2025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-001: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-001: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-001: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria - 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Condition - During our testing, there was no formal review separate from the preparer over the reserve fund reconciliations for the federal program. Cause - The Home did not have an adequate internal control policy in place to ensure review and approval over the reserve fund reconciliations. Effect - The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs - None reported. Context/Sampling – A nonstatistical sample of three months out of twelve months were selected for testing. A lack of documented review was noted for all three months tested. Repeat Finding from Prior Years - Yes - 2024-003 Recommendation - We recommend that the Home enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials - Management agrees with the finding.
FINDING 2025-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2024, FY 2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 14 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Eligibility and the Special Tests and Provisions - Non-Profit School Food Service Accounts compliance requirements. Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending meal service sites of the Summer Food Service Program receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or a statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct-certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under the Supplemental Nutrition Assistance Program, the Food Distribution Program on Indiana Reservations, the Head Start Program (ALN 93.600), or, under most circumstances, the Temporary Assistance for Needy Families program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct-certified households do not need to complete an application. Free and reduced-price applications were completed online. The information entered in the applications was then automatically uploaded into the School Corporation's child nutrition software system. The software system calculated a student's eligibility for free and reducedprice meals based on the parameters within the system. The system parameters were entered by the Food Service Director, without a documented review or oversight process to ensure the parameters entered were accurate. Additionally, there was not a review process in place to ensure that the eligibility determinations made by the software system were in compliance with the requirements of the programs. School Food Accounts The School Corporation did not have internal controls in place to ensure that federal reimbursements received by electronic funds transfers (EFT) for meals served were properly credited to the School Lunch fund. The Treasurer was responsible for posting federal reimbursements to the School Lunch fund without an oversight, review, or approval process in place to ensure they were properly posted. The lack of internal controls was systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 15 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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). . . ." Cause Management of the School Corporation had not established a proper system of internal controls over income parameters entered annually into the food service software or over the verification of free and reduced-price applications. 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, errors. Management of the School Corporation had established a proper system of internal controls over non-EFT receipts; however, a proper system of internal controls had not been established for EFT receipts. Without the proper implementation of an effectively designed system of internal controls over EFT receipts, the internal control system cannot be capable of effectively preventing, or detecting and correcting, errors. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation implement policies and procedures to ensure that eligibility determinations are made properly and that federal reimbursements for meals served are credited to the School Lunch fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in their construction contracts that are subject to the wage rate requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause and that a copy of the payroll was submitted for each week in which contract work was performed. Two construction projects were paid for from the Elementary and Secondary School Emergency Relief Fund grant funds during the audit period. Both contracts were tested. One of the two contracts contained the required prevailing wage rate clause; however, a copy of the payroll was not submitted for either of the contracts for any week in which work was performed. 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 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation did not implement corrective action as planned to rectify the prior audit finding. This was partially due to the timing of the prior audit as well as an oversight by management. Upon realizing corrective action had not been taken, the grant had been fully expended, and corrective action was no longer possible. 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, certified payrolls were not obtained by the School Corporation, and one out of two contractors was not notified of prevailing wage requirements. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and ensure certified payrolls are obtained and contractors are notified of prevailing wage requirements as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Administration for Children and Families Federal Financial Assistance Listing #93.566, 2302SDRCMA, 10/01/2022 – 9/30/2024 Federal Financial Assistance Listing #93.566, 2402SDRCMA, 10/01/2023 – 9/30/2026 Refugee and Entrant Assistance – State Administered Programs Eligibility Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Two instances were identified where the participant was underpaid based upon eligibility for one month (2 participant files). Cause: The participant in each case obtained employment and no monthly redetermination form was completed to ensure the participant no longer was eligible to receive the monthly cash assistance. Additionally, the Organization experienced an increase in refugee arrivals at the beginning of the fiscal year creating an increase in the workload of staff members. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that the Organization would provide services to ineligible participants and the Organization would not detect ineligibility in a timely manner. Questioned Costs: None reported. The grant was under allocated. Context/Sampling: A nonstatistical sample of 60 participant case files out of more than 250 participant case files were selected for testing which included $149,528 of participant payments out of $668,330. Repeat Finding from Prior Year: Yes, prior year finding 2024‐003 Recommendation: We recommend management review the Organization’s policies, procedures and controls over eligibility with applicable program employees to ensure compliance with the federal program. View of Responsible Officials: Management is in agreement.
Passed through Lutheran Immigration and Refugee Service dba Global Refuge Federal Financial Assistance Listing #19.510, 323‐24‐00, 10/01/2023 – 9/30/2024 Federal Financial Assistance Listing #19.510, 323‐25‐00, 10/01/2024 – 9/30/2025 U.S. Refugee Admissions Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: In the sample of expenditures selected for testing, two instances were identified where the approval over the expense occurred after the check was written. Cause: The Organization underwent a transitional phase from paper‐based documentation to a digital workflow using Salesforce. This system change likely contributed to deviations in the established processes and internal controls, including the sequence of expense approvals. Effect: Lack of compliance with designed internal controls over disbursements allows for payment of expenses that were not approved prior to checks being written. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 payroll and nonpayroll disbursements out of more than 250 payroll and nonpayroll disbursements were selected for testing which included $31,198 out of $756,944. Repeat Finding from Prior Year: No Recommendation: We recommend management review the Organization’s policies, procedures and controls over expenses with applicable program employees to ensure approval of expenses occurs prior to checks being written and payments being made. View of Responsible Officials: Management is in agreement.
Passed through Lutheran Immigration and Refugee Service dba Global Refuge Federal Financial Assistance Listing #19.510, 323‐24‐00, 10/01/2023 – 9/30/2024 Federal Financial Assistance Listing #19.510, 323‐25‐00, 10/01/2024 – 9/30/2025 U.S. Refugee Admissions Program Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: We noted the following matters during testing which affected 2 participant files: a) One instance was identified where documentation for both the initial home visit and the 30‐day followup home visit was missing from the participant file. No case activity or other documentation was able to be provided to indicate that these visits were conducted in accordance with the federal program. b) One instance was identified where an expense was paid and reimbursed under the grant without evidence of a formal request, invoice support, review, or approval. Cause: The Organization experienced an increase in refugee arrivals at the beginning of the fiscal year creating an increase in the workload of staff members along with employee turnover occurring toward the end of the fiscal year. Additionally, the Organization underwent a transitional phase from paper‐based documentation to a digital workflow using Salesforce. This system change likely contributed to deviations in established processes and internal controls. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that the Organization would not be in compliance with the federal award was it relates to case file management. Questioned Costs: $39 Context/Sampling: A nonstatistical sample of 18 participant files out of 117 total participant files were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management review the Organization’s policies, procedures and controls over case file management with applicable program employees to ensure compliance with the federal program. View of Responsible Officials: Management is in agreement.
Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Condition: During the year, the former Senior Director of Housing & Facilities was responsible for the custody of assets and for authorizing and recording transactions in the Project’s accounting software, with limited routine oversight. Evidence of mitigating controls, such as supervisory review, documented by management approvals or signoffs, was not maintained. Cause: Staffing constraints and employee turnover have contributed to the current control environment’s inadequate segregation of duties and a lack of documented management oversight. Effect: This concentration of incompatible duties in a single individual, without documented oversight, increases the risk that errors or irregularities may occur and remain undetected. When control activities rely on a single individual’s institutional knowledge rather than documented procedures and effective internal controls, continuity and compliance can be difficult to maintain during periods of staff transition. Recommendations: Management should review existing policies and procedures and improve them where necessary to address gaps in the current control structure. Roles and responsibilities should be clearly defined and documented for all key financial reporting and compliance functions. Controls and mitigating controls should be designed, implemented, and documented, with particular attention given to segregation of duties and oversight. Evidence of supervisory review should be maintained routinely through sign-offs, checklists, or review logs. Staff involved in financial reporting and compliance should be familiar with applicable HUD requirements, the Uniform Guidance, and the entity's own policies to ensure ongoing adherence to federal program requirements. Management Comments: We concur with this finding and recognize the need for a more robust control environment. We are actively working to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with the Uniform Guidance.
Finding 2025-001: Inadequate Segregation of Duties and Lack of Documented Management Oversight Federal Program: U.S. Department of Housing and Urban Development - Supportive Housing for Persons with Disabilities (14.181) Compliance Requirement: Internal Control Over Compliance (2 CFR 200.303) Type of Finding: Significant Deficiency in Internal Control Over Financial Reporting and Compliance Known Questioned Costs: None Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Condition: During the year, the former Senior Director of Housing & Facilities was responsible for the custody of assets and for authorizing and recording transactions in the Project’s accounting software, with limited routine oversight. Evidence of mitigating controls, such as supervisory review, documented by management approvals or signoffs, was not maintained. Cause: Staffing constraints and employee turnover have contributed to the current control environment’s inadequate segregation of duties and a lack of documented management oversight. Effect: This concentration of incompatible duties in a single individual, without documented oversight, increases the risk that errors or irregularities may occur and remain undetected. When control activities rely on a single individual’s institutional knowledge rather than documented procedures and effective internal controls, continuity and compliance can be difficult to maintain during periods of staff transition. Recommendations: Management should review existing policies and procedures and improve them where necessary to address gaps in the current control structure. Roles and responsibilities should be clearly defined and documented for all key financial reporting and compliance functions. Controls and mitigating controls should be designed, implemented, and documented, with particular attention given to segregation of duties and oversight. Evidence of supervisory review should be maintained routinely through signoffs, checklists, or review logs. Staff involved in financial reporting and compliance should be familiar with applicable HUD requirements, the Uniform Guidance, and the entity's own policies to ensure ongoing adherence to federal program requirements. Views of Responsible Officials: We concur with this finding and recognize the need for a more robust control environment. We are actively working to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with the Uniform Guidance.
Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Condition: During the year, the former Senior Director of Housing & Facilities was responsible for the custody of assets and for authorizing and recording transactions in the Project’s accounting software, with limited routine oversight. Evidence of mitigating controls, such as supervisory review, documented by management approvals or signoffs, was not maintained. Cause: Staffing constraints and employee turnover have contributed to the current control environment’s inadequate segregation of duties and a lack of documented management oversight. Effect: This concentration of incompatible duties in a single individual, without documented oversight, increases the risk that errors or irregularities may occur and remain undetected. When control activities rely on a single individual’s institutional knowledge rather than documented procedures and effective internal controls, continuity and compliance can be difficult to maintain during periods of staff transition. Recommendations: Management should review existing policies and procedures and improve them where necessary to address gaps in the current control structure. Roles and responsibilities should be clearly defined and documented for all key financial reporting and compliance functions. Controls and mitigating controls should be designed, implemented, and documented, with particular attention given to segregation of duties and oversight. Evidence of supervisory review should be maintained routinely through sign-offs, checklists, or review logs. Staff involved in financial reporting and compliance should be familiar with applicable HUD requirements, the Uniform Guidance, and the entity's own policies to ensure ongoing adherence to federal program requirements. Management Comments: We concur with this finding and recognize the need for a more robust control environment. We are actively working to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with the Uniform Guidance.
SIGNIFICANT DEFICIENCIES 2025-002 – Allowable Costs and Allowable Activities Federal Program Information: 10.553,10.555,10.556,10.5599 Child Nutrition Cluster and 10.582 Criteria: The following CFR applies to this finding: 2 CFR 200.303 Condition: During audit procedures, it was identified that the Districts process to document approval and coding over disbursements is not working effectively. Cause: The District does not have the necessary internal controls over compliance. Effect: Insufficient controls could allow for unallowable costs to be charged. Identification Of Questioned Costs: None Identified Context: 25 Cash Disbursements were tested and it was found that 13 of the disbursements tested did not have the Purchase Orders or approval on the invoices and 14 of the disbursements that did not have account codes written on the invoices or purchase order to help ensure they were properly charged to the correct accounts. This is not statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the District implements internal control processes and procedures to ensure that they are following the criteria above. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the Maine School Administrative District No. 27.
