Reference Number: 2024-024 Prior Year Finding: 2023-031 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305VT5MAP (10/1/2022 – 9/30/2023) 2405VT5MAP (10/1/2023 – 9/30/2025) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(a), 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: The Agency of Human Services (Agency) did not maintain documentation to support a provider’s compliance with the prescribed health and safety standards. The provider health and safety requirements are administered by a 3rd-party that determines and documents providers’ eligibility with the Agency’s requirements in the provider management module (PMM). Context: For one of sixty providers selected for testing, documentation was incomplete to support that the provider was in good tax standing. The provider’s tax standing was verified by the Agency, but the letter was not signed by the Vermont Tax Department Commissioner and uploaded to the PMM as required. As part of a prior year Corrective Action Plan (CAP), a process was developed to require letters of good standing be uploaded to the provider file in the PMM but when this provider’s tax standing was verified, the CAP had not been fully implemented. Cause: The Agency’s 3rd-Party provider did not consistently maintain verification of tax standing documentation in the PMM. Although the Agency had begun implementation of its corrective action plan from a prior year audit, the plan has not been fully implemented. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency fully implement its CAP to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-025 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305VT5MAP (10/1/2022 – 9/30/2023) 2405VT5MAP (10/1/2023 – 9/30/2024) Compliance Requirement: Special Tests and Provisions – Utilization Control Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The state plan must provide methods and procedures to safeguard against unnecessary utilization of care and services (42 CFR Part 456). The State Medicaid Agency (SMA) must implement a statewide surveillance and utilization control program that (1) safeguards against unnecessary or inappropriate use of Medicaid services against excess payments, (2) assesses the quality of those services, and (3) provides for the control of the utilization of all services provided under the state plan per 42 CFR 456 Subparts B-I. The SMA must establish and use written criteria for evaluating the appropriateness and quality of Medicaid services. The agency must have procedures for the ongoing post-payment review, on a sample basis, of the need for, and the quality and timeliness of, Medicaid services. The SMA may conduct this review directly or may contract with an independent entity. 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 comply 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: The Agency of Human Services (Agency) failed to properly document closure of a case referred to the Medicaid Fraud and Residential Abuse Unit (MFRAU) by the Special Investigations Unit (SIU). Context: For one of twenty-eight cases selected for testing, the SIU opened the case in FY2016, marked it as a high priority, and referred it to the MFRAU. The MFRAU closed the case in FY2018, however, the closure was not properly documented nor communicated. In FY2024 the case was classified by the SIU as administratively closed due to its age, but the results of the review and closure were not documented. Cause: The Agency did not adequately follow procedures regarding utilization control case review and closure in accordance with federal program requirements and its state plan. Internal controls did not detect or prevent the error. Effect Failure to properly document and promptly close cases could allow unnecessary utilization of care and services to continue undetected and result in unnecessary or inappropriate use of Medicaid services. Questioned costs: Undetermined. Recommendation: We recommend that the Agency review and enhance procedures and controls for Medicaid utilization control to ensure that cases are closed timely and that documentation of the results of reviews are maintained and communicated. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-027 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services State Agency: Department of Human Resources Agency of Human Services Federal Program: SNAP Cluster Temporary Assistance for Needy Families Child Support Services CCDF Cluster Medicaid Cluster Assistance Listing Number: 10.551, 10.561, 93.558, 93.563, 93.575, 93.596, 93.775, 93.777, 93.778 Award Number and Year: 4VT400406 (10/1/2022 – 9/30/2023) 4VT402513 (10/1/2023 – 9/30/2024) 2301VTTANF (10/1/2022 – 9/30/2023) 2401VTTANF (10/1/2023 – 9/30/2024) 2401VTSCSS (10/1/2023 – 9/30/2024) 2301VTCCDD (10/1/2022 – 9/30/2025) 2401VTCCDD (10/1/2023 – 9/30/2026) 2305VT5MAP (10/1/2022 – 9/30/2023) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR section 200.403(c), to be allowable under Federal awards, except where otherwise authorized by statute, costs must be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. Compensation for exempt attorneys in the State of Vermont are determined by the State of Vermont’s Attorney Pay Plan which governs the hiring level, compensation and promotion of exempt attorneys. 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 comply 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: The hourly rate used to compensate an exempt attorney was higher than the maximum limit identified for the position in the State of Vermont’s Attorney Pay Plan. Context: The Department of Human Resources (Department) manages and updates the VTHR Human Resource information system which is the system used for managing employee data and processing payroll for all State employees. The Agency of Human Services (Agency) allocates payroll costs to federal programs using methodologies approved in its Cost Allocation Plan. After allocation, compensation for positions may be charged by the Agency to multiple federal programs. During cost allocation testing, auditors determined one employee’s rate of pay exceeded the limit identified for the position in the State of Vermont’s Attorney Pay Plan. The maximum hourly rate for the General Counsel I position is $59.61 or up to the Department Head’s Salary, whichever is lower. The employee selected for testing was compensated at the hourly rate of $62.06 which exceeds the maximum for the position. Cause: The Department of Human Resources used the department head’s salary as the maximum for the General Counsel I position in VTHR. It did not implement a control to ensure that the employee’s salary also did not exceed the maximum hourly rate identified for the position. Effect An employee was compensated at a rate higher than the maximum limit identified for the position in the State of Vermont’s Attorney Pay Plan. Internal controls did not detect or prevent the error. Questioned costs: Undetermined. Recommendation: We recommend that the Department review and enhance procedures and internal controls to ensure that VTHR uses rates of pay for attorneys that align with the maximum pay rates established by the Attorney Pay Plan. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-022 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305VT5MAP (10/1/2022 – 9/30/2023) Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: States verify the financial and nonfinancial factors of eligibility by checking electronic data sources in accordance with federal requirements at 42 CFR 435.948 through 435.956 and state requirements (as documented in the state plan, verification plan, and eligibility manual). Per 42 CFR §435.915(b) and the Vermont State Plan, eligibility for Medicaid is effective on the first day of a month if an individual was eligible at any time during that month. 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 comply 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: The Agency of Human Services (Agency) incorrectly discontinued benefits for a Medicaid participant during the month in which eligibility was renewed. Context: For one of sixty participants selected for testing, the Agency performed a renewal of Medicaid benefits during the month of October and discontinued benefits for that month instead of backdating the claim to the beginning of the month. Cause: The Agency did not adequately follow procedures regarding eligibility renewals in accordance with federal program requirements and its state plan. Internal controls did not detect or prevent the error. Effect A participant’s benefits were improperly discontinued for one month. Questioned costs: None noted. Recommendation: We recommend that the Agency review and enhance procedures and controls for Medicaid eligibility renewals to ensure that benefits for eligible participants are not discontinued. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-023 Prior Year Finding: 2023-030 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305VT5MAP (10/1/2022 – 9/30/2023) 2405VT5MAP (10/1/2023 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) 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 comply 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: A subaward was not reported to FSRS in accordance with FFATA requirements. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty subawards totaling $6,709,156 were selected for testing, including twenty-eight initial subawards and two subaward amendments. We noted the following exception: • One of thirty subawards was not reported. The subaward was issued 9/26/2023 but it was not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE As part of a prior year Corrective Action Plan (CAP), the Agency implemented a process to report required subawards to FSRS timely. The exception noted occurred prior to the full implementation of the CAP. Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Agency complete implementation of its prior year CAP to ensure that all required subawards and subaward modifications are reported timely to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-024 Prior Year Finding: 2023-031 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305VT5MAP (10/1/2022 – 9/30/2023) 2405VT5MAP (10/1/2023 – 9/30/2025) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(a), 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: The Agency of Human Services (Agency) did not maintain documentation to support a provider’s compliance with the prescribed health and safety standards. The provider health and safety requirements are administered by a 3rd-party that determines and documents providers’ eligibility with the Agency’s requirements in the provider management module (PMM). Context: For one of sixty providers selected for testing, documentation was incomplete to support that the provider was in good tax standing. The provider’s tax standing was verified by the Agency, but the letter was not signed by the Vermont Tax Department Commissioner and uploaded to the PMM as required. As part of a prior year Corrective Action Plan (CAP), a process was developed to require letters of good standing be uploaded to the provider file in the PMM but when this provider’s tax standing was verified, the CAP had not been fully implemented. Cause: The Agency’s 3rd-Party provider did not consistently maintain verification of tax standing documentation in the PMM. Although the Agency had begun implementation of its corrective action plan from a prior year audit, the plan has not been fully implemented. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency fully implement its CAP to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-025 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305VT5MAP (10/1/2022 – 9/30/2023) 2405VT5MAP (10/1/2023 – 9/30/2024) Compliance Requirement: Special Tests and Provisions – Utilization Control Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The state plan must provide methods and procedures to safeguard against unnecessary utilization of care and services (42 CFR Part 456). The State Medicaid Agency (SMA) must implement a statewide surveillance and utilization control program that (1) safeguards against unnecessary or inappropriate use of Medicaid services against excess payments, (2) assesses the quality of those services, and (3) provides for the control of the utilization of all services provided under the state plan per 42 CFR 456 Subparts B-I. The SMA must establish and use written criteria for evaluating the appropriateness and quality of Medicaid services. The agency must have procedures for the ongoing post-payment review, on a sample basis, of the need for, and the quality and timeliness of, Medicaid services. The SMA may conduct this review directly or may contract with an independent entity. 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 comply 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: The Agency of Human Services (Agency) failed to properly document closure of a case referred to the Medicaid Fraud and Residential Abuse Unit (MFRAU) by the Special Investigations Unit (SIU). Context: For one of twenty-eight cases selected for testing, the SIU opened the case in FY2016, marked it as a high priority, and referred it to the MFRAU. The MFRAU closed the case in FY2018, however, the closure was not properly documented nor communicated. In FY2024 the case was classified by the SIU as administratively closed due to its age, but the results of the review and closure were not documented. Cause: The Agency did not adequately follow procedures regarding utilization control case review and closure in accordance with federal program requirements and its state plan. Internal controls did not detect or prevent the error. Effect Failure to properly document and promptly close cases could allow unnecessary utilization of care and services to continue undetected and result in unnecessary or inappropriate use of Medicaid services. Questioned costs: Undetermined. Recommendation: We recommend that the Agency review and enhance procedures and controls for Medicaid utilization control to ensure that cases are closed timely and that documentation of the results of reviews are maintained and communicated. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-028 Prior Year Finding: 2023-034 Federal Agency: U.S. Department of Homeland Security State Agency: Department of Public Safety Federal Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: FEMA-4474-DR-VT (2020), FEMA-4532-DR-VT (2020), FEMA-4621-DR-VT (2021), FEMA-4695-DR-VT (2023), FEMA-4720-DR-VT (2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) 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 comply 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: The Department of Public Safety (Department) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: This is a repeat finding from the prior year and auditors note that progress has been made, though the corrective action plan from the prior year has not been fully implemented. Ninety-six subawards were selected for testing, including thirty-two which were issued in a prior year and sixty-four which were issued during FY2024. The following exceptions were noted: • 24 of 96 subawards were not reported to FSRS, totaling $17,306,440. o Of the exceptions noted, FY2024 subawards not reported were 13 of 64 and totaling $7,627,387 of $17,741,626. • 5 of 96 subawards were not reported timely to FSRS, totaling $10,937,684. o Of the exceptions noted, FY2024 subawards reported late were 4 of 64 and totaling $9,609,432 of $17,741,626. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures were not sufficient to ensure that subawards were reported timely or accurately to FSRS. Internal controls did not prevent or detect the errors. The corrective action plan from the prior year has not been fully implemented. Effect: The Department’s subaward reporting to FSRS was incomplete and inaccurate. Questioned costs: None noted. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department should continue to improve its procedures and internal controls to ensure that all required subawards and subaward modifications are reported accurately and timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: Management agrees with the finding.
FINDING 2024-003 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture 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 Number and Year (or Other Identifying Number): FY23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles 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 2022-003. 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 Allowable Costs/Cost Principles compliance requirement; however, it was not effective. The School Corporation was approved for an indirect cost rate for fiscal year 2021-2022 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, the School Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for 2021-2022 in the amount of $26,793 was not charged to the Cafeteria fund until September 2022. Per USDA guidance, it is unallowable to bill the National School Food Service Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless an agreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costs in one or more prior years. The School Corporation did not have an interfund loan agreement in place. Therefore, the amounts were considered questioned costs. The lack of effective internal controls and noncompliance were isolated to the indirect costs noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part: ". . . It is unallowable to bill the NSFSA for indirect costs that were paid from the general fund in prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . . There is no Federal requirement that prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirect costs by those organizational units within the SFA that actually incur costs. Absent a documented 'inter-fund loan' as outlined above, however, an SFA may only change its policy to charge the NSFSA for indirect costs prospectively (that is going forward for the next school year.) It is unallowable to bill the NSFSA for indirect costs that were previously paid from the general fund unless an agreement exists to show that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management was not aware of the requirements before the transfer was made in September 2022. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected and resulted in the School Corporation charging indirect costs that were not allowable. Questioned Costs Known questioned costs of $26,793 were identified as noted in the Condition and Context. Recommendation Management of the School Corporation should develop written policies and procedures to ensure that indirect costs are properly determined and paid in the appropriate fiscal year. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. 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 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. 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 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture 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 Number and Year (or Other Identifying Number): FY23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles 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 2022-003. 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 Allowable Costs/Cost Principles compliance requirement; however, it was not effective. The School Corporation was approved for an indirect cost rate for fiscal year 2021-2022 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, the School Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for 2021-2022 in the amount of $26,793 was not charged to the Cafeteria fund until September 2022. Per USDA guidance, it is unallowable to bill the National School Food Service Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless an agreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costs in one or more prior years. The School Corporation did not have an interfund loan agreement in place. Therefore, the amounts were considered questioned costs. The lack of effective internal controls and noncompliance were isolated to the indirect costs noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part: ". . . It is unallowable to bill the NSFSA for indirect costs that were paid from the general fund in prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . . There is no Federal requirement that prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirect costs by those organizational units within the SFA that actually incur costs. Absent a documented 'inter-fund loan' as outlined above, however, an SFA may only change its policy to charge the NSFSA for indirect costs prospectively (that is going forward for the next school year.) It is unallowable to bill the NSFSA for indirect costs that were previously paid from the general fund unless an agreement exists to show that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management was not aware of the requirements before the transfer was made in September 2022. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected and resulted in the School Corporation charging indirect costs that were not allowable. Questioned Costs Known questioned costs of $26,793 were identified as noted in the Condition and Context. Recommendation Management of the School Corporation should develop written policies and procedures to ensure that indirect costs are properly determined and paid in the appropriate fiscal year. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. 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 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. 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 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture 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 Number and Year (or Other Identifying Number): FY23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles 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 2022-003. 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 Allowable Costs/Cost Principles compliance requirement; however, it was not effective. The School Corporation was approved for an indirect cost rate for fiscal year 2021-2022 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, the School Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for 2021-2022 in the amount of $26,793 was not charged to the Cafeteria fund until September 2022. Per USDA guidance, it is unallowable to bill the National School Food Service Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless an agreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costs in one or more prior years. The School Corporation did not have an interfund loan agreement in place. Therefore, the amounts were considered questioned costs. The lack of effective internal controls and noncompliance were isolated to the indirect costs noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part: ". . . It is unallowable to bill the NSFSA for indirect costs that were paid from the general fund in prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . . There is no Federal requirement that prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirect costs by those organizational units within the SFA that actually incur costs. Absent a documented 'inter-fund loan' as outlined above, however, an SFA may only change its policy to charge the NSFSA for indirect costs prospectively (that is going forward for the next school year.) It is unallowable to bill the NSFSA for indirect costs that were previously paid from the general fund unless an agreement exists to show that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management was not aware of the requirements before the transfer was made in September 2022. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected and resulted in the School Corporation charging indirect costs that were not allowable. Questioned Costs Known questioned costs of $26,793 were identified as noted in the Condition and Context. Recommendation Management of the School Corporation should develop written policies and procedures to ensure that indirect costs are properly determined and paid in the appropriate fiscal year. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. 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 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. 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 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Activities Allowed or Unallowed Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Activities Allowed or Unallowed Audit Findings: Material Weakness, Modified Opinion Condition and Context The COVID-19 - Education Stabilization Fund (ESF), established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. A sample of 40 vendor and payroll disbursements that were charged to the ESF grant for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable allowable cost principles. Of the 40 disbursements tested, 4 payroll disbursements for accelerated learning were approved, but the School Corporation could not provide documentation to show where the governing board approved their rate of pay. In addition, there was a transfer from the ESSER II - Cares grant fund to the Education fund for $117,177 to reimburse that fund for expenses on June 20, 2024. The School Corporation was unable to provide documentation for the expenses that were reimbursed to ensure they were for allowable activities and allowable costs. The ineffective internal controls were a systemic issue 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 200.334 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. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the Allowable Costs/Cost Principles and the Activities Allowed or Unallowed compliance requirements. Management was not aware that they should have only been reimbursed for expenditures made out of the ESF funds or should have moved the expenditures and retained proper documentation to support what expenditures tied to what was reimbursed. It was noted that the accelerated learning rate of pay was discussed at a School Board meeting, but the approved wage rates were not documented in the School Board minutes or on any sort of salary schedule approved by the School Board members. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Cost/Cost Principles and the Activities Allowed or Unallowed compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs There was a total of $173,841 of questioned costs as referenced under the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure only allowable activities and allowable costs are charged to grants funds and to ensure grant money is only requested for reimbursement for monies directly related to the grant program. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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 2022-010. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Even though the reports were reviewed by someone other than the preparer, the School Corporation was not able to provide financial information that was used to determine amounts used in the reports. The School Corporation completed and submitted four annual Data Collection reports (Reports) for the Elementary and Secondary School Emergency Relief (ESSER) grants. For all four of the Reports, the School Corporation was unable to provide financial information to support the amounts in the Reports; therefore, the Indiana State Board of Accounts could not determine the accuracy of the Reports. Additionally, eight of eight key line items selected for testing could not be verified to the financial records. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 the Federal awards that are renewed quarterly or annual, from the date of 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. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause According to the School Corporation, these issues were due to the reporting differences of how the annual expenditure report categories are different than the annual Data Collection reports. The School Corporation indicated that it had to go employee by employee to properly place them under the correct category using the reimbursement requests but did not retain that documentation of how it came to the numbers. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected with the Reporting compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish effective internal controls to ensure reports submitted are accurate and have supporting documentation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Activities Allowed or Unallowed Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Activities Allowed or Unallowed Audit Findings: Material Weakness, Modified Opinion Condition and Context The COVID-19 - Education Stabilization Fund (ESF), established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. A sample of 40 vendor and payroll disbursements that were charged to the ESF grant for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable allowable cost principles. Of the 40 disbursements tested, 4 payroll disbursements for accelerated learning were approved, but the School Corporation could not provide documentation to show where the governing board approved their rate of pay. In addition, there was a transfer from the ESSER II - Cares grant fund to the Education fund for $117,177 to reimburse that fund for expenses on June 20, 2024. The School Corporation was unable to provide documentation for the expenses that were reimbursed to ensure they were for allowable activities and allowable costs. The ineffective internal controls were a systemic issue 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 200.334 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. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the Allowable Costs/Cost Principles and the Activities Allowed or Unallowed compliance requirements. Management was not aware that they should have only been reimbursed for expenditures made out of the ESF funds or should have moved the expenditures and retained proper documentation to support what expenditures tied to what was reimbursed. It was noted that the accelerated learning rate of pay was discussed at a School Board meeting, but the approved wage rates were not documented in the School Board minutes or on any sort of salary schedule approved by the School Board members. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Cost/Cost Principles and the Activities Allowed or Unallowed compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs There was a total of $173,841 of questioned costs as referenced under the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure only allowable activities and allowable costs are charged to grants funds and to ensure grant money is only requested for reimbursement for monies directly related to the grant program. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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 2022-010. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Even though the reports were reviewed by someone other than the preparer, the School Corporation was not able to provide financial information that was used to determine amounts used in the reports. The School Corporation completed and submitted four annual Data Collection reports (Reports) for the Elementary and Secondary School Emergency Relief (ESSER) grants. For all four of the Reports, the School Corporation was unable to provide financial information to support the amounts in the Reports; therefore, the Indiana State Board of Accounts could not determine the accuracy of the Reports. Additionally, eight of eight key line items selected for testing could not be verified to the financial records. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 the Federal awards that are renewed quarterly or annual, from the date of 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. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause According to the School Corporation, these issues were due to the reporting differences of how the annual expenditure report categories are different than the annual Data Collection reports. The School Corporation indicated that it had to go employee by employee to properly place them under the correct category using the reimbursement requests but did not retain that documentation of how it came to the numbers. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected with the Reporting compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish effective internal controls to ensure reports submitted are accurate and have supporting documentation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Activities Allowed or Unallowed Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Activities Allowed or Unallowed Audit Findings: Material Weakness, Modified Opinion Condition and Context The COVID-19 - Education Stabilization Fund (ESF), established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. A sample of 40 vendor and payroll disbursements that were charged to the ESF grant for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable allowable cost principles. Of the 40 disbursements tested, 4 payroll disbursements for accelerated learning were approved, but the School Corporation could not provide documentation to show where the governing board approved their rate of pay. In addition, there was a transfer from the ESSER II - Cares grant fund to the Education fund for $117,177 to reimburse that fund for expenses on June 20, 2024. The School Corporation was unable to provide documentation for the expenses that were reimbursed to ensure they were for allowable activities and allowable costs. The ineffective internal controls were a systemic issue 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 200.334 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. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the Allowable Costs/Cost Principles and the Activities Allowed or Unallowed compliance requirements. Management was not aware that they should have only been reimbursed for expenditures made out of the ESF funds or should have moved the expenditures and retained proper documentation to support what expenditures tied to what was reimbursed. It was noted that the accelerated learning rate of pay was discussed at a School Board meeting, but the approved wage rates were not documented in the School Board minutes or on any sort of salary schedule approved by the School Board members. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Cost/Cost Principles and the Activities Allowed or Unallowed compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs There was a total of $173,841 of questioned costs as referenced under the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure only allowable activities and allowable costs are charged to grants funds and to ensure grant money is only requested for reimbursement for monies directly related to the grant program. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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 2022-010. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Even though the reports were reviewed by someone other than the preparer, the School Corporation was not able to provide financial information that was used to determine amounts used in the reports. The School Corporation completed and submitted four annual Data Collection reports (Reports) for the Elementary and Secondary School Emergency Relief (ESSER) grants. For all four of the Reports, the School Corporation was unable to provide financial information to support the amounts in the Reports; therefore, the Indiana State Board of Accounts could not determine the accuracy of the Reports. Additionally, eight of eight key line items selected for testing could not be verified to the financial records. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 the Federal awards that are renewed quarterly or annual, from the date of 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. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause According to the School Corporation, these issues were due to the reporting differences of how the annual expenditure report categories are different than the annual Data Collection reports. The School Corporation indicated that it had to go employee by employee to properly place them under the correct category using the reimbursement requests but did not retain that documentation of how it came to the numbers. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected with the Reporting compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish effective internal controls to ensure reports submitted are accurate and have supporting documentation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Activities Allowed or Unallowed Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Activities Allowed or Unallowed Audit Findings: Material Weakness, Modified Opinion Condition and Context The COVID-19 - Education Stabilization Fund (ESF), established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. A sample of 40 vendor and payroll disbursements that were charged to the ESF grant for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable allowable cost principles. Of the 40 disbursements tested, 4 payroll disbursements for accelerated learning were approved, but the School Corporation could not provide documentation to show where the governing board approved their rate of pay. In addition, there was a transfer from the ESSER II - Cares grant fund to the Education fund for $117,177 to reimburse that fund for expenses on June 20, 2024. The School Corporation was unable to provide documentation for the expenses that were reimbursed to ensure they were for allowable activities and allowable costs. The ineffective internal controls were a systemic issue 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 200.334 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. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the Allowable Costs/Cost Principles and the Activities Allowed or Unallowed compliance requirements. Management was not aware that they should have only been reimbursed for expenditures made out of the ESF funds or should have moved the expenditures and retained proper documentation to support what expenditures tied to what was reimbursed. It was noted that the accelerated learning rate of pay was discussed at a School Board meeting, but the approved wage rates were not documented in the School Board minutes or on any sort of salary schedule approved by the School Board members. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Cost/Cost Principles and the Activities Allowed or Unallowed compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs There was a total of $173,841 of questioned costs as referenced under the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure only allowable activities and allowable costs are charged to grants funds and to ensure grant money is only requested for reimbursement for monies directly related to the grant program. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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 2022-010. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Even though the reports were reviewed by someone other than the preparer, the School Corporation was not able to provide financial information that was used to determine amounts used in the reports. The School Corporation completed and submitted four annual Data Collection reports (Reports) for the Elementary and Secondary School Emergency Relief (ESSER) grants. For all four of the Reports, the School Corporation was unable to provide financial information to support the amounts in the Reports; therefore, the Indiana State Board of Accounts could not determine the accuracy of the Reports. Additionally, eight of eight key line items selected for testing could not be verified to the financial records. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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 the Federal awards that are renewed quarterly or annual, from the date of 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. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause According to the School Corporation, these issues were due to the reporting differences of how the annual expenditure report categories are different than the annual Data Collection reports. The School Corporation indicated that it had to go employee by employee to properly place them under the correct category using the reimbursement requests but did not retain that documentation of how it came to the numbers. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected with the Reporting compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish effective internal controls to ensure reports submitted are accurate and have supporting documentation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024 – 001 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2022-23 and 2023-24 award years. Award Period: July 1, 2023, through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, consisting of 2 CFR 200.303, 34 CFR 685.309, and 34 CFR 690.83(b)(2), 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. Additionally, schools are required to certify enrollment at a minimum of every 60 days or every other month. Condition and Context: During our testing of NSLDS Enrollment Reporting on the State System, we noted: 1) Status change received by NSLDS was outside of the 60-day time frame. • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 9 of the 12 students tested for award year 2023-24 • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 35 of the 40 students tested for award year 2023-24 • East Stroudsburg University (P268K232133, P268K242133, P063P222133, and P063P232133): 2 of the 5 students tested for award year 2023-24 • Indiana University (P268K232107, P268K242107, P063P222107, and P063P232107): 17 of the 40 students tested for award year 2023-24 • Kutztown University (P268K232135, P268K242135, P063P222135, and P063P232135): 3 of the 5 students tested for award year 2023-24 • Millersville University (P268K242138, P268K252138, P063P222138, P063P232138): 10 of the 40 students tested for award year 2023-24 2) Enrollment was not certified at a minimum of every 60 days or every other month. • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 23 of the 40 students tested for award year 2023-24 • East Stroudsburg University (P268K232133, P268K242133, P063P222133, and P063P232133): 2 of the 5 students tested for award year 2023-24 Questioned Costs: N/A Cause: The Universities’ policies and procedures were not designed to ensure that student status changes were timely reported to NSLDS. Effect: The NSLDS system is not updated with the student information which can cause over-awarding should the student transfer to another institution and the student may not properly enter the repayment period. Repeat Finding: Cheyney University – Yes – Finding 2023-002 Kutztown University – Yes – Finding 2022-002 East Stroudsburg University – Yes – Finding 2023-002 All Other Universities – No Recommendation: The Universities should review their reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by Federal regulations. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 001 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2022-23 and 2023-24 award years. Award Period: July 1, 2023, through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, consisting of 2 CFR 200.303, 34 CFR 685.309, and 34 CFR 690.83(b)(2), 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. Additionally, schools are required to certify enrollment at a minimum of every 60 days or every other month. Condition and Context: During our testing of NSLDS Enrollment Reporting on the State System, we noted: 1) Status change received by NSLDS was outside of the 60-day time frame. • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 9 of the 12 students tested for award year 2023-24 • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 35 of the 40 students tested for award year 2023-24 • East Stroudsburg University (P268K232133, P268K242133, P063P222133, and P063P232133): 2 of the 5 students tested for award year 2023-24 • Indiana University (P268K232107, P268K242107, P063P222107, and P063P232107): 17 of the 40 students tested for award year 2023-24 • Kutztown University (P268K232135, P268K242135, P063P222135, and P063P232135): 3 of the 5 students tested for award year 2023-24 • Millersville University (P268K242138, P268K252138, P063P222138, P063P232138): 10 of the 40 students tested for award year 2023-24 2) Enrollment was not certified at a minimum of every 60 days or every other month. • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 23 of the 40 students tested for award year 2023-24 • East Stroudsburg University (P268K232133, P268K242133, P063P222133, and P063P232133): 2 of the 5 students tested for award year 2023-24 Questioned Costs: N/A Cause: The Universities’ policies and procedures were not designed to ensure that student status changes were timely reported to NSLDS. Effect: The NSLDS system is not updated with the student information which can cause over-awarding should the student transfer to another institution and the student may not properly enter the repayment period. Repeat Finding: Cheyney University – Yes – Finding 2023-002 Kutztown University – Yes – Finding 2022-002 East Stroudsburg University – Yes – Finding 2023-002 All Other Universities – No Recommendation: The Universities should review their reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by Federal regulations. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 002 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2022-23 and 2023-24 award years Award Period: July 1, 2023, through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 685.309(b), states that: 1) Schools must have some arrangement to report student enrollment data to NSLDS through an enrollment roster file. The school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Also, the Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless if they receive aid from the institution or not. 2) Schools must have some arrangement to report student program enrollment effective date and status to NSLDS. The Code of Federal Regulations, 2 CFR 200.303, non-Federal 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. Condition and Context: During our testing of enrollment status reporting on the State System, we noted: 1) Incorrect Enrollment Effective Date Reported to NSLDS • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 2 of the 12 students tested for award year 2023-24 • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 2 of the 40 students tested for award year 2023-24 • East Stroudsburg University (P268K232133, P268K242133, P063P222133, and P063P232133): 3 of the 5 students tested for award year 2023-24 • Indiana University (P268K232107, P268K242107, P063P222107, and P063P232107): 17 of the 40 students tested for award year 2023-24 • Kutztown University (P268K232135, P268K242135, P063P222135, and P063P232135): 2 of the 5 students tested for award year 2023-24 • Millersville University (P268K242138, P268K252138, P063P222138, P063P232138): 22 of the 40 students tested for award year 2023-24 2) Incorrect Program Enrollment Effective Date Reported to NSLDS • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 1 of the 12 students tested for award year 2023-24 • Indiana University (P268K232107, P268K242107, P063P222107, and P063P232107): 3 of the 40 students tested for the award year 2023-24. 