FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were to be prepared and submitted by the School Principal and reviewed by the Executive Business Director; however, no evidence of this review or oversight process could be provided. As such, the annual data reports were prepared and submitted to the IDOE without an oversight or review process to prevent, or detect and correct, errors. In addition, five of six reports submitted during the audit period were not supported by the School Corporation's records. The following errors were identified: The ESSER I, Year 2 report, which had an applicable reporting period of October 1, 2020 through June 30, 2021, reported $534,761 in expenditures; however, actual expenditures for the applicable reporting period totaled $478,883. The ESSER I, Year 3 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $243,814.67. The ESSER II, Year 1 report, which had an applicable reporting period of July 1, 2020 to June 30, 2021, reported $733 in expenditures; however, actual expenditures for the applicable reporting period totaled $322,539. The ESSER II, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $276,642. The ESSER III, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $1,315,208. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, reports were not accurately submitted to the IDOE. 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 reports are submitted accurately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were to be prepared and submitted by the School Principal and reviewed by the Executive Business Director; however, no evidence of this review or oversight process could be provided. As such, the annual data reports were prepared and submitted to the IDOE without an oversight or review process to prevent, or detect and correct, errors. In addition, five of six reports submitted during the audit period were not supported by the School Corporation's records. The following errors were identified: The ESSER I, Year 2 report, which had an applicable reporting period of October 1, 2020 through June 30, 2021, reported $534,761 in expenditures; however, actual expenditures for the applicable reporting period totaled $478,883. The ESSER I, Year 3 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $243,814.67. The ESSER II, Year 1 report, which had an applicable reporting period of July 1, 2020 to June 30, 2021, reported $733 in expenditures; however, actual expenditures for the applicable reporting period totaled $322,539. The ESSER II, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $276,642. The ESSER III, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $1,315,208. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, reports were not accurately submitted to the IDOE. 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 reports are submitted accurately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSERI II reports, and two ESSER III reports for a total of six reports. The reports were prepared and submitted by the Finance Manager without a documented oversight or review process. In addition, four of the six annual data reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted; therefore, we could not determine the accuracy of the annual data reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 17 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." 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, reports were not supported by the School Corporation's records. 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 records of the School Corporation support the expenditures reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSERI II reports, and two ESSER III reports for a total of six reports. The reports were prepared and submitted by the Finance Manager without a documented oversight or review process. In addition, four of the six annual data reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted; therefore, we could not determine the accuracy of the annual data reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 17 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." 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, reports were not supported by the School Corporation's records. 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 records of the School Corporation support the expenditures reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSERI II reports, and two ESSER III reports for a total of six reports. The reports were prepared and submitted by the Finance Manager without a documented oversight or review process. In addition, four of the six annual data reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted; therefore, we could not determine the accuracy of the annual data reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 17 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." 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, reports were not supported by the School Corporation's records. 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 records of the School Corporation support the expenditures reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSERI II reports, and two ESSER III reports for a total of six reports. The reports were prepared and submitted by the Finance Manager without a documented oversight or review process. In addition, four of the six annual data reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted; therefore, we could not determine the accuracy of the annual data reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 17 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." 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, reports were not supported by the School Corporation's records. 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 records of the School Corporation support the expenditures reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSERI II reports, and two ESSER III reports for a total of six reports. The reports were prepared and submitted by the Finance Manager without a documented oversight or review process. In addition, four of the six annual data reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted; therefore, we could not determine the accuracy of the annual data reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 17 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." 