FINDING 2025-001 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY24, FY25, FY24-FY25, FY24/25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that was effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the School Breakfast Program and the National School Lunch Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under the Supplemental Nutrition Assistance Program (SNAP), the Food Distribution Program on Indian Reservations (FDPIR), the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. The Food Service Director was responsible for generating and reviewing the direct certification reports. Eligibility is then manually checked by the Food Service Director or Food Service Manager, then it is cross-referenced with the Child Nutrition Program web database to ensure eligibility was uploaded correctly. For two students tested who received free or reduced priced lunches, the eligibility determination was incorrect. The students were classified as free; however, the students should have been regular paying students. 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 14 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. . . ." Cause For one student, the School Corporation erroneously accepted a possible match for a student on the direct certification report without confirming the match. The other student was incorrectly entered into the School Corporation's information system as "free." Effect Providing ineligible students free lunches would cause the School Corporation to receive too much federal funding from the program as amounts received are based on free and reduced meals served. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 15 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure student eligibility for free or reduced-price lunches is accurately determined. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Allowable Costs Federal Agency: United States Department of Education Federal Program Name: Special Education Cluster (IDEA) Assistance Listing Number: 84.027 / 84.173 Federal Award Identification Number and Year: HO27A230021 - 2023 (84.027) HO27A240021 - 2024 (84.027) H173A240024 - 2024 (84.173) H173A230024 - 2023 (84.173) Pass-Through Agency: Connecticut State Department of Education Pass-Through Number(s): 12060-SDE64370-20977-2024 12060-SDE64370-20983-2024 12060-SDE64370-20977-2025 12060-SDE64370-20983-2025 Award Period: 7/1/2023-6/30/2025 (2024 Grant) 7/1/2024-6/30/2026 (2025 Grant) Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matter Criteria or Specific Requirement: Under 2 CFR 200.303, the Board of Education must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). Condition: Out of a statistically valid sample of 60 payroll disbursements to individual employees, the Board of Education did not update the employees pay rate to reflect the amount approved in the new salary letter / union agreement for 2 payroll disbursements (both pertaining to the same employee). Questioned Costs: None noted. Context: The Town is required to make payroll disbursements in accordance with each employees approved salary letter / union agreement. Cause: 1 employee's pay rate was not updated to reflect the new fiscal year 2025 collective bargaining agreement for their specific union after its implementation in December 2024. Although retroactive pay for hours worked prior to ratification was correctly calculated and paid, the payroll system continued using the prior contracts rate for all subsequent pay periods through the end of the school year. This occurred due to a failure in the payroll update process following contract implementation. Effect: The employee was underpaid for the remainder of the school year, resulting in non-compliance with the collective bargaining agreement. The absence of adequate internal controls increases the risk of payroll errors and potential fraud. Repeat Finding: No Recommendation: We recommend that the Board of Education implement additional controls over payroll updates and establish a documented process for updating pay rates immediately after contract ratification. Additionally, review and verification of rate changes, along with periodic reconciliation against approved salary schedules or union agreements, should be performed to ensure accuracy and compliance. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding. The Board of Education will implement additional controls over payroll updates and establish a documented process for updating pay rates immediately after contract ratification. Additionally, review and verification of rate changes, along with periodic reconciliation against approved salary schedules or union agreements, should be performed to ensure accuracy and compliance.
Assistance Listing, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Pell Grant Program ALN 84.063 Federal Award Identification Number and Year - Various Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303, School Districts are required to establish and maintain effective internal controls over compliance with federal statutes, regulations, and the terms and conditions of federal awards. This includes oversight of third party service providers that manage key systems used in the administration of Title IV programs. Controls over the third party service providers should include access to systems and data, change management, data backup and recovery, and system operations and monitoring. Condition - The School District relies on two third party vendors to manage key financial aid systems, including student information, eligibility determinations, disbursement calculations, and reporting. During the audit period, the institution did not perform any oversight activities or testing to verify the integrity, accuracy, or compliance of the systems managed by the vendor. There were no documented controls, service level agreements, or monitoring procedures in place. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - No questioned costs Identification of How Questioned Costs Were Computed - N/A Context - The School District utilizes two third party vendors to manage key financial aid systems. The School District relies on the controls embedded into the systems by the third party vendors; however, the School District does not perform any internal control reviews over one of the systems. Cause and Effect - The School District did not have a formal process for evaluating or monitoring third party service providers. Roles and responsibilities for oversight were not clearly defined, and there was a lack of awareness regarding federal requirements for vendor accountability. The absence of oversight and testing over third party systems increases the risk of undetected errors, data integrity issues, and noncompliance with Title IV requirements. This represents a material weakness in internal control over compliance. Recommendation - We recommend the institution establish formal oversight procedures for third party service providers managing Title IV systems. This should include documented agreements, regular performance reviews, system access controls, and periodic testing of data accuracy and compliance. Responsibilities should be clearly assigned to ensure ongoing monitoring. Views of Responsible Officials and Planned Corrective Actions - The School District agrees with the finding. The School District is implementing oversight practices for its third-party service providers, including maintaining written agreements and setting expectations for regular check-ins and performance reviews. Responsibilities for monitoring will be assigned to ensure ongoing attention to system accuracy and support needs.
2025-001 Reporting – Inaccurate Meal Counts Reported for Reimbursement. Federal Program: Child Nutrition Cluster (10.553, 10.555). Finding Type: Significant deficiency in internal control over compliance, and noncompliance with laws and regulations. Condition: The District did not maintain effective internal controls over the Child Nutrition Cluster to ensure the accuracy of meals served, as reported on monthly Claim Status Reports for reimbursement. Criteria: 2 CFR § 200.303 requires that non-federal entities establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing federal awards in compliance with federal statues, regulations, and the terms and conditions of the federal award. Additionally, 7 CFR § 210.8(a) requires that school food authorities establish internal controls which ensure the accuracy of meals served prior to the submission of monthly Claim Status Reports. At a minimum, these internal controls shall include on-site reviews of the meal counting and claiming system employed by each school in the District, comparisons of daily meal counts against data which will assist in the identification of inaccurate meal counts, and a system for appropriate corrective action when differences or deficiencies are identified. Cause: The District’s oversight of monthly reporting for reimbursement was ineffective in ensuring accuracy in the total number of meals served reported. Effect: The District received reimbursements in excess of meals served. Context: We evaluated meals served for all buildings in the District for three months during the audit period, comparing totals reported per the monthly Claim Status Reports to supporting point-of-sale reports and hard copy count sheets. For the months reviewed, the District served 159,265 total meals and requested reimbursement for 159,419. Questioned Costs: $1,782 Recommendation: The District should establish and maintain effective procedures and internal controls that would identify and correct errors and ensure accuracy prior to submitting monthly Claim Status Reports for reimbursement. View of Responsible Officials: The District agrees with the finding and will implement corrective action to address the condition.
FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of six claims were determined to require small purchase procedures. Of the six claims, totaling $334,605, four were selected for testing. For two of the four claims selected, the School Corporation did not obtain an adequate number of price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for these two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry, the School Corporation indicated that all service contracts contain a provision regarding suspension and debarment and that the contracts were reviewed and signed by a knowledgeable member of the School Corporation. A population of four covered transactions for goods or services totaling $306,482, all of which equaled or exceeded the $25,000 threshold paid from the Child Nutrition funds during the audit period, was identified and selected for testing. For two of the four selected transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. The Food Service Director was unaware of specific federal requirements regarding procurement thresholds for small purchases and the mandatory verification of vendor suspension and debarment status for transactions exceeding $25,000. The Director relied solely on the Food Service Center to ensure compliance. In addition, the School Corporation utilized additional vendors outside of the center's management scope without independently verifying their compliance status. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds 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 there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-001 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 24611-009-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 15 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation did not have an effective internal control system in place to ensure compliance with the earmarking requirements and to ensure that the required level of expenditures for nonpublic school students with disabilities was met. Specifically, internal controls were not designed to ensure expenditures for nonpublic school students with disabilities were appropriately identified, tracked in the accounting records, and accurately reported. The School Corporation did not meet the earmarking requirements for grant award number 24611-009-PN01. The required expenditures for nonpublic proportionate share was $4,330; however, the School Corporation could only provide documentation of expenditures totaling $2,250. This resulted in an underexpenditure of $2,080 relative to the required set-aside amount for the grant. In addition, the School Corporation did not track the expenditures in a separate line item within the ledger to specifically identify services provided for nonpublic school students. The lack of internal controls and noncompliance was isolated to 24611-009-PN01 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 16 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation had a lack of documented internal controls and oversight regarding specific grant compliance requirements. The School Corporation Treasurer was unaware of the mandate to separately track and ensure full expenditure of nonpublic proportionate share funds. This lack of knowledge led to an unverified assumption that the Special Education Cooperative was performing this tracking function on the School Corporation's behalf, which was not the case. Effect The School Corporation's lack of internal controls resulted in noncompliance with federal earmarking requirements and the terms of the grant award. The outcome was an underexpenditure of $2,080, representing funds intended for eligible nonpublic students. This amount constitutes questioned costs and may be subject to repayment to the granting agency. 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 We identified $2,080 in known questioned costs as noted above in the Condition and Context. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-001 – Allowable Costs/Cost Principles Identification of the federal program: Health Resources and Services Administration HIV Emergency Relief Project Grants Assistance Listing No. 93.914 Pass Through Numbers Pass Through Entity Grant Period 11987 PREV King County Public Health 3/1/2024–2/28/2025 13548 PREV King County Public Health 3/1/2025–2/28/2026 Location: Virginia Mason Medical Center, Bailey-Boushay House (Bailey-Boushay House) Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 (a) requires that a non-federal entity must “(a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 200.430 (i) states “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflected the work performed. These records must: (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) be incorporated into the official records of the non-Federal entity; (iii) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) encompass both federal assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) comply with the established accounting policies and practices of the non-Federal entity.” Condition: Bailey-Boushay House did not have effective internal controls addressing the requirements of 2 CFR 200.303(a) and 2 CFR 200.430, including consistent approval of employees’ timecards. Cause: Bailey-Boushay House’s management did not execute their intended corrective action to implement internal controls in response to the prior year finding. Effect or potential effect: Unallowable and/or inaccurate payroll expenditures could be charged to the federal program. Questioned costs: None. Context: For 2 of 8 payroll expenditures selected for testing, Bailey-Boushay House’s management did not properly approve the employee timecard for time charged to the grant. Total payroll expenditures, including fringe benefits, for Bailey-Boushay House were approximately $1.1 million and represent 29% of the total HIV Emergency Relief Project Grants expenditures of approximately $3.8 million. Identification of a repeat finding: This is a repeat finding – Findings 2024-001, 2023-003, 2022-007, and 2021-008. Recommendation: We recommend management at Bailey-Boushay House execute its processes to properly approve all time charged to federal grants in accordance with 2 CFR 200.430. Views of responsible officials: Management agrees with the finding. Corrective action over timecard approval will be implemented in January 2026.
Finding 2025-002 – Eligibility Identification of the federal program: Health Resources and Services Administration HIV Emergency Relief Project Grants Assistance Listing No. 93.914 Pass Through Number Pass Through Entity Grant Period 11987 PREV King County Public Health 3/1/2024–2/28/2025 13548 PREV King County Public Health 3/1/2025–2/28/2026 Location: Virginia Mason Medical Center, Bailey-Boushay House (Bailey-Boushay House) Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 (a) requires that a non-federal entity must “(a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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).” Condition: Bailey-Boushay House has processes in place to verify whether participants are eligible; however, documentation to evidence the execution of the controls was not retained. Cause: Bailey-Boushay House management did not retain evidence of the execution of controls due to lack of understanding of the need to retain the documentation. Effect or potential effect: Ineligible individuals may be provided services. Questioned costs: None. Context: We issued a material weakness for Bailey-Boushay House related to internal controls in the prior year. Based upon the implementation date of February 2025 for the corrective action provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a material weakness consistent with the prior year finding. Total expenditures for Bailey-Boushay House were approximately $1.1 million and represent 29.8% of the total HIV program expenditures of approximately $3.8 million. However, expenditures are not based upon serving eligible patients. Identification of a repeat finding: This is a repeat finding – Finding 2024-004. Recommendation: We recommend management maintain evidence of the execution of internal controls related to documentation that individuals served are eligible to participate in the program. Views of responsible officials: Management agrees with the finding and implemented corrective action in February 2025.
Criteria: Under Uniform Guidance (2 CFR §200.302, §200.303, §200.305, §200.318–§200.326, and §200.430), a non-federal entity must establish, document, and maintain written policies and procedures for the management of federal awards. Effective internal control over federal awards provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the awards. Condition: The Town did not have written policies and procedures required by Uniform Guidance (2 CFR 200) for the administration of its federal programs. Specifically, the Town has not formally documented policies and procedures addressing key areas required under the Uniform Guidance, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. While informal processes exist, they are not sufficiently documented to ensure consistent application or compliance with federal requirements. Cause: The Town has not developed or formally adopted written federal grant management policies and procedures. Effect: Without formal written policies and procedures, there is an increased risk of noncompliance with federal program requirements. This condition exposes the Town to potential noncompliance with federal regulations, increases the risk of unallowable costs being charged to federal awards, and may affect the Town’s ability to properly administer, monitor, and report federal program activity. Additionally, the lack of documentation may impair continuity of compliance in the event of change in key personnel. Recommendation: The Town should develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). The policies should address all major compliance areas, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. The Town should ensure that staff responsible for federal grant administration are properly trained to ensure adherence to these policies and that the policies are reviewed periodically and updated as needed. Views of responsible officials: See management’s responses to findings on Page 78.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Condition: During our testing, there was no formal review separate from the preparer over the reserve fund reconciliations for the federal program. Cause: The Authority did not have an adequate internal control policy in place to ensure review and approval over the reserve fund reconciliations. Effect: The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of three months out of twelve months were selected for testing. A lack of documented review was noted for all three months tested. Repeat Finding from Prior Years: No Recommendation: We recommend that the Authority enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials: Management agrees with the finding.