1. Reporting Finding Number: 2023-002 Assistance Listing Number and Title: AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Material Weakness and Noncompliance 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The County submitted the required Project and Expenditure Report on April 10, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records due to $1,210,069 identified as loss of revenue being excluded from Project and Expenditure Report. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports. Officials’ Response: See Corrective Action Plan.
1. Reporting Finding Number: 2023-002 Assistance Listing Number and Title: AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Material Weakness and Noncompliance 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The County submitted the required Project and Expenditure Report on April 10, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records due to $1,210,069 identified as loss of revenue being excluded from Project and Expenditure Report. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports. Officials’ Response: See Corrective Action Plan.
Finding Number: 2023-002 Assistance Listing Number and Title: Coronavirus State And Local Fiscal Recovery Funds AL # 21.027 Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The City submitted the required Project and Expenditure Report on April 26, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records with the Current Expenditures being overstated by $650,606. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports.
Finding Number: 2023-002 Assistance Listing Number and Title: Coronavirus State And Local Fiscal Recovery Funds AL # 21.027 Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The City submitted the required Project and Expenditure Report on April 26, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records with the Current Expenditures being overstated by $650,606. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports.
Finding Number: 2023-002 Assistance Listing Number and Title: Coronavirus State And Local Fiscal Recovery Funds AL # 21.027 Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The City submitted the required Project and Expenditure Report on April 26, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records with the Current Expenditures being overstated by $650,606. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports.
Finding Number: 2023-002 Assistance Listing Number and Title: Coronavirus State And Local Fiscal Recovery Funds AL # 21.027 Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The City submitted the required Project and Expenditure Report on April 26, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records with the Current Expenditures being overstated by $650,606. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports.
Finding Number: 2023-002 Assistance Listing Number and Title: Coronavirus State And Local Fiscal Recovery Funds AL # 21.027 Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The City submitted the required Project and Expenditure Report on April 26, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records with the Current Expenditures being overstated by $650,606. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports.
2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 C.F.R. § 200.328 which states, unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information. 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.208 which states, in part, that Federal awarding agencies are responsible for ensuring that specific Federal award conditions are consistent with the program design reflected in § 200.202 and include clear performance expectations of recipients as required in § 200.301. The Federal awarding agency or pass- through entity may adjust specific Federal award conditions as needed, in accordance with this section, based on an analysis of specified factors. Additional Federal award conditions may be added provided the applicant or non-Federal entity has been notified, and any additional requirements must be promptly removed once the conditions that prompted them have been satisfied. Additional Federal award conditions may include items such as additional, more detailed financial reports. The various grant agreements for the program state that the grantee shall submit the required reports in an adequate and timely fashion. The Grantor shall provide a format for these reports and shall instruct the Grantee on the proper completion of said reports. All report forms and requirements listed herein shall be provided by the Grantor but shall not be construed to limit the Grantor in making additional and/or further requests, nor in the change or addition of detail to the items listed. The Grantee shall submit to the Grantor a Status Report within 30 days of the request by the Grantor. The County submitted Final and Status Reports; however, possibly due to the failure of existing controls, three out of three (one hundred percent) of Final and Status Reports tested were submitted late. Reporting errors could adversely affect future grant awards. Additional controls and/or procedures should be implemented to help ensure required reports are accurately prepared and submitted in a timely manner.
FINDING 2023-004 – Cash Management: Significant Deficiency over Internal Controls over Compliance Assistance Listing Number Federal Agency/Pass-through Entity – Program Name Award Year Questioned Costs 64.033 VA Supportive Services for Veteran Families Program 2023 $0 Criteria: Regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 ((2 CFR section 200.302(b)(6)). Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). The reimbursement payment method is the preferred payment method if (a) the non-federal entity cannot the meet the requirements in 2 CFR section 200.305(b)(1) for advance payment, (b) the federal awarding agency sets a specific condition for use of the reimbursement or (c) if requested by the non-federal entity (2 CFR sections 200.305(b)(3) and 200.208). Condition/Context: The Organization draws down funds based on a profit and loss report to signify the excess expenses incurred over the grant revenue. The Organization operates on a reimbursement basis. The request for reimbursements are not reviewed to ensure amounts have been paid with the Organization’s funds prior to the reimbursement request because certain expense codes do not relate to expenses paid but rather expenses incurred. Additionally, the frequency of draws during mid-months creates potential for errors when the reporting period has not been reconciled and therefore coded expenses are subject to change. Effect: Certain expenses included on the draw down total have not been paid for with Organization funds prior to the request or within 3 days of receipt of federal fund. Cause: There is no review to ensure the total only included expenses paid. Repeat finding: This is not a repeat finding. Recommendation: The Organization should reconcile program expenditures and requests for federal funds to ensure the total draw down is not in excess of disbursements paid by the Organization. Management should implement a review and approval process for reimbursement requests to verify that amounts drawn are supported by paid expenditures and appropriate documentation. Views of responsible officials and planned corrective actions: Management agrees with the recommendation and has developed a corrective action plan to address the finding.
Finding Number: 2023-002 Assistance Listing Number and Title: Coronavirus State And Local Fiscal Recovery Funds AL # 21.027 Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 1000.10 gives regulatory effect to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200 for the Department of Treasury. 2 CFR 200.328 (b) provides that The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. 31 CFR 35.4(c) requires recipients, in part, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. The U.S. Department of Treasury provided supplementary information on reporting requirements in its interim final rule for State and Local Fiscal Recovery Funds for 31 CFR Part 35 and provided further guidance in its Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guide. Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding are required to submit Project and Expenditure Report by April 30, 2022, and then annually thereafter. The City submitted the required Project and Expenditure Report on April 26, 2023, which is within the required timeframe. However, due to the failure of existing controls, the expenditures reported did not agree to the accounting records with the Current Expenditures being overstated by $650,606. Reporting errors could adversely affect future grant awards. Additional controls should be implemented to help ensure accuracy of the reports.