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, reports were not supported by the School Corporation's records. 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 records of the School Corporation support the expenditures reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund. 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 Program: Various, including AL 20.509 – Formula Grants for Rural Areas and Tribal Transit Program – Reporting Grant Number & Year: Various Federal Grantor Agency: Various, including U.S. Department of Transportation Pass-Through Entity: Various, including Nebraska Department of Transportation Criteria: Title 2 of the U.S. Code of Federal Regulations (CFR) § 200.510(b) (January 1, 2023) states, in part, the following: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with § 200.502. . . . (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. . . . Title 2 CFR § 200.302(b) (January 1, 2023) states, in relevant part, the following: The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. Title 2 CFR § 200.303 (January 1, 2023) states the following, in relevant 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). Title 2 CFR § 200.511(a) (January 1, 2023) requires the auditee to prepare a summary schedule of prior audit findings. Per subsection (b)(2) of that same regulation, “When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding’s recurrence and planned corrective action, and any partial corrective action taken.” The U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in Title 2 CFR § 1201.10 (January 1, 2023). A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures Federal Awards (SEFA) is properly presented and includes all Federal expenditures made by the County during the fiscal year. Condition: Kimball County does not have adequate procedures in place to ensure the SEFA is prepared accurately and includes all Federal expenditures of the County. Consequently, there were numerous errors in the SEFA that were identified by the auditors. A similar finding was noted during the fiscal year 2022 audit. The Summary Schedule of Prior Audit Findings lists the status of this finding as complete. Repeat Finding: Finding # 2022-002 Questioned Costs: None Statistical Sample: No Context: Specifically, we noted the following errors during our audit: • Fiscal year 2023 Federal expenditures of $276,566 were improperly omitted from the SEFA for Assistance Listing 20.509. • Fiscal year 2022 Federal expenditures of $92,389 were improperly included as fiscal year 2023 expenditures for Assistance Listing 20.509. • Non-Federal expenditures of $253,869 were improperly included as Federal Expenditures for Assistance Listing 20.509. These expenditures were paid with State funds and, therefore, should not have been included on the SEFA. • The SEFA provided by Kimball County did not include the assistance listing number to which the expenditures were related, nor did it identify the name of the pass-through entity or the identifying number assigned by the pass-through entity. Corrections were made for these errors after they were identified by the auditors to ensure the SEFA was properly presented. Cause: Kimball County continues to lack personnel with adequate knowledge of Federal reporting and compliance requirements to prepare an accurate SEFA. Effect: Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or failure to audit programs that should be audited. Recommendation: We recommend the County work with their pass-through entities to obtain training necessary to understand fully Federal reporting and compliance requirements, including how to prepare the SEFA accurately. View of Officials: The information provided to the auditors regarding the SEFA did contain additional information such as the Federal and State reimbursements for the months before and after the fiscal year. While it is our responsibility to provide just the information required, the information was trackable and accurate per month.
FINDING 2023-009 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were prepared by the Chief Financial Officer and reviewed by a second knowledgeable individual; however, this process did not allow for the prevention, or detection and correction, of errors prior to submission. INDIANA STATE BOARD OF ACCOUNTS 30 MADISON-GRANT UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Due to the lack of effective internal controls, one of the six annual data reports was not supported by the School Corporation's records. For the ESSER 1, Year 2 report, which covered the period of October 1, 2020 to June 30, 2021, the School Corporation's records did not support the data reported. The total expenditures were not correct and the key line item did not match to the records of the unit. The lack of internal controls and noncompliance were isolated to the ESSER I, Year 2 report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." 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 ESSER I, Year 2 report was not supported by the School Corporation's records. 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. INDIANA STATE BOARD OF ACCOUNTS 31 MADISON-GRANT UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 all expenditures are reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 32