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development (HUD), Home Investment Partnerships Program Federal Award Identification Number and Year - M18MC260202 2018; M19MC260202 2019; M20MC260202 2020; M21MC260202 2021 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2024 004 Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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). The City is required to complete inspections of HOME-assisted units to ensure they meet the HUD housing standards outlined in 24 CFR 92.251(b)(viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsided housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on-site inspections of rental housing occupied by tenants receiving HOME/HOME-ARP-assisted tenant-based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)). Per 24 CFR 92.504(d) (Sept. 30, 2024), once a housing quality standards inspection is completed, the results must be communicated to the property owner, and any deficiencies identified must be remedied immediately after notification if they are life-threatening and an additional inspection completed within 12 months for all other deficiencies. Condition - The requirements mandate that units be inspected, deficiencies communicated, and corrective actions taken promptly. However, controls over housing quality standards are not effectively designed, reflecting a persistent lack of segregation of duties necessary to ensure compliance. Furthermore, existing controls were insufficient to guarantee that HQS inspection requirements were met and that identified deficiencies were addressed in a timely manner. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During our walkthrough of the City’s processes and controls, we observed that the inspector responsible for conducting inspections of HOME-assisted projects also prepares and signs the certification of completion, with no secondary review in place. In addition, sample testing revealed that 8 of 13 HOME-assisted projects were not inspected according to the established schedule. Finally, 4 of 13 projects did not have deficiencies identified during inspection resolved in a timely manner. Cause and Effect - The absence of effectively designed controls over inspection resulted in material noncompliance with program requirements, as described above. Recommendation - We recommend that the City establish and implement effective internal controls over inspections. These controls should include segregation of duties, independent review of inspection results, and documented approval processes. Strengthening these measures will help prevent errors or omissions from going undetected and reduce the risk of material noncompliance with program requirements. Views of Responsible Officials and Corrective Action Plan - During the fiscal year, the City reviewed and enhanced its internal controls over HQS inspections to strengthen oversight and segregation of duties. Process changes were implemented to ensure that inspections, documentation of deficiencies, follow-up actions, and certifications of completion have independent review and approval. In addition, management implemented monitoring procedures to track inspection schedules to help ensure HQS requirements are met in a timely manner. While corrective actions were initiated during the fiscal year, they were not fully implemented throughout the entire period. By year end, the controls were in place. The City will continue to monitor these controls to ensure ongoing compliance and to prevent similar issues from recurring.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program Federal Award Identification Number and Year - M18MC260202 2018; M19MC260202 2019; M20MC260202 2020; M21MC260202 2021 Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - Yes 2024 006 Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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. The HOME program has income targeting requirements such that only low-income or very low-income persons can receive housing assistance, as prescribed by 24 CFR 92.216, which covers income targeting for tenant-based rental assistance and rental units. The City maintains Asset Management Policies and Procedures to comply with these standards, which state that an annual review will be performed on each asset. Condition - The City lacked adequate controls to ensure annual reviews were conducted in accordance with its policy, limiting its ability to exercise proper oversight of eligibility determinations performed by the program’s contractor. If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The City engaged a contractor to review developers’ income-eligibility determinations for HOME-assisted housing units. While the contractor performs these reviews, the City retains full responsibility for compliance with eligibility requirements. Our testing showed that the contractor reviewed 62 determinations during the fiscal period; however, the City conducted annual reviews for only 50 of these projects. Additionally, for 5 of 9 projects selected for testing, there was no evidence that the City reviewed the contractor’s certification of the developers’ income-eligibility determinations. As part of our procedures, we reviewed evidence that the contractor performed the required number of reviews and that individuals assessed were income-eligible to receive program benefits. Cause and Effect - The City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without oversight of the contractor’s procedures for assessing participant eligibility, there is an increased risk that ineligible participants could receive program benefits, potentially resulting in material noncompliance and repayment obligations to the funder. Recommendation - We recommend that the City continue to implement oversight procedures to conduct and document reviews of contractor work related to compliance requirements and programmatic decisions, specifically, eligibility determinations. Views of Responsible Officials and Planned Corrective Actions - This finding is timing related and was resolved by the City during the fiscal year. The City reviewed and updated its policies and procedures to help ensure proper segregation of duties and proper oversight of eligibility determination. Additional processes now have independent review of inspections after the program’s contractor to further support program compliance. Review responsibilities were put in place to help ensure determinations receive an independent secondary review by city staff. These changes were in place by year end. The City will continue to monitor the program and review procedures to ensure continued compliance and to prevent the recurrence of similar timing-related issues.
Assistance Listing Number, Federal Agency, and Program Name - ALN 93.914, Department of Health and Human Services (HHS), HIV Relief Project Grants Federal Award Identification Number and Year - 6 H89HA00021 32 01 2024 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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. Per 2 CFR 200.305(b)(3), when the reimbursement method is used, the federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request, unless the federal agency or pass-through entity reasonably believes the request to be improper. Condition - A lack of effective controls resulted in noncompliance with federal payment requirements, specifically for payments made to subrecipients. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During testing over a sample of 40 payments to subrecipients, we noted 3 payments that were made more than the required 30 days after the City received a reimbursement request from the subrecipient. Cause and Effect - A lack of effectively operating controls could result in the untimely disbursement of funds to subrecipients and material noncompliance with federal payment requirements. Recommendation - We recommend that the City design and implement controls to ensure compliance with federal payment requirements, including establishing timelines for processing subrecipient payments and review to ensure adherence to federal payment requirements. Views of Responsible Officials and Planned Corrective Actions - The three payments made were paid 1 to 2 days after the 30 day reimbursement requirement. The City will review its subrecipient payment terms and implement additional processes to help ensure compliance with federal payment requirements.
Assistance Listing Number, Federal Agency, and Program Name - ALN 10.557, United States Department of Agriculture, WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Federal Award Identification Number and Year - E20240675 00 and E20241960 00 2024 Pass through Entity - Michigan Department of Health and Human Services (MDHHS) Finding Type - Material weakness Repeat Finding - No Criteria - 2 CFR 200 Appendix V.4 requires that each central service cost allocation plan be accompanied by a certification, which includes the period to which the accumulated costs under the plan are allocated. 2 CFR 200.303(a) requires nonfederal entities to establish and maintain effective internal controls over federal awards, providing reasonable assurance of compliance with federal statutes, regulations, and award terms. These controls should align with the "Standards for Internal Control in the Federal Government" or the COSO framework. Condition - The City applied indirect costs to the programs in a manner that did not align with the allocation methodology outlined in the 2022-2023 cost allocation plan submitted to MDHHS. Furthermore, the plan lacked explicit certification and contained minor errors and omissions. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The City prepares an annual cost allocation plan as required by 2 CFR 200, Appendix V. During testing, we noted that the City charged indirect costs to ensure the amount did not exceed the budgeted indirect cost amount. However, under the methodology submitted with the plan, indirect costs should have been allocated based on the program’s total direct costs. Although total direct costs were below the budgeted amount, indirect costs were applied without consideration of this methodology. Additionally, the plan lacked evidence of certification and did not accurately specify the allocation period. Following identification of these matters, the City obtained approval from MDHHS permitting indirect costs to be charged without regard to total direct costs and acknowledging oversights in the plan, including the failure to clearly identify the applicable allocation period. Based on MDHHS’ approval, the additional indirect costs charged, though not proportional to total direct costs, did not result in questioned costs. Cause and Effect - The City’s internal controls were not sufficient to ensure that the required certification was performed or to detect the inconsistent application of the indirect cost allocation methodology. This control weakness increases the risk of noncompliance and may result in excessive indirect costs being charged to the program. Recommendation - We recommend that the City conduct a comprehensive review of its indirect cost allocation methodology, incorporating feedback provided by the funder, to ensure consistency between the cost allocation plan and its application. Additionally, the City should design and implement internal controls to verify that indirect costs are applied in accordance with the approved methodology and allocation period. We further recommend that all personnel involved in the preparation, submission, and application of indirect costs receive training on the revised methodology and related controls to prevent future inconsistencies and reduce the risk of noncompliance. Views of Responsible Officials and Planned Corrective Actions - Upon identification, the City worked with the Michigan Department of Health and Human Services and obtained approval and acceptance of the indirect cost calculation. The City will continue to work with MDHHS to ensure full compliance. The City has initiated a review of its indirect cost allocation methodology to ensure compliance. Management is updating the cost allocation calculation to document the approved allocation method and ensure the method is in accordance with the approved plan. The City will also provide training to staff involved in the preparation, submission, and calculation of the indirect costs to ensure understanding requirements.
