs/Cost Principles
Summary of Finding:
Condition and Context
The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to
States and school districts to combat the effects of the coronavirus pandemic, help safely reopen and
sustain the safe operation of schools, and to address the impact of the coronavirus pandemic on the nation’s
students. States were required to subgrant a portion of their ESSER allocation to local educational agencies
(LEA). Prior to LEAs receiving their respective subgrants, LEAs were required to complete an application
for ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through
entity for approval. The application included a district level budget identifying how the LEA intended to
spend program funds. Per the School Corporation’s approved application, program funding was budgeted
for salaries and respective benefits, counseling services, and supplies.
A sample of 40 payroll claims charged to the ESSER program for which reimbursement
was received during the audit period was selected for testing to verify the expenditures were in conformance
with the applicable cost principles. Of the 40 payroll claims tested, 21 payroll claims were determined to be
for payroll adjustments into the ESSER II fund. For all 21 payroll adjustments, totaling $1,509,248, there
was not adequate supporting documentation to determine to where the payroll was originally paid, to whom
the original payment was made and at what amount the original payment was made. The total amount of
the 21 payroll claims/adjustments, $1,509,248, was determined to be questioned costs.
Due to the lack of documentation for the payroll adjustments into the ESSER II fund, all
adjustments were reviewed. A review of the additional adjustments resulted in an additional $114,353 of
payroll charges in which there was not adequate supporting documentation to determine to where the
payroll was originally paid, to whom the original payment was made and at what amount the original
payment was made.
In addition, the School Corporation requested a total reimbursement of $3,342,940 in payroll costs
from their ESSER allocation during the audit period. However, expenditures per the ledger for payroll and
benefits totaled $2,995,014. As a result, the School Corporation over requested and received $347,926 for
payroll expenditures that cannot be substantiated.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the payroll adjustments and additional payroll noted above.
Contact Person Responsible for Corrective Action:
Dr. Thomas A. Keeley, Executive Director of Business Services
Contact Phone Number and Email Address: (574) 258-9591 Tkeeley@phm.k12.in.us
Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan:
The school corporation will revise job descriptions to clearly identify segregation of duties for
Federal Fund Coordinators, employees responsible for calculating accurate disbursement reports,
reimbursement requests and payroll processing. Detailed expenditure reports will be generated for end
of year reporting with the Accounting Specialist, Accounts Payable Coordinator and the Executive
Director of Business Services completing a final review process providing signatures indicating review
and accuracy before filing.
Anticipated Completion Date: March 1, 2024.