Subrecipient Monitoring Federal Department – U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH75OT000024 and 2021 COVID-19 - Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises, Federal Assistance Listing #93.391 County Department – Department of Public Health Finding 2023 – 005 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D—Post Federal Award Requirements Standards for Financial and Program Management, Section 200.332. Requirements for pass-through entities, requires that “All pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 Specific conditions. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521 Management decision. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in Section 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F— Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in Section 200.338 Remedies for noncompliance of this part and in program regulations.” CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not adequately comply with its subrecipient monitoring requirements in accordance with federal regulations. CAUSE Based on discussions with management, the cause of this finding was due to DPH/CCH identifying a consultant agency to conduct the subrecipient monitoring; this was accomplished October 2023. Current Status: These documents were created, shared with the auditor pending management approval; 1) Subrecipient Monitoring Policy 2). Subrecipient Commitment Form 3). Subrecipient Determination Tool 4). Subrecipient Risk Assessment and Monitoring Guide. EFFECT Failure to adequately monitor the activities and performance of a subrecipient could result in Federal awards being used for unauthorized purposes and DPH’s inability to adequately perform risk assessments on its subrecipient(s). QUESTIONED COSTS None. CONTEXT During the prior audit period, we noted 6 instances (of 27 subrecipients), whereby adequate documentation was not maintained to support both the financial and programmatic monitoring of these subrecipients. Also, we noted no evidence of the performance of subrecipients’ risk assessment and whether the subrecipients were required to have a Single audit conducted. This resulted in the 2022 audit finding and subsequent corrective action planned prepared by DPH to address the finding, which was anticipated to be completed by December 31, 2023. During the current audit period, we received DPH’s current year status of the prior audit finding, noting that risk assessment and monitoring will be ongoing during the 2023 Single audit. To assess the current year’s status, we reviewed 5 of 35 subrecipients, noting that risk assessments were conducted in April 2024. We also noted that 4 of the 5 subrecipients reviewed were subject to a Single Audit per the risk assessment documentation. However, we noted no evidence financial monitoring conducted, including whether a Single Audit report was obtained and reviewed by DPH. IDENTIFICATION OF REPEATED FINDINGS Repeated (Prior Finding No. 2022-009) RECOMMENDATION We recommend DPH implement its prior corrective action plan for any future subrecipients awarded under the federal program. Also, procedures should be in place to adequately document financial monitoring conducted, as well as the review of the Single Audit report, as required by federal regulations. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County’s corrective action plan is on page 56.
Subrecipient Monitoring Federal Department – U.S. Department of Health and Human Services Federal Award Identification Number and Year: NU58DP006993 and 2022/2023 COVID-19 - Community Health Workers for Public Health Response and Resilient, Federal Assistance Listing #93.495 County Department – Department of Public Health Finding 2023 – 006 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D—Post Federal Award Requirements Standards for Financial and Program Management, Section 200.332. Requirements for pass-through entities, requires that “All pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 Specific conditions. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521 Management decision. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in Section 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F— Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in Section 200.338 Remedies for noncompliance of this part and in program regulations.” CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not perform adequate monitoring of its subrecipients as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding was due to DPH/CCH identifying a consultant agency to conduct the subrecipient monitoring; this was accomplished October 2023. Current Status: These documents were created, shared with the auditor pending management approval; 1) Subrecipient Monitoring Policy 2). Subrecipient Commitment Form 3). Subrecipient Determination Tool 4). Subrecipient Risk Assessment and Monitoring Guide. EFFECT Failure to adequately monitor the activities and performance of a subrecipient could result in Federal awards being used for unauthorized purposes and DPH’s inability to adequately perform risk assessments on its subrecipient(s). QUESTIONED COSTS None. CONTEXT During the current audit period, we noted 12 subrecipients were awarded funds. During our review of three (3) subrecipients, we noted the following: For all three subrecipients, we noted that adequate documentation was not maintained to support the financial monitoring of these subrecipients. Also, no documentation was provided to verify whether the subrecipients were required to have a Single Audit conducted, including DPH’s review of the report, and if applicable, issuance of a management decision on audit findings noted as required by 2 CFR 200.332d(3). For one subrecipient, we noted documentation was not maintained to support DPH’s evaluation of the subrecipient’s risk of noncompliance and the frequency of monitoring to be conducted by DPH based on the assessed risk. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH implement procedures to ensure that adequate documentation is maintained to support financial monitoring conducted, evaluation of each subrecipient’s risk of noncompliance and review of the Single Audit report, as required by federal regulations. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County’s corrective action plan is on page 56.