2023-002 - Significant Deficiency - Coronavirus State & Local Fiscal Recovery Funds - Lack of Written Policies and Procedures including Suspension & Debarment and Conflict of Interest Federal Expenditures Compliance Requirement: Procurement and Written Policies ALN Number: 21.027 Criteria: Title 2 of the U.S. Code of Federal Regulations (CFR) 180.300 (January 1, 2021) requires non-federal entities to verify an entity is not excluded or disqualified prior to entering into a covered transaction by, "(a) Checking SAM Exclusions; or (b) Collecting a certification from that [entity]; or (c) Adding a clause or condition to the covered transaction with that [entity]." A good internal control plan requires adequate procedures to ensure the County has proper procedures in place to verify that contractors paid with grant funds are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities. The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, and or/standards of conduct, except if excluded in compliance supplement. There are four basic reasons for creating an internal control system through defining and documenting processes with well-written policies and procedures: 1. Compliance 2. Operational Needs 2. Managing Risks 4. Continuous Improvement Complying with laws and regulations should be a critical funciton of the County. Well-defined and documented processes (i.e. procedures, training manuals) along with records that demonstrate process capability can make evident an effective internal control system and compliance to Federal guidelines. Another important role of documentation of procedures is to ensure processes fundamental to the County are properly guided by County's officials, and are consistent way that meets the County's needs, and that are important related information and data are captured and communicated. Documentation of procedures are important for controlling process, documenting the standard work that was performed and training new employees. Condition: The County lacks certain written policies and procedures required by Uniform Guidance. Although the County has an outdated Accounting Policy, certain policies for Federal Expenditures need to be updated and added. These include: 1. Financial management (200.302) 2. Payment (200.305) 3. General procurement standards (200.318) 4. Competition (200.319) 5. Methods of procurement to be followed (200.320) 6. Compensation - personal services (200.430) 7. Compensation - fringe benefits (200.431) 8. Relocation costs of employees (200.464) 9. Travel costs (200.474) Cause: Appears to be the result of a lack of training coupled with limited staffing and resources. Questioned Costs: None Context for Calculation of Questioned Costs: None Effect: Without adequate procedures to ensure contractors are not suspended, debarred or otherwise excluded from or ineligible for participation in Federal programs or activities, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the County implement proceduresto ensure, prior to entering into a covered transaction, that a contractor in not syspended, bebarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, and that procedures is adequately documented. Furthermore, the County should familiarize themselves with the Uniform Guidance and implement the following: 1. Develop and document all of its significant processes over federal awards. 2. Make the written policies and procedures available to all personnel and departments within the County. 3. Ensure the written policies and procedures are accurate, complete, and current at all times (The Board of County Commissioners should update the policy on an annual basis.) 4. Revise policies and procedures for changes in business processes and policies over federal awards. 5. Communicate significant changes to all affected personnel immediately to ensure they are aware of any revisions to their responsibilities to the federal award. 6. Document policies and procedures to facilitate training and provide guidelines relative to federal awards for changes in personnel.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
2023-008 – Internal Controls Over Compliance Federal Program: Refugee and Entrant Assistance Program Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.566 Repeat of Prior Finding: No Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria In accordance with 2 CFR § 200.302, the Organizations’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the federal award. Additionally, as required by 2 CFR 200.302(b)(4), the non-federal entity must exercise effective control over, and accountability for, all federal funds. Per 2 CFR. 200.303(a), the non-federal entity should use the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guideline. The COSO guideline indicates that proper segregation of duties between initiating, recording, and authorizing is a best practice as well as retaining documentation of performance and authorization controls. Condition and Context During our audit it was noted that the Organization had inadequate segregation of duties over cash disbursements. Further, written policies concerning cash management practices were not followed and there are no written policies in place regarding written approval of expenses prior to submitting requests for reimbursement. Cause Lack of segregation of incompatible tasks and written policies were not consistently followed. Effect or Potential Effect Lack of internal controls around supervising and authorizing cash management and financial management systems could result in mismanagement of federal funds. Questioned Costs None noted. Recommendations Initiating, authorizing, and recording transaction should not be performed by the same individual. Segregation of incompatible tasks should be implemented so that authorization and review of cash draws of federal or state funds is done by someone other than the individual who initiates and records the transaction. Additionally, there should be written policies in place surrounding cash management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendations. See the attached corrective action plan.
Statement of condition: For the Provider Relief Funds, there were no written policies and procedures. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.302 (b)(6) and (7) states that the non-federal entity must establish written procedures to implement the requirements of 2 CFR 200.305 and written procedures for determining the allowability of costs in accordance with 2 CFR 200 Subpart E as well as terms and conditions of the Federal award. Cause of condition: No controls to establish written policies and procedures when Federal awards are received. Effect of condition: During testing, it was noted that there were no written policies and procedures regarding the Federal award. Context: Policies and procedures were verbally communicated or written during fieldwork to assist with testing. Recommendation: To establish written policies and procedures for Federal awards. Views of responsibile officials and planned corrective actions: Management agrees with this finding and will write policies and procedures for Federal awards.