Federal agency: U.S. Department of Agriculture Federal program name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559 Federal Award Identification Number and Year: 202121N109942, 2025 Pass-Through Agency: Minnesota Department of Agriculture Pass-Through Number: 202121N109942 Award Period: Year ended June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR sections 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires that the entity maintain records sufficient to detail the history of the procurement. 2 CFR 200.303 requires that the entity have sufficient controls over compliance related to federal awards. Condition: During our testing of the District’s procurements within the Child Nutrition program, it was noted that not all procurements followed the appropriate method and history of the transaction was not sufficiently documented. Questioned Costs: ALN 10.553 and 10.555 - $220,560.64 Context: Out of thirteen procurement which were tested, we noted one of them for which the District did not retain documentation detailing the history of the procurement, including the rationale for choosing the particular vendor. This was a statistically valid sample. Cause: Controls were insufficient to ensure this process occurred. Effect: The District was not in compliance with Uniform Guidance requirements for the proper documentation of all procurement transactions. Repeat Finding: No Recommendation: We recommend the District reviews its procedures and controls over procurement to ensure that all procurements are documented such that a third party can clearly see and understand the detailed history of the procurement. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2025-001 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls over Eligibility Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility 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). . . ." 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 eligibility compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with eligibility requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: During the testing of internal controls over eligibility determinations for free and reduced meals, we noted there was no formal, documented review control in place. There is no documented, secondary review for the applications entered in the food service software which determines eligibility. Additionally, there was no documented review by School Corporation personnel of the Income Eligibility Guidelines used by the food service software which are updated on annual basis. Identification as a repeat finding, if applicable: No. Section III – Federal Award Findings and Questioned Costs (Continued) FINDING 2025-001 (Continued) Recommendation: We recommend that the School Corporation's management establish an internal control process to review the updates to the annual adjustments to the Income Eligibility Guidelines made to the food service software to determine eligibility to ensure updated guidelines are accurate and complete. This review should be documented on annual basis to confirm management’s oversight and monitoring of eligibility determinations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: STP-5419 (613) - 2021 Pass-Through Agency: Missouri Department of Transportation Pass-Through Number(s): STP-5419 (613) Award Period: 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Per Uniform Guidance 2 CFR 180.300 nonfederal entities entering into covered transactions must verify the party is not suspended or debarred from conducting business by the federal government. This can be performed by: Checking SAM exclusions, collecting a certification from the party, or adding a clause or condition to the covered transaction. Condition: The City did not maintain documentation indicating the date the SAM check was completed prior to entering into a covered transaction. Questioned costs: None Context: No process exists to review SAM exclusions list comparing the listing of vendors with expenditures exceeding $25,000 and documenting date this check was performed. Cause: The City does not have a control in place to ensure the SAM exclusion check is performed before entering into a covered transaction. Effect: The City could enter into a covered transaction with an entity that is suspended or disbarred. Repeat Finding: No Recommendation: We recommend that the City evaluate its procedures and implement an additional control to ensure verifications checks are occurring prior to entering into contracts with a vendor. Views of responsible officials: There is no disagreement the audit finding.
FINDING 2025-001 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context The internal controls in place at the School Corporation were not effective in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement. The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. Of the 25 students selected for testing, 2 students did not have any supporting documentation. 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). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." INDIANA STATE BOARD OF ACCOUNTS 16 SCHOOL CITY OF HAMMOND SCHEDULE OF FINDINGS AND QUESTIONED COSTS Cause The 2 students' cumulative files could not be located by the School Corporations, thus, resulting in supporting documentation not to be retained. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management evaluate the internal control policies and procedures to ensure the proper documentation is maintained for students that are removed from the cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Type of Findings: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures in place to ensure the required certifications for covered contracts and subawards are received, documented, and contracts are not made with a debarred or suspended party. Condition: During our review we noted that the district followed procurement guidelines and policies established in the DJB Federal Procurement guide, but the District does not have an established suspension and debarment policy that they follow. Effective internal controls should include procedures in place to ensure the required certifications for covered contracts and subawards are received, documented, and contracts are not made with a debarred or suspended party. Questioned costs: None Context: The sole vendor engaged under the IDEA grant was found to have no evidence of verification that the vendor was not suspended or debarred by the District. We did later verify that the vendor was not suspended or debarred per verification on SAM.gov. Cause: The District engaged with the vendor in a contract effective from 07/01/2023, but did not conduct a suspension and debarment check prior to engagement. Effect: The District could not be in compliance with suspension and debarment requirements for its federal programs. Repeat Finding: No Recommendation: We recommend that the District implement policies for verifying suspension and debarment compliance for all transactions with vendors that are paid with Federal Funds. View of Responsible Officials: There is no disagreement with the audit finding. Corrective action plan - management response: The District will formally adopt a Suspension and Debarment Verification Procedure that outlines the required process for verifying all vendors and subrecipients before entering into any contract funded by federal awards. Staff will verify suspension and debarment status by checking the System for Award Management (SAM.gov) prior to contract execution and will maintain documentation of verification in the procurement file. The Business Services Department will complete training on the new procedure and documentation requirements. Responsible Party: Business Manager Completion Date: Procedure adoption and staff training by December 31, 2025
2025-001- Unaccompanied Children Program - ALN 93.676- Reporting - Internal Control (Significant Deficiency) Grant No. 90ZU0620 Passed through from Board of Child Care of the United Methodist Church Grant Period: January 1, 2024 - December 31, 2026 Criteria: 2 CFR 200.303(a) requires non-Federal entities to establish and maintain effective internal controls over compliance with Federal statutes, regulations, and terms and conditions of Federal awards. Quarterly Federal Financial Reporting (FFR) report is required to be submitted by the 15th of the following month. Condition: The quarterly FFR due April 15, 2025 and July 15, 2025 were both filed on September 11, 2025. Questioned Costs: None noted. Effect: Failure to file reports timely could result in noncompliance with regulations and withdrawal of funding. Cause: The late filings were a result of inexperience regarding the filing requirements of the federal grant award. Recommendation: We recommend implementing controls to ensure all reports are filed timely and properly documented. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. The Home promptly filed the FFRs on September 11, 2025 when made aware of the late filings. The Home designated the controller with responsibility for grant reporting including quarterly Federal Financial Reporting (FFR) and will implement policies and procedures to ensure timely filing going forward starting with the October 15, 2025 filing deadline.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559 Federal Award Identification Number and Year: 252MN061N1199 – 2025 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-2859-000 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Related to reporting requirements of the Child Nutrition Cluster, there should be a documented control in place to ensure all reports have proper documented review and approval prior to submission. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing it was noted that, for 1 of 4 reports tested, the District was not able to provide any documentation of the review performed to ensure they are meeting federal requirements surrounding reporting. Questioned costs: None Context: 1 of 4 reports selected for testing were missing documentation of the review and approval. Cause: The District has a procedure in place to address this finding. However, due to turnover, this procedure was missed on one of the reports tested. Effect: It is possible that if there were errors on the report they would not be caught by the internal control. Repeat finding: No Recommendation: The District ensures their key controls are operating effectively and documents the review and approval of all the reports. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: Community Development Financial Institutions Equitable Recovery Program Assistance Listing Number: 21.033 Federal Award Identification Number and Year: 22ERP061061 – 2022 Award Period: April 10, 2023 through December 31, 2028 Type of Finding: - Material Weakness in Internal Control over Compliance - Other Matter Criteria or specific requirement: Per 2 CFR §200.303 and Government Auditing Standards (GAS), recipients of federal awards must establish and maintain effective internal control over federal programs. This includes maintaining documentation that supports the allowability of expenditures in accordance with the terms and conditions of the federal award. Condition: The original Schedule of Expenditures of Federal Awards (SEFA) submitted by the Credit Union included $2,331,150 in expenditures that appeared consistent with allowable uses under the grant agreement. However, the Credit Union did not maintain transaction-level tracking or retain detailed supporting documentation to substantiate the allowability of these expenditures. This lack of contemporaneous documentation prevented the audit team from obtaining sufficient appropriate audit evidence to confirm compliance with CDFI Fund requirements. Questioned costs: None Context: The deficiency was identified during the audit of the SEFA and reconciliation of unearned grant revenue. The original SEFA lacked sufficient documentation, and the audit team had to expand procedures to validate the revised expenditure amounts. Following this, Management performed a detailed analysis and reconciliation of grant-related transactions, which resulted in an updated SEFA. This revised schedule included properly supported expenditure details, ensuring alignment with grant requirements and correcting prior documentation gaps. Cause: The Credit Union did not implement adequate internal controls to ensure contemporaneous tracking and documentation of grant expenditures. This may have been due to limited staffing, lack of formal procedures, or insufficient training on federal grant compliance requirements. Effect: The absence of transaction-level tracking and supporting documentation created a risk of material misstatement in the SEFA and noncompliance with federal grant requirements. Although management later provided an updated SEFA with supported expenditures totaling $2,354,606, the initial lack of documentation could have led to disallowed costs or questioned costs if not corrected. The $23,456 difference between the updated SEFA and recorded grant revenue was not considered material to the financial statements. Repeat finding: Not a repeat finding. Recommendation: We recommend that the Credit Union implement procedures for transaction-level tracking of all federal grant expenditures to ensure accurate and complete records. The organization should maintain contemporaneous documentation that clearly supports the allowability of each expenditure in accordance with federal requirements. Additionally, staff should receive training on federal grant documentation and compliance requirements to strengthen understanding and adherence to applicable regulations. Finally, the Credit Union should perform periodic internal reviews to verify that documentation standards are consistently met and that internal controls remain effective. Views of responsible officials and planned corrective actions: Management agrees with the finding and acknowledges the need to strengthen internal controls over grant expenditure documentation. They have committed to implementing the recommended procedures.
FINDING 2025-001 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 15 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with procurement requirements. The Cooperative did not have procedures in place to ensure compliance with procurements in excess of the SAT threshold. During 2023-2024, the Cooperative had three vendors which exceeded the SAT and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. The lack of internal controls and noncompliance were systemic issues limited to 2023-2024. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 16 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the vendors paid with federal award funds by the Cooperative are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require that appropriate procurement methods are used by the Cooperative for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, 23619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services (GLASS) Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 26311-021-PN01, and 23619-021-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 17 LAFAYETTE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal 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 such, the School Corporation's nonpublic proportionate share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum nonpublic proportionate share as required by the grant agreement. INDIANA STATE BOARD OF ACCOUNTS 18 LAFAYETTE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23/24, FY 24/25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. During the audit period, a total of four vendors were determined to require small purchase procedures, and all four vendors were selected for testing. For two of the four vendors, the School Corporation could not provide the procurement history or the rationale for the method of procurement, selection of vendors, and basis for price. The total dollar amount spent with these two vendors was $165,131. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During review of the School Corporation's procedures, officials stated that the Food Service Director verified that vendors were not suspended or debarred by including a clause in the vendor contract or by collecting a certification from the vendor prior to entering into a covered transaction. We identified ten transactions during the audit period that equaled or exceeded $25,000 and were therefore determined to be covered transactions. All ten transactions, totaling $767,259, were selected for testing. The School Corporation was unable to provide documentation that the vendor's suspension and debarment status was verified for four of these transactions, which comprised the same two vendors for both years of the audit period. The total dollar amount spent with these two vendors was $268,962. 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's corrective action plan from the prior audit stated that the Food Service Director was the individual responsible for implementing the corrective action measures and that those measures would be implemented in June 2024. The Food Service Director resigned, however, in May 2024. Therefore, the new Food Service Director was unaware of the compliance issues and the need to implement the corrective action measures during the current audit period. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of preventing, or detecting and correcting, noncompliance. As a result, the School Corporation did not comply with the small purchase procurement requirements or the suspension and debarment requirements of the federal award. By not properly completing the procurement process, the School Corporation could have overpaid for the goods or services that were procured. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure expenditures made from federal awards are in compliance with the procurement and suspension and debarment compliance requirements. The School Corporation's system of internal controls should be designed to ensure that the appropriate procurement method is utilized and that documentation is retained to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Additionally, the system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425U, 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have an effective system of internal controls over federal award requirements that would have ensured that expenses charged to the grant were for activities and costs that were allowable under the federal award. The School Corporation designed a process for vendor claims in which all purchase orders were approved by either the Superintendent of Schools or a member of his staff who was knowledgeable of the requirements of the federal program, with the associated claim vouchers, then reviewed by another employee who was also knowledgeable of the requirements of the federal program prior to submission to the School Board for final approval for payment and inclusion on the reimbursement requests submitted for the program. Out of a sample of 25 claims selected for internal control testing, the School Corporation was unable to provide 5 claim vouchers to show the aforementioned review and approval. We were therefore unable