Subrecipient Monitoring Federal Department – U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH75OT000024 and 2021 COVID-19 - Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises, Federal Assistance Listing #93.391 County Department – Department of Public Health Finding 2023 – 005 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D—Post Federal Award Requirements Standards for Financial and Program Management, Section 200.332. Requirements for pass-through entities, requires that “All pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 Specific conditions. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521 Management decision. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in Section 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F— Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in Section 200.338 Remedies for noncompliance of this part and in program regulations.” CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not adequately comply with its subrecipient monitoring requirements in accordance with federal regulations. CAUSE Based on discussions with management, the cause of this finding was due to DPH/CCH identifying a consultant agency to conduct the subrecipient monitoring; this was accomplished October 2023. Current Status: These documents were created, shared with the auditor pending management approval; 1) Subrecipient Monitoring Policy 2). Subrecipient Commitment Form 3). Subrecipient Determination Tool 4). Subrecipient Risk Assessment and Monitoring Guide. EFFECT Failure to adequately monitor the activities and performance of a subrecipient could result in Federal awards being used for unauthorized purposes and DPH’s inability to adequately perform risk assessments on its subrecipient(s). QUESTIONED COSTS None. CONTEXT During the prior audit period, we noted 6 instances (of 27 subrecipients), whereby adequate documentation was not maintained to support both the financial and programmatic monitoring of these subrecipients. Also, we noted no evidence of the performance of subrecipients’ risk assessment and whether the subrecipients were required to have a Single audit conducted. This resulted in the 2022 audit finding and subsequent corrective action planned prepared by DPH to address the finding, which was anticipated to be completed by December 31, 2023. During the current audit period, we received DPH’s current year status of the prior audit finding, noting that risk assessment and monitoring will be ongoing during the 2023 Single audit. To assess the current year’s status, we reviewed 5 of 35 subrecipients, noting that risk assessments were conducted in April 2024. We also noted that 4 of the 5 subrecipients reviewed were subject to a Single Audit per the risk assessment documentation. However, we noted no evidence financial monitoring conducted, including whether a Single Audit report was obtained and reviewed by DPH. IDENTIFICATION OF REPEATED FINDINGS Repeated (Prior Finding No. 2022-009) RECOMMENDATION We recommend DPH implement its prior corrective action plan for any future subrecipients awarded under the federal program. Also, procedures should be in place to adequately document financial monitoring conducted, as well as the review of the Single Audit report, as required by federal regulations. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County’s corrective action plan is on page 56.
Subrecipient Monitoring Federal Department – U.S. Department of Health and Human Services Federal Award Identification Number and Year: NU58DP006993 and 2022/2023 COVID-19 - Community Health Workers for Public Health Response and Resilient, Federal Assistance Listing #93.495 County Department – Department of Public Health Finding 2023 – 006 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D—Post Federal Award Requirements Standards for Financial and Program Management, Section 200.332. Requirements for pass-through entities, requires that “All pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 Specific conditions. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521 Management decision. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in Section 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F— Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in Section 200.338 Remedies for noncompliance of this part and in program regulations.” CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not perform adequate monitoring of its subrecipients as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding was due to DPH/CCH identifying a consultant agency to conduct the subrecipient monitoring; this was accomplished October 2023. Current Status: These documents were created, shared with the auditor pending management approval; 1) Subrecipient Monitoring Policy 2). Subrecipient Commitment Form 3). Subrecipient Determination Tool 4). Subrecipient Risk Assessment and Monitoring Guide. EFFECT Failure to adequately monitor the activities and performance of a subrecipient could result in Federal awards being used for unauthorized purposes and DPH’s inability to adequately perform risk assessments on its subrecipient(s). QUESTIONED COSTS None. CONTEXT During the current audit period, we noted 12 subrecipients were awarded funds. During our review of three (3) subrecipients, we noted the following: For all three subrecipients, we noted that adequate documentation was not maintained to support the financial monitoring of these subrecipients. Also, no documentation was provided to verify whether the subrecipients were required to have a Single Audit conducted, including DPH’s review of the report, and if applicable, issuance of a management decision on audit findings noted as required by 2 CFR 200.332d(3). For one subrecipient, we noted documentation was not maintained to support DPH’s evaluation of the subrecipient’s risk of noncompliance and the frequency of monitoring to be conducted by DPH based on the assessed risk. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH implement procedures to ensure that adequate documentation is maintained to support financial monitoring conducted, evaluation of each subrecipient’s risk of noncompliance and review of the Single Audit report, as required by federal regulations. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County’s corrective action plan is on page 56.
2023 SINGLE AUDIT FINDING SA-2: Compliance Element: Subrecipient Monitoring Federal Department – Department of the Treasury COVID-19 - Provider Relief Fund and American Rescue Plan (ARPA) Coronavirus State and Local Fiscal Recovery Fund Federal Assistance Listing # 21.027 County Department – County Board CRITERIA: 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D—Post Federal Award Requirements Standards for Financial and Program Management, Section 200.332. Requirements for pass-through entities, requires that “All pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 Specific conditions. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521 Management decision. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in Section 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F— Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in Section 200.338 Remedies for noncompliance of this part and in program regulations.” CONDITION: During the current audit period, the County did not perform adequate monitoring of its subrecipients as required by Federal regulations. CAUSE: Based on discussions with management, the cause of this finding was a lack of familiarity and awareness regarding the requirements to perform subrecipient monitoring in accordance with Federal regulations. EFFECT: Failure to adequately communicate and monitor the activities and performance of a subrecipient could result in Federal awards being used for unauthorized purposes and the County’s inability to adequately perform risk assessments on its subrecipients. QUESTIONED COSTS: None. CONTEXT: During the current audit period, we noted multiple subrecipients were awarded funds. During our review of the subrecipients, we noted adequate documentation was not maintained to support both the financial and programmatic monitoring of these subrecipients. Specifically, we noted documentation was not maintained to support the County’s evaluation of each subrecipients risk of noncompliance and the frequency of monitoring to be conducted by the County based on the assessed risk. Also, we noted no documentation was provided to verify whether the subrecipients were required to have a Single Audit conducted, including the County’s review of the report, and if applicable, issuance of a management decision on audit findings noted as required by 2 CFR 200.332d(3). IDENTIFICATION OF REPEATED FINDINGS: None. RECOMMENDATION: We recommend that the County review the allowable costs principles and consult with the grant body to determine if grant repayment is required. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: The County Board is planning to take the following steps: VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: See corrective action plan. ANCITPATED COMPLETION DATE: See corrective action plan. ANTICIPATED COMPLETION DATE: December 1, 2025.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Information on the Federal Program: Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Controls over Compliance, Modified Opinion Criteria: Title 2 U.S. Code of Federal Regulations (CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Section 200.332, Requirements for pass-through entities, states "All pass-through entities must: (a) ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward; (b) evaluate each subrecipient's risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring; (c) consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 (Specific conditions); (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved; (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501. 2 CFR 200.303 states in part: "The non-Federal enity 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." Condition: The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $3,431,839. In its March, 2022, Project and Expenditures Report, the City elected to use the standard allowance for identifying revenue loss and reported its Revenue Loss Due to Covid-19 Public Health Emergency as $3,431,839. During fiscal year ended September 30, 2023, the City made payments from its SLFRF federal award, totaling $1,600,000, to another local government entity for materials used by the other government for a water line project. The payments were supported by an invoice from the other government, to which were attached copies of invoices submitted to the other government by its vendors. The City reported in its March, 2023, Project and Expenditures Report that the payments were made under the Infrastructure: Drinking water: Transmission & distribution Project Expenditure Category and Subcategory. The City also reported the transactions as a subaward, including identification of the subrecipient, and reported each of the payments to the subrecipient in the Expenditures section, in that Project and Expenditures Report. The City was unable to provide: a copy of the subaward agreement that clearly identified the subaward to the subrecipient as a subaward and that included the information required by Section 200.332(a); supporting documentation that the City evaluated the subrecipient's risk of noncompliance as required by Section 200.332(b); supporting documentation that the City monitored the activities of the subrecipient as required by Section 200.332 (d); and/or supporting documentation that the City verified that the subrecipient was audited as required by Subpart F. Cause: The City did not have adequate internal controls to ensure compliance with the Subrecipient Monitoring compliance requirement. The City's past federal awards experience did not involve or include subawards. Effect or Potential Effect: Noncompliance by the subrecipient may occur due to the subrecipient not being aware of the federal program's requirements and due to the City not sufficiently monitoring the subrecipient. Recommendation: We recommend that management of the City design and implement a comprehensive system of internal controls over federal award compliance, including development of policies and procedures to ensure compliance with the Subrecipient Monitoring compliance requirement. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plan
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Information on the Federal Program: Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Controls over Compliance, Modified Opinion Criteria: Title 2 U.S. Code of Federal Regulations (CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Section 200.332, Requirements for pass-through entities, states "All pass-through entities must: (a) ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward; (b) evaluate each subrecipient's risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring; (c) consider imposing specific subaward conditions upon a subrecipient if appropriate as described in Section 200.208 (Specific conditions); (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved; (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501. 2 CFR 200.303 states in part: "The non-Federal enity 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." Condition: The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $3,431,839. In its March, 2022, Project and Expenditures Report, the City elected to use the standard allowance for identifying revenue loss and reported its Revenue Loss Due to Covid-19 Public Health Emergency as $3,431,839. During fiscal year ended September 30, 2023, the City made payments from its SLFRF federal award, totaling $1,600,000, to another local government entity for materials used by the other government for a water line project. The payments were supported by an invoice from the other government, to which were attached copies of invoices submitted to the other government by its vendors. The City reported in its March, 2023, Project and Expenditures Report that the payments were made under the Infrastructure: Drinking water: Transmission & distribution Project Expenditure Category and Subcategory. The City also reported the transactions as a subaward, including identification of the subrecipient, and reported each of the payments to the subrecipient in the Expenditures section, in that Project and Expenditures Report. The City was unable to provide: a copy of the subaward agreement that clearly identified the subaward to the subrecipient as a subaward and that included the information required by Section 200.332(a); supporting documentation that the City evaluated the subrecipient's risk of noncompliance as required by Section 200.332(b); supporting documentation that the City monitored the activities of the subrecipient as required by Section 200.332 (d); and/or supporting documentation that the City verified that the subrecipient was audited as required by Subpart F. Cause: The City did not have adequate internal controls to ensure compliance with the Subrecipient Monitoring compliance requirement. The City's past federal awards experience did not involve or include subawards. Effect or Potential Effect: Noncompliance by the subrecipient may occur due to the subrecipient not being aware of the federal program's requirements and due to the City not sufficiently monitoring the subrecipient. Recommendation: We recommend that management of the City design and implement a comprehensive system of internal controls over federal award compliance, including development of policies and procedures to ensure compliance with the Subrecipient Monitoring compliance requirement. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plan
Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Disease Federal Award No.: NU50CK000513 Area: Cash Management Questioned Costs: $236,426 Criteria: In accordance with 2 CFR section 200.305(b)(3), reimbursement is preferred when the requirements in paragraph (b) cannot be met, when the Federal agency sets a specific condition per section 200.208. When the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass-through entity reasonably believes the request to be improper. Condition: Of forty transactions tested, aggregating $236,426 of a total population of $3,758,311, the following were noted: For forty (or 100%) samples tested, drawdown reports were not provided to substantiate that expenditures were incurred prior to the date of the reimbursement request. Cause: The FSM National Government lacked monitoring controls over adequate documentation and systematic filing of relevant documents supporting program costs. Effect: The FSM National Government appears to be in noncompliance with applicable cash management requirements and questioned cost of $236,426 is reported. Recommendation: The FSM National Government should strengthen and enforce compliance with the applicable cash management requirements and establish and implement systematic filing of relevant documentation supporting program costs for easy retrieval. Views of Responsible Officials: Management disagrees with the finding. Refer to FSM NG’s Views of Responsible Officials for their detailed response. Auditor Response: The finding remains as we could not locate nor find the required documentation within the files provided.