Finding 2023-006 Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): 22611-020-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Management misinterpreted the instructions for the reporting requirements and believed that they did not need to fill in the expense information as an LEA. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was required to submit one Annual Data Report for each year in the audit period to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards. There was no documented review by someone other than the preparer of the Annual Data Report to ensure the information submitted was complete and accurate. Additionally, amounts reported on each ESSER I Annual Data Report did not agree to underlying detail for the ESSER I grant. ESSER I was overstated on the Year 2 report by $23,853 and ESSER I was understated on the Year 3 report by $25,761. The finding is isolated to the S425D200013 award (ESSER I). Identification as a repeat finding: No. Recommendation: We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2023-006 Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): 22611-020-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Management misinterpreted the instructions for the reporting requirements and believed that they did not need to fill in the expense information as an LEA. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was required to submit one Annual Data Report for each year in the audit period to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards. There was no documented review by someone other than the preparer of the Annual Data Report to ensure the information submitted was complete and accurate. Additionally, amounts reported on each ESSER I Annual Data Report did not agree to underlying detail for the ESSER I grant. ESSER I was overstated on the Year 2 report by $23,853 and ESSER I was understated on the Year 3 report by $25,761. The finding is isolated to the S425D200013 award (ESSER I). Identification as a repeat finding: No. Recommendation: We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
2023-003 Internal Control Over Financial Reporting Title and Assistance Listing Number of the Federal Program: 84.425D COVID-19 - Elementary and Secondary School Emergency Relief Fund; 84.425U COVID-19 - American Rescue plan - Elementary and Secondary School Emergency Relief Fiscal Year Finding Originated: 2023 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Name of Federal Agency: Department of Education Pass-through Agency: Louisiana Department of Education / East Baton Rouge Parish School Board Questioned Costs: No questioned costs reported. Condition: Significant audit adjustments were required to fairly present the consolidated financial statements and related Schedule of Expenditures of Federal Awards (SEFA). Criteria: According to 2 CFR 200.508 “Auditee Responsibilities” the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 “Financial statements”). Title 2 CFR 200.510 “Financial statements” requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 “Financial management”, the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. When federal expenditures are incurred over $750,000, a Single Audit is required to be performed under Uniform Guidance. Failure to properly record federal expenditures could cause the Academies to not have a Single Audit performed, or have it performed improperly, which would be considered noncompliant with Uniform Guidance. Cause: The impacts of the financial statement audit adjustments are as follows: • Accounts receivable and revenue related to Employee Retention Tax Credits were overstated by $600,000. • Revenues and expenditures related to reimbursement-based federal grants included in testing as a major program were understated $426,863. The Academies did not record certain grant revenues and expenditures for expenditures paid directly by the granting agency on behalf of the Academies. This adjustment impacted the SEFA and financial statements. • Revenue related to Child Nutrition Program funds were overstated $19,150. This adjustment impacted the SEFA and financial statements. • Adjustments to property and equipment resulting in a net increase to net assets of $29,583. • Adjustments to accumulated depreciation resulting in a net decrease in net assets of $54,906. • Adjustments to inter-school payable amounts resulting in a net increase in net assets of $23,015. • Adjustments to accounts payable resulting in a net increase in net assets of $60,179. • Adjustments to due to management company resulting in a net increase in net assets of $45,903. • Adjustments to compensated absences resulting in a net decrease in net assets of $24,391. Effect: The consolidated financial statements and related SEFA required material adjustments in order to be presented fairly. A lack of accounting practices can cause potential misstatements to remain unidentified and cause the financial statements and related schedules to be misleading. Noncompliance with Uniform Guidance may result in a temporary suspension of federal awards. Recommendation: We recommend the Academies implement monthly financial statement closing procedures which capture all relevant information necessary to reconcile accounts to supporting documentation on a timely basis. These procedures should include implementing internal controls over recording and monitoring revenues related to federal awards to ensure accuracy of funds recorded. Views of responsible officials: See views of responsible officials on page 36.