to verify that the stated internal control was properly implemented and operated effectively for those claims to ensure the expenditures were for activities and costs allowed under the federal award. INDIANA STATE BOARD OF ACCOUNTS 17 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation also designed a process for payroll claims where the Superintendent of Schools reviewed and approved the detailed payroll distribution reports which included employees with payroll expenses charged to the federal award. However, the internal control was not adequately designed and did not detect noncompliance with the allowable cost requirements of the award. During compliance testing of vendor and payroll claims, one payroll claim for a Certified Intervention Teacher was selected for testing. The School Corporation was unable to provide documentation to support the determination of the amount of the teacher's total salary that was allocated to the federal award. We then reviewed all payroll expenses associated with the Certified Intervention Teacher position paid out of the federal award during the audit period and determined that a total of $22,416 was charged to the federal award without proper documentation to support the amount of the teacher's salary allocated to the federal award. We consider the $22,416 to be questioned costs. The lack of effective vendor internal controls was systemic to both awards but was isolated to fiscal year 2023-2024 prior to the appointment of the current Treasurer. The lack of effective payroll internal controls was systemic to both awards, while the noncompliance was isolated to award number S425U210013. 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 . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, asses, expenditures, income and interest and be supported by source documentation. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . INDIANA STATE BOARD OF ACCOUNTS 18 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (g) Be adequately documented. . . ." Cause The School Corporation experienced turnover in a key position related to the internal controls over the federal award, resulting in issues with organization and retention of supporting documentation to verify the key internal control over vendor claims. In addition, the School Corporation's policies and procedures were not properly designed to show the determination of how employees' compensation would be allocated to multiple cost centers. As a result, the key internal control over payroll claims was unable to prevent, or detect and correct, noncompliance with the allowable costs requirement of the federal award. Effect Without proper implementation of an effectively designed system of internal controls, noncompliance that resulted in questioned costs remained undetected. 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 We identified $22,416 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure expenditures made from federal awards are for activities and costs allowed per the terms and conditions of the federal award and in compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. We also recommended that the School Corporation strengthen its policies and procedures to ensure that appropriate supporting documentation is retained and available for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2025-001 Documentation of Internal Controls over Federal Awards Year Finding Originated: 2025 Criteria: Per 2 CFR § 200.303(a), the non-Federal entity must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the awards. Condition: Although the City maintains formal policies and procedures which document internal controls, the policies are not up to date with current Federal requirements and are not prescribed as required by the Uniform Guidance. Further, the policies do not cover all aspects of compliance pertaining to the federal programs the City facilitates. Cause: City management was not aware of all documentation requirements under Uniform Guidance for internal controls over federal programs. Effect: The City’s failure to document internal control procedures related to federal programs increases the risk of noncompliance with federal requirements, misstatement of financial reports, and potential misuse of federal funds. Recommendation: We recommend that the City enhance and document internal controls over federal awards in accordance with 2 CFR § 200.303(a). Views of responsible officials: See management’s response to finding on Page 72.
Assistance Listing Number, Federal Agency, and Program Name - 84.007, 84.063, 84.268; U.S. Department of Education; Federal Supplemental Educational Opportunity Grants, Federal Pell Grant Program, Federal Direct Student Loans Federal Award Identification Number and Year - P007A236053, P063P232857, P268K242857; 2024 2025 Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - Yes 2024-002 Criteria - In accordance with 2 CFR 200.303, the College must establish and maintain effective internal control over its federal awards in order to provide reasonable assurance that it is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Specific to these Title IV programs, 34 CFR 668.22 outlines the requirements for institutions to follow when returns of Title IV funds are required, including identifying when calculations are necessary and the time frame in which they are required to be returned. Condition - There was a lack of internal controls in place related to the return of Title IV funds, which lead to two students with returns that were not issued timely and two students with error in return calculations. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A Context - Once return calculations were identified and calculated, there were no controls in place to ensure that the calculations were complete, accurate, or returned in a timely manner. Cause and Effect - A lack of review of the processes to identify students who required a calculation, review the completed calculations for accuracy, or ensure that that all calculated returns were completed could lead to incomplete calculations, inaccurate calculations, or untimely return of funds once they are identified. Recommendation - We recommend that the College implement a review control that would cover each stage of the return process outlined. Views of Responsible Officials and Corrective Action Plan - The College has implemented procedures to verify that academic dates are entered accurately in Banner and confirmed by personnel other than those responsible for calculating and reviewing returns of Title IV funds. This should ensure the related calculations are complete and accurate, and the funds are returned in a timely manner.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Center Program Assistance Listing Number: 93.224/93.527 Federal Award Number: H80CS24103-13-00; H80CS24103-14-04 Award Periods: May 1, 2024 – April 30, 2025; May 1, 2025 – April 30, 2026 Criteria: CFR § 200.303 Internal controls states that 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. Condition: The Organization filed a Standard Form 425 (SF-425) Federal Financial Report which included inaccurate information. Questioned Costs: None. Context: The SF-425 filed was for the project period beginning May 1, 2024 through April 30, 2025 and failed to include the correct amount for an unobligated balance. Cause: Oversight. Effect: Inaccurate report filed. Repeat Finding: No. Recommendation: We recommend the Organization closely review all SF-425 reports filed to ensure that the grant drawdowns reconcile to the amount reported as federal share of expenditures and any unobligated balances/carryover requests are done promptly. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program: Student Financial Aid Cluster ALN: 84.063, 84.268 Federal Award Identification Number: P063P241225 - 2025 ; P268K251553 - 2025 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – The Code of Federal Regulations, 34 CFR 685.309 requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Condition: During our testing of enrollment status reporting, we noted the change in enrollment status was not reported within 60 days. Questioned Costs: None Context: The change in enrollment data was not reported timely for 1 out of 40 students. Cause: Hagerstown Community College did not have a process in place to ensure the students who changed status were reported timely and accurately. Effect: Student enrollment status changes was not reported timely to NSLDS. Repeat Finding: No Recommendation: We recommend Hagerstown Community College reevaluate their procedures and review policies surrounding reporting status changes to NSLDS to ensure timely and accurate reporting. Views of responsible officials: Management agrees with the finding and has a plan to correct the finding
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year: SLFRP0127-FRF2969-774301 Pass-through Entity – Department of Environment, Great Lakes, and Energy Finding Type – Significant deficiency in internal control over compliance Repeat Finding - No Criteria - per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for reporting compliance, it was noted the client failed to submit monthly reports within the required time frame. 3 out of 4 samples selected for testing were not submitted on time. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Current Management procedures and controls were not sufficient to ensure that report was completing in a timely manner, therefore required reports were not submitted on time. Effect – The City did not submit monthly report on time. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.