2023-006 – Department of the Interior Federal Program Name: Natural Resource Stewardship - Pass-Through Agency: N/A Assistance Listing Number: 15.944 Federal Award Identification Year: 2023 Award Period: 10/01/2022 – 09/30/2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.8(a) – Federal agencies are responsible for ensuring that specific Federal award conditions and performance expectations are consistent with the program design. 2 CFR 200.208 (c)(1) Specific conditions may include requiring payments as reimbursements rather than advance payments Condition: Regarding cash management and the requesting of reimbursement, there was not documented review and approval of the submission by management. Condition: Known: $672,870 Likely: $672,870. Context: Internal controls need to be formally documented as well as have support and authorization. With no authorization or proof that the internal control was completed, we cannot rely on the controls. Effect: Not having internal controls formalized and documented can lead to higher risk of noncompliance and misreporting. Cause: Internal controls are not formalized or documented Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CIES modifies its internal control policies for general review and approval of the reporting requirements set forth by the criteria listed above. Management’s Views: See separate corrective action plan.
Finding No. 2023-034 Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Criteria: Per the U.S. Treasury Interim and Final Rules, the U.S. Treasury is aligning the definition of subrecipient in the final rule with the definition of subrecipient in the Uniform Guidance, wherein, subrecipients are entities that receive a subaward from a recipient to carry out a program or project on behalf of the recipient with the recipient’s Federal award funding but does not include an individual that is a beneficiary of such award. The recipient remains responsible for monitoring and overseeing the subrecipient’s use of State and Local Fiscal Recovery Funds (SLFRF) and other activities related to the award to ensure that the subrecipient complies with the statutory and regulatory requirements and the terms and conditions of the award. Recipients also remain responsible for reporting to the U.S. Treasury on their subrecipients’ use of payments from the SLFRF funds for the duration of the award. Accordingly, in accordance with 2 CFR §200.332, a pass-through entity (PTE) must: 1. Verify that the subrecipient is not excluded or disqualified in accordance with §180.300. Verification methods are provided in §180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. 2. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A PTE must provide the best available information when some of the information below is unavailable. A PTE must provide the unavailable information when it is obtained. One of the required information includes: (1) Federal award identification: (i) Subrecipient’s unique entity identifier; (ii) Federal Award Identification Number (FAIN); (iii) Federal Award Date; (iv) Subaward Period of Performance Start and End Date; (v) Total Amount of Federal Funds Obligated to the subrecipient by the PTE, including the current financial obligation; Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Criteria, continued: (vi) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (vii) Name of the Federal agency; and (viii) Assistance Listings title and number; the PTE must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement. (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the PTE imposes on the subrecipient for the PTE to meet its responsibilities under the Federal award. This includes information and certifications (see §200.415) required for submitting financial and performance reports that the PTE must provide to the Federal agency; (4) A requirement that the subrecipient permits the PTE and auditors to access the subrecipient's records and financial statements for the PTE to fulfill its monitoring requirements; and (5) Appropriate terms and conditions concerning the closeout of the subaward. 3. Evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient’s risk, a PTE should consider the following: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Criteria, continued: (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). 4. If appropriate, consider implementing specific conditions in a subaward as described in §200.208 and notify the Federal agency of the specific conditions. 5. Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The PTE is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a PTE must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the PTE as required by §200.521. (4) Resolve audit findings specifically related to the subaward. However, the PTE is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the PTE may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Criteria, continued: 6. Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. 7. Verify that a subrecipient is audited as required by subpart F of this part. 8. Consider whether the results of a subrecipient's audit, site visits, or other monitoring necessitate adjustments to the pass-through entity's records. 9. Consider taking enforcement action against noncompliant subrecipients as described in §200.339 and in program regulations. Condition: 1. Of four new subawards made during FY2023, aggregating $5,450,541 of a total population of $5,450,541, the following were noted: a. For four (or 100%), documentation of the risk assessments performed and verification as to whether the subrecipients are not suspended, debarred, or otherwise excluded from receiving Federal funds, were not provided. Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Condition, continued: b. For two (or 50%), subaward agreements provided were incomplete (pages missing). Accordingly, we could not determine if the subawards: (1) Were clearly identified to the subrecipients as subawards; (2) Included the following required information: (a) Federal award identification numbers (FAIN); (b) Federal award date; (c) Subaward period of performance start and end dates; (d) Total amount of federal funds obligated to the subrecipient by the pass-through entity including the current financial obligation for subaward number CNMI22046A/CNMI22046B, which has multiple subawards; (e) Total amount of the federal award committed to the subrecipient by the pass-through entity for subaward number CNMI22046A/CNMI22046, which has multiple subawards; (f) Name of Federal awarding agency; (g) Assistance Listing number for subaward number CNMI22046A/CNMI22046B); (h) Identification of the dollar amount made available under each Federal award at the time of disbursements; (3) Included all requirements of the subawards, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (4) Included any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see §200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Condition, continued: (5) Included requirements that the subrecipients permit the pass-through entity and auditors to access the subrecipients’ records and financial statements for the pass-through entity to fulfill its monitoring requirements; and (6) Included appropriate terms and conditions concerning the closeout of the subaward. In addition, the page reflecting the award date for subaward number CNMI22051 was also not provided; thus, the award date is presented as Unknown. No questioned costs are presented as amounts are questioned at Condition 1a. c. For two (or 50%), subaward agreements did not include the following required information: (1) Subrecipients’ unique entity identifiers; (2) Federal award identification numbers (FAIN); (3) Federal award date; (4) Total amount of federal funds obligated to the subrecipient by the pass-through entity including the current financial obligation for subaward number CNMI22044A, which has two subawards; (5) Total amount of the federal award committed to the subrecipient by the pass-through entity for subaward number CNMI22044A, which has two subawards; (6) Identification of the dollar amount made available under each Federal award at the time of disbursements; (7) Appropriate terms and conditions concerning the closeout of the subaward No questioned costs are presented as amounts are questioned at Condition 1a. Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Condition, continued: 2. Of seven subrecipients tested for monitoring compliance requirements, aggregating $15,640,541 of a total population of $15,640,541, documentation on monitoring procedures performed during FY2023 for the seven (or 100%) subrecipients, including documentation of the verification as to whether the subrecipients are subject to the audit requirements, were not provided. In addition, other than Award Number CNMI22044, subaward agreements for six subrecipients were not provided; accordingly, award dates were presented as unknown. No questioned costs are presented for six subrecipients as there were no subaward disbursements made during FY2023. Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Condition, continued: 3. Of nine monitoring procedure requirements tested at the invoice/disbursement level, aggregating $16,693,880 of a total population of $16,693,880, for five (or 56%) disbursements, review and approval of either the invoices, drawdowns and/or payment requests to ensure that subrecipients used the subaward for authorized purposes in compliance with Federal statutes, regulations, and the terms and conditions of the subawards, were not evident. Cause: 1. CNMI does not have approved/adopted written subrecipient monitoring policies and procedures; 2. Documentation of the risks assessments and the monitoring procedures performed, including verifications as to whether the subrecipients are subject to the audit requirements and are not suspended, debarred, or otherwise excluded from receiving Federal funds, could not be located on file and/or were not performed; 3. CNMI failed to enforce compliance with subrecipient monitoring compliance requirements and lacks monitoring controls over the subrecipient monitoring compliance requirements. Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Cause: 4. Inadequate documentation and systematic filing of relevant documentation supporting program costs. In addition, for award numbers CNMI22044 and CNMI22044A, the Entity’s management has determined that it should be classified as a contractor under the agreement as the Entity’s role is to promote the program within CNMI, develop a marketing and promotional campaign and disburse the award to the recipients identified by the CNMI. The Entity was not involved in reviewing and deciding which grant applicant is eligible to receive the grant. CNMI’s role in the review of grant applications and eligibility determination may have caused confusion as to whether the Entity that received the funds is a subrecipient or a contractor. As of the auditor’s report date, CNMI and the Entity have yet to conclude whether the Entity received the funds in the role of a subrecipient or a contractor. Effect or Potential Effect: CNMI is in noncompliance with applicable subrecipient monitoring compliance requirements and questioned costs of $15,640,541 result. Identification as a Repeat Finding: Finding No. 2022-031 Recommendation: We recommend CNMI establish approved/adopted written subrecipient monitoring policies and procedures and an approved template that includes all required clauses needed for subrecipient agreements. In addition, CNMI should implement and enforce monitoring internal control procedures over the following: Finding No. 2023-034, continued Federal Agency: U.S. Department of the Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $15,640,541 Recommendation, continued: 1. Verification as to whether the subrecipients are not suspended, debarred, or otherwise excluded from receiving Federal funds; 2. Evaluation over each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring; 3. Monitoring procedures to ensure that all subaward agreements include the required information in accordance with 2 CFR §200.332(b)(1); 4. Monitoring activities of a subrecipient to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward; 5. Verification that subrecipients are audited as required by 2 CFR Part 200 Subpart F; and 6. Adequate documentation and systematic filing of relevant documentation supporting program costs. Views of Responsible Officials: Conditions 1 to 3 - CNMI Department of Finance agrees with this finding. During FY2023, the Department of Finance became aware that existing practices for subrecipient monitoring did not fully meet federal requirements under 2 CFR 200.331–200.332. DOF began implementing corrective actions in the latter part of FY2023 and continued strengthening procedures throughout FY2024, including improvements in documentation, SAM.gov verification, and basic risk assessment elements. Refer to CNMI’s Corrective Action Plan for additional information.
Finding No. 2023-038 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Criteria: Per 2 CFR § 200.1, a subrecipient in the Uniform Guidance are entities that receive a subaward from a recipient to carry out a program or project on behalf of the recipient with the recipient’s Federal award funding but does not include an individual that is a beneficiary of such award. The U.S. Department of Education engages with non-Federal entities by awarding federal funds in the form of a subaward as an extension of its services. The recipient remains responsible for monitoring and overseeing the use of federal funds and other activities related to the award to ensure that the subrecipient complies with the statutory and regulatory requirements and the terms and conditions of the award. Recipients also remain responsible for reporting to the U.S. Department of Education on their subrecipients’ use of payments from the ESF-Governor funds for the duration of the award. Accordingly, in accordance with 2 CFR §200.332, a pass-through entity (PTE) must: (a) Verify that the subrecipient is not excluded or disqualified in accordance with §180.300. Verification methods are provided in §180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A PTE must provide the best available information when some of the information below is unavailable. A PTE must provide the unavailable information when it is obtained. One