2023-003 Internal Control Over Financial Reporting Title and Assistance Listing Number of the Federal Program: 84.425D COVID-19 - Elementary and Secondary School Emergency Relief Fund; 84.425U COVID-19 - American Rescue plan - Elementary and Secondary School Emergency Relief Fiscal Year Finding Originated: 2023 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Name of Federal Agency: Department of Education Pass-through Agency: Louisiana Department of Education / East Baton Rouge Parish School Board Questioned Costs: No questioned costs reported. Condition: Significant audit adjustments were required to fairly present the consolidated financial statements and related Schedule of Expenditures of Federal Awards (SEFA). Criteria: According to 2 CFR 200.508 “Auditee Responsibilities” the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 “Financial statements”). Title 2 CFR 200.510 “Financial statements” requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 “Financial management”, the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. When federal expenditures are incurred over $750,000, a Single Audit is required to be performed under Uniform Guidance. Failure to properly record federal expenditures could cause the Academies to not have a Single Audit performed, or have it performed improperly, which would be considered noncompliant with Uniform Guidance. Cause: The impacts of the financial statement audit adjustments are as follows: • Accounts receivable and revenue related to Employee Retention Tax Credits were overstated by $600,000. • Revenues and expenditures related to reimbursement-based federal grants included in testing as a major program were understated $426,863. The Academies did not record certain grant revenues and expenditures for expenditures paid directly by the granting agency on behalf of the Academies. This adjustment impacted the SEFA and financial statements. • Revenue related to Child Nutrition Program funds were overstated $19,150. This adjustment impacted the SEFA and financial statements. • Adjustments to property and equipment resulting in a net increase to net assets of $29,583. • Adjustments to accumulated depreciation resulting in a net decrease in net assets of $54,906. • Adjustments to inter-school payable amounts resulting in a net increase in net assets of $23,015. • Adjustments to accounts payable resulting in a net increase in net assets of $60,179. • Adjustments to due to management company resulting in a net increase in net assets of $45,903. • Adjustments to compensated absences resulting in a net decrease in net assets of $24,391. Effect: The consolidated financial statements and related SEFA required material adjustments in order to be presented fairly. A lack of accounting practices can cause potential misstatements to remain unidentified and cause the financial statements and related schedules to be misleading. Noncompliance with Uniform Guidance may result in a temporary suspension of federal awards. Recommendation: We recommend the Academies implement monthly financial statement closing procedures which capture all relevant information necessary to reconcile accounts to supporting documentation on a timely basis. These procedures should include implementing internal controls over recording and monitoring revenues related to federal awards to ensure accuracy of funds recorded. Views of responsible officials: See views of responsible officials on page 36.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
Finding Reference 2023-003 Federal Agency: U.S. Department of Homeland Security Pass-through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Federal Emergency Management Agency (FEMA) Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2022-2023. During our audit procedures, we noted that the reports did not agree with the accounting and project records. Criteria 2 CFR 200.302 (a) states that the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend the Program Administrators to reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity. Questioned Cost None Views of Responsible Officials and Planned Corrective Actions The QPR Reports for the months from January to March 2023, were completed by the previous POC Recovery Office. We understand that expenses were reported in the QPR on the date when the certification with the contractor´s invoice was received at the Secretary of Engineering and Conservation of Infrastructure and not on the date of payment or disbursement of the invoice. For example, if the invoice was received in the month of February, the expense was recorded in the QPR from January to March even though it was not paid until the month of April. We are verifying each project reported in the QPR against the amount reported at the SIMA System. We expect to have updated and correct information for all the Quarterly Progress Reports for the period from January to March 2024. Implementation Date: Fiscal Year 2023-2024. Responsible Person: Dafne L. Claudio Sánchez, Accountant