of the required information includes: (1) Federal award identification: (i) Subrecipient’s unique entity identifier; (ii) Federal Award Identification Number (FAIN); (iii) Federal Award Date; (iv) Subaward Period of Performance Start and End Date; (v) Total Amount of Federal Funds Obligated to the subrecipient by the PTE, including the current financial obligation; Finding No. 2023-038, continued Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Criteria, continued: (vi) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (vii) Name of the Federal agency; and (viii) Assistance Listings title and number; the PTE must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement. (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the PTE imposes on the subrecipient for the PTE to meet its responsibilities under the Federal award. This includes information and certifications (see §200.415) required for submitting financial and performance reports that the PTE must provide to the Federal agency; (4) A requirement that the subrecipient permits the PTE and auditors to access the subrecipient's records and financial statements for the PTE to fulfill its monitoring requirements; and (5) Appropriate terms and conditions concerning the closeout of the subaward. (c) Evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient’s risk, a PTE should consider the following: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and Finding No. 2023-038, continued Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Criteria, continued: (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (d) If appropriate, consider implementing specific conditions in a subaward as described in §200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The PTE is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a PTE must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the PTE as required by §200.521. (4) Resolve audit findings specifically related to the subaward. However, the PTE is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the PTE may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Finding No. 2023-038, continued Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Criteria, continued: (f) Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (g) Verify that a subrecipient is audited as required by subpart F of this part. (h) Consider whether the results of a subrecipient's audit, site visits, or other monitoring necessitate adjustments to the pass-through entity's records. (i) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 and in program regulations. Condition: 1. For two (or 100%) new subawards made during FY2023, aggregating $6,641,757 of a total population of $6,641,757, there was no documentation of the risk assessments performed and verification as to whether the subrecipients are not suspended, debarred, or otherwise excluded from receiving Federal funds. Finding No. 2023-038, continued Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Condition, continued: Further, the subaward agreements did not include the following required information: (1) Subrecipients’ unique entity identifiers; and (2) Appropriate terms and conditions concerning the closeout of the subaward. 2. For two (or 100%) subrecipients subject to monitoring compliance requirements, aggregating $6,641,757 of a total population of $6,641,757, there was no documentation on monitoring procedures performed during FY2023, and no documentation of the verification as to whether the subrecipients are subject to the audit requirements. CNMI did not provide evidence of procedures used to determine that the subrecipients (which expended more than $750,000 in Federal awards) have met the audit requirement of 2 CFR part 200, subpart F and that the required audits are completed within nine months of the end of the subrecipient’s audit period. No questioned costs are presented as amounts are questioned at Condition 1. Cause: 1. CNMI does not have an established subrecipient risk assessment policy and procedures prior to entering into the subaward agreement and to identify the type of monitoring procedures required to be performed for the subrecipient. 2. CNMI does not have an established policy or procedure that monitors whether a subrecipient that incurs expenditures above $750,000 during the year, has hired the services of a reputable auditor to conduct a single audit engagement and to ensure that follow-up corrective actions have been performed as regards to the deficiencies identified during the previous audits. 3. Inadequate documentation and systematic filing of relevant documentation supporting program costs. Finding No. 2023-038, continued Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Effect or Potential Effect: CNMI is in noncompliance with applicable subrecipient monitoring compliance requirements and questioned costs of $6,641,757 result for Condition 1. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend CNMI establish approved/adopted written subrecipient monitoring policies and procedures and an approved template that includes all required clauses needed for subrecipient agreements. In addition, CNMI should implement and enforce monitoring internal control procedures over the following: a. Evaluation over each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring; b. Monitoring procedures to ensure that all subaward agreements include the required information in accordance with 2 CFR §200.332(b)(1); c. Monitoring activities of a subrecipient to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward; d. Verification that subrecipients are audited as required by 2 CFR Part 200 Subpart F; and e. Adequate documentation and systematic filing of relevant documentation supporting program costs. Finding No. 2023-038, continued Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425H Education Stabilization Fund - Governors (Outlying Areas) (ESF-Governor) Federal Award No.: S425H210001 Area: Subrecipient Monitoring Questioned Costs: $6,641,757 Views of Responsible Officials: Conditions 1 and 2 - CNMI Department of Finance agrees with this finding. CNMI submitted risk assessment and monitoring compliance documentation to the auditor on February 26, 2026, after the agreed February 19, 2026 deadline, resulting in evidence timing deficiency. CNMI established Standard Operating Procedures for subrecipient monitoring effective October 28, 2026. Management will implement standardized file labeling and retention procedures in accordance with the SOP so that each subrecipient file contains the subrecipient determination, required subaward clauses, the unique entity identifier, documented SAM.gov exclusion checks, and verification of audit requirements. In alignment with 2 CFR §200.332, CNMI will review financial and performance reports quarterly, conduct an annual performance assessment using a standardized checklist (updated annually or upon project completion), maintain documentation of all monitoring activities, and verify audit status for entities subject to the Single Audit Act. The risk assessment and monitoring compliance documentation for this grant is available to the auditor upon request. Refer to CNMI’s Corrective Action Plan for additional information.