Finding Reference 2023-003 Federal Agency: U.S. Department of Homeland Security Pass-through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Federal Emergency Management Agency (FEMA) Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2022-2023. During our audit procedures, we noted that the reports did not agree with the accounting and project records. Criteria 2 CFR 200.302 (a) states that the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend the Program Administrators to reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity. Questioned Cost None Views of Responsible Officials and Planned Corrective Actions The QPR Reports for the months from January to March 2023, were completed by the previous POC Recovery Office. We understand that expenses were reported in the QPR on the date when the certification with the contractor´s invoice was received at the Secretary of Engineering and Conservation of Infrastructure and not on the date of payment or disbursement of the invoice. For example, if the invoice was received in the month of February, the expense was recorded in the QPR from January to March even though it was not paid until the month of April. We are verifying each project reported in the QPR against the amount reported at the SIMA System. We expect to have updated and correct information for all the Quarterly Progress Reports for the period from January to March 2024. Implementation Date: Fiscal Year 2023-2024. Responsible Person: Dafne L. Claudio Sánchez, Accountant
FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, all Annual Data Reports were not submitted to the IDOE. 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 reports are submitted. 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 - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, all Annual Data Reports were not submitted to the IDOE. 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 reports are submitted. 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 - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, all Annual Data Reports were not submitted to the IDOE. 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 reports are submitted. 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 - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, all Annual Data Reports were not submitted to the IDOE. 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 reports are submitted. 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 - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, all Annual Data Reports were not submitted to the IDOE. 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 reports are submitted. 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 - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, all Annual Data Reports were not submitted to the IDOE. 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 reports are submitted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Program: AL 93.558 – Temporary Assistance for Needy Families; AL 93.563 – Child Support Enforcement; AL 93.568 – Low Income Home Energy Assistance (LIHEAP); AL 93.575 – Child Care and Development Block Grant; AL 93.658 – Foster Care Title IV-E; AL 93.778 – Medical Assistance Program; AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program – Allowable Costs/Cost Principles Grant Number & Year: 2001NETANF, FFY 2020; 2301NECSES, FFY 2023; 2301NELIEA, FFY 2023; 2301NECCDD, FFY 2023; 2301NEFOST, FFY 2023; 2305NE5ADM, FFY 2023; 233NE406S2514, FFY 2023 Federal Grantor Agency: U.S. Department of Health and Human Services and U.S. Department of Agriculture Criteria: 45 CFR § 75.405(a) (October 1, 2022) and 2 CFR § 200.405 (January 1, 2023) state, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR § 75.403 (October 1, 2022) and 2 CFR § 200.403 (January 1, 2023) provide the following, in relevant part: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. * * * * (g) Be adequately documented. See also §§ 75.300 through 75.309. Per 45 CFR § 75.303 (October 1, 2022) and 2 CFR § 200.303 (January 1, 2023), 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. Title 45 CFR § 75.302 (October 1, 2022) and 2 CFR § 200.302 (January 1, 2023) require financial management systems of the State sufficient to permit preparation of required reports and permit the tracing of funds to expenditures adequate to establish the use of these funds were in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Good internal control requires procedures to ensure that amounts charged to Federal funds are proper. Condition: Procedures to ensure journal entries and adjustments to the Public Assistance Cost Allocation Plan (PACAP) were not adequate, resulting in multiple Federal programs being overcharged. Repeat Finding: No Questioned Costs: $581,496 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: Each quarter, as the PACAP is prepared, the Agency makes multiple adjustments for costs that either were charged to Federal funds and should not have been, or costs that were not charged to Federal funds but are claimable to a Federal grant. We tested five adjustments between two quarters. One adjustment tested for the quarter ended December 31, 2022, was recorded to charge the Foster Care grant for allowable costs incurred by the Foster Care Review Office (FCRO), a separate agency. The amounts provided by FCRO erroneously included payroll charges from a previous quarter, inflating the amount charged. The FCRO later caught the mistake and adjusted the internal spreadsheet but did not alert the Agency to the error, so a correcting adjustment was never made to the PACAP. The amount charged was $353,984; however, the adjustment should have been $212,725, a difference of $141,259. Foster Care is matched at 50%, so the grant was overcharged $70,629, which are questioned costs. Due to this error, we reviewed a second Foster Care adjustment for the quarter ending March 31, 2023, and noted the Agency’s calculation included amounts for a State funded program that should have been removed, resulting in the grant being overcharged an additional $1,561. We also tested six journal entries that moved costs between cost centers to determine any impact on the PACAP and if those journal entries were appropriate. We noted three improper journal entries that the Agency had not corrected as of the end of the fiscal year: • A journal entry for $526,487 was performed in November 2022 to temporarily move postage costs of multiple programs from State funds to the Child Support Enforcement (CSE) grant until new coding could be created in the State’s accounting system to track expenses from one fiscal year to another. The intent was to reverse the entry as soon as the new coding was completed; however, the reversing entry was never performed. Since the Agency performs a quarterly adjustment for the CSE grant to charge indirect costs identified by the Agency’s PACAP to the grant, the CSE grant was overcharged a total of $263,628. No correcting entry had been made as of September 30, 2023. These are considered questioned costs. • A journal entry for $207,369 was performed in December 2022 to move expenses to allow payroll to post. The intent was to reverse the entry before the end of the fiscal year; however, that was not done. The expenses were moved from Medicaid administration and were charged to the Central Services and Supplies Cost Center, which is then allocated to numerous other Cost Centers that are further allocated or charged directly to Federal programs such as TANF and Child Care. Due to the intricacies of PACAP allocations, exact questioned costs are unknown. No correcting entry was made as of September 30, 2023. • A journal entry for $5,317,640 was done in February 2023 to move Premium Pay to the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) grant as additional pay for certain job roles allowed under that grant. However, the entry performed included some lines that were miscoded, most significantly a line for $764,187 that was supposed to move money within the same Cost Center (CC 25C21910 – Field Office Administration); however, it pulled costs out of Cost Center 25C21780 - Protection and Safety Policy Chief instead. Additionally, we confirmed with the Agency that the costs charged to CC 25C21910 under the CSLFRF grant were also allocated to other Federal programs through the PACAP, essentially charging Federal programs twice. Due to the intricacies of the PACAP allocations, total questioned costs are unknown; however, we were able to determine that this error caused Medicaid to be overcharged $149,478, LIHEAP to be overcharged $33,447, SNAP to be overcharged $44,984, Child Care to be overcharged $10,412, and TANF to be overcharged $7,357. Cause: Inadequate procedures to ensure that adjustments to the PACAP are proper and that journal entries are appropriate for each program. Effect: Unallowable expenditures were charged to Federal funds and there is an increased risk for errors, fraud, and non-compliance with Federal regulations. Recommendation: We recommend the Agency strengthen procedures to ensure adjusting entries are complete and accurate. We further recommend the Agency strengthen procedures to ensure compliance with Federal regulations. Management Response: The Agency agrees.
Program: AL 12.401 – National Guard Military Operations and Maintenance (O&M) Projects – Cash Management & Reporting Grant Number & Year: Appendices – W91243-21-2-1001, FFY 2021; W91243-22-2-1001, FFY 2022; W91243-22-2-1002, FFY 2022; W91243-22-2-1005, FFY 2022; W91243-22-2-1007, FFY 2022; W91243-22-2-1021, FFY 2022; W91243-22-2-1023, FFY 2022; W91243-22-2-1031, FFY 2022; W91243-23-2-1001, FFY 2023; W91243-23-2-1003, FFY 2023; W91243-23-2-1005, FFY 2023; W91243-23-2-1010, FFY 2023; W91243-23-2-1021, FFY 2023; W91243-23-2-1023, FFY 2023; W91243-23-2-1024, FFY 2023; W91243-23-2-1031, FFY 2023. Federal Grantor Agency: U.S. Department of Defense Criteria: Per 2 CFR § 1128.100 and 2 CFR § 1128.200 (January 1, 2023), the Department of Defense adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR parts 200.302, 200.303, and 200.305. Per 2 CFR § 200.303 (January 1, 2023): 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. Title 2 CFR § 200.302 (January 1, 2023) requires financial management systems of the State be sufficient to permit both the preparation of required reports and tracing of funds to expenditures adequate to establish that the use of these funds was in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Title 2 CFR § 200.305(a) (January 1, 2023) states, in part, “For states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 . . . .” Title 31 CFR Part 205 (July 1, 2022) implements the CMIA and requires State recipients to enter into agreements that document accepted funding techniques for Federal assistance programs. The CMIA Agreement between the State of Nebraska, Secretary of the Treasury, and U.S. Department of the Treasury, for the period July 1, 2022, through June 30, 2023, allows the program to request Federal funds