Criteria: Per 2 CFR 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." 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 earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. 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 is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 22 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Local educational agencies that receive funds under the American Rescue Plan - Elementary and Secondary School Emergency Relief Fund (ESSER III) are to reserve not less than 20 percent of the funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups. This requirement was set out in the enabling legislation for the funds and further implemented in the Education Stabilization Relief Fund Application III, which the School Corporation was required to complete for its award. As the School Corporation fully expended its ESSER III award during the audit period, earmarking was tested. The School Corporation, per its application, was required to set aside a total of $329,358 of ESSER III grant funds to be used to provide additional opportunities to students including summer school, career coach, and a social emotional academic learning liaison. Of the grant proceeds received by the School Corporation, a total of $27,840 was expended towards the established set aside. Therefore, only 9 percent of the required 20 percent minimum earmarking requirement was spent. The remaining set aside amount, $301,518, that was requested for reimbursement, was spent on activities that were not a part of the earmarking requirement. The lack of internal controls and noncompliance was isolated to the ESSER III grant noted above. 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 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed. . . ." Section 2001(e)(1) of the ARP Act states in part: "A local educational agency that receives funds under this section— (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups . . ." INDIANA STATE BOARD OF ACCOUNTS 23 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the required set-aside was not spent by the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure required earmarking requirements are met. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 22 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Local educational agencies that receive funds under the American Rescue Plan - Elementary and Secondary School Emergency Relief Fund (ESSER III) are to reserve not less than 20 percent of the funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups. This requirement was set out in the enabling legislation for the funds and further implemented in the Education Stabilization Relief Fund Application III, which the School Corporation was required to complete for its award. As the School Corporation fully expended its ESSER III award during the audit period, earmarking was tested. The School Corporation, per its application, was required to set aside a total of $329,358 of ESSER III grant funds to be used to provide additional opportunities to students including summer school, career coach, and a social emotional academic learning liaison. Of the grant proceeds received by the School Corporation, a total of $27,840 was expended towards the established set aside. Therefore, only 9 percent of the required 20 percent minimum earmarking requirement was spent. The remaining set aside amount, $301,518, that was requested for reimbursement, was spent on activities that were not a part of the earmarking requirement. The lack of internal controls and noncompliance was isolated to the ESSER III grant noted above. 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 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed. . . ." Section 2001(e)(1) of the ARP Act states in part: "A local educational agency that receives funds under this section— (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups . . ." INDIANA STATE BOARD OF ACCOUNTS 23 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the required set-aside was not spent by the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure required earmarking requirements are met. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 22 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Local educational agencies that receive funds under the American Rescue Plan - Elementary and Secondary School Emergency Relief Fund (ESSER III) are to reserve not less than 20 percent of the funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups. This requirement was set out in the enabling legislation for the funds and further implemented in the Education Stabilization Relief Fund Application III, which the School Corporation was required to complete for its award. As the School Corporation fully expended its ESSER III award during the audit period, earmarking was tested. The School Corporation, per its application, was required to set aside a total of $329,358 of ESSER III grant funds to be used to provide additional opportunities to students including summer school, career coach, and a social emotional academic learning liaison. Of the grant proceeds received by the School Corporation, a total of $27,840 was expended towards the established set aside. Therefore, only 9 percent of the required 20 percent minimum earmarking requirement was spent. The remaining set aside amount, $301,518, that was requested for reimbursement, was spent on activities that were not a part of the earmarking requirement. The lack of internal controls and noncompliance was isolated to the ESSER III grant noted above. 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 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed. . . ." Section 2001(e)(1) of the ARP Act states in part: "A local educational agency that receives funds under this section— (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups . . ." INDIANA STATE BOARD OF ACCOUNTS 23 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the required set-aside was not spent by the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure required earmarking requirements are met. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years: 20611-043-PN01, 21611-043-PN01, 21619-43-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-043-PN01, 21611-043-PN01, and 21619-43-PN01 grant awards could not be verified for the individual member schools. The non-public school share funds for all member schools were comingled and the aggregate amount of expenditures was then allocated to the member schools on a percentage basis. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-043-PN01, 21611-043-PN01, and 21619-43-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, it could not be determined if the School Corporation expended their required non-public proportionate share. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that the required non-public proportionate share amounts are spent as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years: 20611-043-PN01, 21611-043-PN01, 21619-43-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-043-PN01, 21611-043-PN01, and 21619-43-PN01 grant awards could not be verified for the individual member schools. The non-public school share funds for all member schools were comingled and the aggregate amount of expenditures was then allocated to the member schools on a percentage basis. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-043-PN01, 21611-043-PN01, and 21619-43-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, it could not be determined if the School Corporation expended their required non-public proportionate share. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that the required non-public proportionate share amounts are spent as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-048-PN01, 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 26 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-006. Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of three of the six member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-048-PN01 and 22611-048-PN01 grant awards could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-048-PN01 and 22611-048-9N01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-048-PN01, 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 26 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-006. Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of three of the six member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-048-PN01 and 22611-048-PN01 grant awards could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-048-PN01 and 22611-048-9N01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-048-PN01, 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 SOUTH RIPLEY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of 3 of the 6 member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-048-PN01 and 22611-048-PN01 grant awards could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-048-PN01 and 22611-048-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 22 SOUTH RIPLEY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure non-public proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-048-PN01, 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 SOUTH RIPLEY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of 3 of the 6 member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-048-PN01 and 22611-048-PN01 grant awards could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-048-PN01 and 22611-048-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 22 SOUTH RIPLEY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure non-public proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-021-PN01, 21611-021-PN01, 22619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-021-PN01, 21611-021-PN01, and 22619-021-PN01 grant awards could not be verified for the individual member school corporations. Total grant expenditures were posted as expended. The Non-Public Proportionate Share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-021-PN01, 21611-021-PN01, and 22619-021-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation's Non-Public Proportionate Share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum Non-Public Proportionate Share as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school corporation based on expenses charged directly on behalf of the member school corporation. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-021-PN01, 21611-021-PN01, 22619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-021-PN01, 21611-021-PN01, and 22619-021-PN01 grant awards could not be verified for the individual member school corporations. Total grant expenditures were posted as expended. The Non-Public Proportionate Share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-021-PN01, 21611-021-PN01, and 22619-021-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation's Non-Public Proportionate Share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum Non-Public Proportionate Share as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school corporation based on expenses charged directly on behalf of the member school corporation. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-021-PN01, 21611-021-PN01, 22619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services Cooperative (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-021-PN01, 21611-021-PN01, and 22619-021-PN01 grant awards could not be verified for the individual member school corporations. Total grant expenditures were posted as expended. The Non-Public Proportionate Share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-021-PN01, 21611-021-PN01, and 22619-021-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation's Non-Public Proportionate Share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum Non-Public Proportionate Share as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school corporation based on expenses charged directly on behalf of the member school corporation. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.