in accordance with the monthly draw funding technique, which bases the amount requested on costs estimated to be incurred in the next month. Master Cooperative Agreement (October 2022), Article V – Payment, Section 503, Payment by Advance Method, states, “The advance payment method shall be according to procedures established in current NGB-AQ policy, NGR 5-1 Chapter 11 or successor CNGB I & M, and 2 CFR §200.305.” National Guard Policy (NG Policy) 5-1, National Guard Grants and Cooperative Agreements, Section 11-5, Advance Payment Method, Section (5), states, in part, “[T]he grantee agrees to minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the State. (no more than 45 days).” GCAPL 20-02 AQ-A Policy (February 4, 2020) turned NGR 5-1 into NG Policy 5-1. It generally maintained the principles and operational aspects of NGR 5-1, except as provisions of the document were adjusted in the AQ-A Policy. The AQ-A Policy did not make any changes to the 45-day requirement found in NGR 5-1. Instructions for OMB Standard Form 270 (REV. 1/2016) include the following for line 11a, “Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subrecipients.” Title 2 CFR § 200.511(b) (January 1, 2023) states in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit’s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding's recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency's or pass-through entity's management decision, the summary schedule must provide an explanation. A good internal control plan would include procedures to ensure that the times between the drawdown of Federal funds and the disbursements thereof are minimized and in compliance with State of Nebraska CMIA Agreement and National Guard Regulations. Condition: The Agency was not in compliance with the Federal cash management requirements during the fiscal year and did not properly report program outlays on the OMB Standard Form (SF) 270. A similar finding was noted in the prior audit. Repeat Finding: 2022-050 Questioned Costs: None Statistical Sample: No Context: We tested 25 drawdowns of Federal funds to support the Agency’s operations and noted the following: • Eleven drawdowns were not in compliance with NG Policy 5-1. The draws were expended from 48 to 166 days after the drawdown of Federal funds. The table below provides a summary of the 11 draws: See Schedule of Findings and Questioned Costs for chart/table. • In addition, five draws were not in compliance with CMIA Agreement requirements. Advance amounts were requested based on estimated costs to be incurred during the month covered by the requests. To determine the reasonableness of the estimates, the APA determined the time it took the Agency to expend amounts advanced (without consideration of any cash on hand). Five draws were expended between 48 and 111 days after the drawdown of Federal funds. • For 23 of 25 SF-270’s tested, the Agency did not properly report total program outlays on the OMB SF-270 report. The Agency reported the total drawdowns for the program to date, rather than actual cash disbursements, as total program outlays. The variance between what was reported and what should have been reported ranged from an underreporting of $45,247 to an overreporting of $1,143,496, with a net total overreporting of expenditures by $5,104,828 for the 25 reports tested. A similar finding was noted during the previous audit. In the Summary Schedule of Prior Audit Findings, the Agency stated the following as a reason for the recurrence: The requirement per the CMIA Agreement which requires the program to request Federal funds in accordance with the pre-issuance funding technique and that such funds are to be requested and deposited in a state account not more than three business days prior to disbursement of funds is not a reasonable standard for the National Guard Military Operations and Maintenance Program. The Agency stated further that it will seek a modification to the CMIA Agreement. However, under the State’s fiscal year 2022 and 2023 CMIA Agreements, the program is no longer required to follow the pre-issuance funding technique and instead follows the monthly draw funding technique. Thus, the Summary Schedule of Prior Audit Findings is not accurate. Cause: Inadequate procedures for estimating cash needs for the upcoming month. Regarding SF-270 reporting, the Agency stated that it did not plan to implement corrective action until State fiscal year 2024. Effect: The Agency is not in compliance with Federal cash management and reporting requirements, which could result in sanctions. Additionally, there is an increased risk for the loss of Federal funding. Recommendation: We recommend the Agency ensure the amount of time between the Federal draw and the disbursement of funds by the State is minimized and in compliance with the State of Nebraska CMIA Agreement and National Guard requirements. We also recommend the Agency report total program outlays in compliance with Federal requirements. Management Response: The Agency agrees with the finding. The drawdown timeline is a partial result of the variances in federal reimbursement functionalities and advance state requirement functionalities. The State Services Support Division has simultaneously been prioritizing workloads due to staffing shortages persistent through the first quarter end of fiscal year 2023-2024.