3) Incorrect Program Enrollment Status Reported to NSLDS • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 4 of the 12 students tested for award year 2023-24 • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 2 of the 40 students tested for award year 2023-24 • Millersville University (P268K242138, P268K252138, P063P222138, P063P232138): 1 of the 40 students tested for award year 2022-23 Questioned Costs: N/A Causes: 1) The Universities did not have a process in place to ensure the effective date reported to NSLDS matches the effective date of the student’s last date of attendance. 2) The Universities did not have a process in place to ensure the student’s program enrollment effective date was being accurately reported. 3) The Universities did not have a process in place to ensure the student’s program enrollment status was being accurately reported. Effect: 1) The enrollment effective date reported to NSLDS is used to determine when the student’s grace period should begin. By not reporting a correct effective date, the grace period begin date for the student will be incorrect. 2) The program enrollment effective date reported to NSLDS is used to determine the student’s 150% limit for direct loans as well as when grace period should begin. By not reporting the correct status, the calculation of the 150% would be incorrect and the grace period begin date would be incorrect. Repeat Finding: Cheyney University – Yes – Finding 2022-003 East Stroudsburg - Yes – Finding 2022-003 Kutztown University – Yes – Finding 2022-003 Commonwealth University (Lock Haven University) – Yes – Finding 2022-003 All Other Universities – No Recommendation: 1) The Universities should evaluate their procedures and review policies surrounding reporting status changes to NSLDS to ensure the enrollment effective date reported to NSLDS is aligning with the Universities’ last date of attendance. 2) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment effective dates to NSLDS. 3) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment statuses to NSLDS. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 002 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2022-23 and 2023-24 award years Award Period: July 1, 2023, through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 685.309(b), states that: 1) Schools must have some arrangement to report student enrollment data to NSLDS through an enrollment roster file. The school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Also, the Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless if they receive aid from the institution or not. 2) Schools must have some arrangement to report student program enrollment effective date and status to NSLDS. The Code of Federal Regulations, 2 CFR 200.303, non-Federal 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. Condition and Context: During our testing of enrollment status reporting on the State System, we noted: 1) Incorrect Enrollment Effective Date Reported to NSLDS • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 2 of the 12 students tested for award year 2023-24 • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 2 of the 40 students tested for award year 2023-24 • East Stroudsburg University (P268K232133, P268K242133, P063P222133, and P063P232133): 3 of the 5 students tested for award year 2023-24 • Indiana University (P268K232107, P268K242107, P063P222107, and P063P232107): 17 of the 40 students tested for award year 2023-24 • Kutztown University (P268K232135, P268K242135, P063P222135, and P063P232135): 2 of the 5 students tested for award year 2023-24 • Millersville University (P268K242138, P268K252138, P063P222138, P063P232138): 22 of the 40 students tested for award year 2023-24 2) Incorrect Program Enrollment Effective Date Reported to NSLDS • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 1 of the 12 students tested for award year 2023-24 • Indiana University (P268K232107, P268K242107, P063P222107, and P063P232107): 3 of the 40 students tested for the award year 2023-24. 3) Incorrect Program Enrollment Status Reported to NSLDS • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 4 of the 12 students tested for award year 2023-24 • Commonwealth University (P268K242129, P268K252129, P063P222129 and P063P232129): 2 of the 40 students tested for award year 2023-24 • Millersville University (P268K242138, P268K252138, P063P222138, P063P232138): 1 of the 40 students tested for award year 2022-23 Questioned Costs: N/A Causes: 1) The Universities did not have a process in place to ensure the effective date reported to NSLDS matches the effective date of the student’s last date of attendance. 2) The Universities did not have a process in place to ensure the student’s program enrollment effective date was being accurately reported. 3) The Universities did not have a process in place to ensure the student’s program enrollment status was being accurately reported. Effect: 1) The enrollment effective date reported to NSLDS is used to determine when the student’s grace period should begin. By not reporting a correct effective date, the grace period begin date for the student will be incorrect. 2) The program enrollment effective date reported to NSLDS is used to determine the student’s 150% limit for direct loans as well as when grace period should begin. By not reporting the correct status, the calculation of the 150% would be incorrect and the grace period begin date would be incorrect. Repeat Finding: Cheyney University – Yes – Finding 2022-003 East Stroudsburg - Yes – Finding 2022-003 Kutztown University – Yes – Finding 2022-003 Commonwealth University (Lock Haven University) – Yes – Finding 2022-003 All Other Universities – No Recommendation: 1) The Universities should evaluate their procedures and review policies surrounding reporting status changes to NSLDS to ensure the enrollment effective date reported to NSLDS is aligning with the Universities’ last date of attendance. 2) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment effective dates to NSLDS. 3) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment statuses to NSLDS. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.268 Federal Award Identification Number and Year: P268K242129, P268K252129; all grants were awarded within the 2022-23 and 2023-24 award years Award Period: July 1, 2023, through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Code of Federal Regulations, 2 CFR 200.303, non-Federal 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. Condition and Context: During the testing of Direct Loan Reconciliations on the State System, we noted that Commonwealth University was performing reconciliations; however, formal documentation of review or approval could not be provided. Questioned Costs: N/A Cause: The University financial and student records management did not have the appropriate coordination or communication with the financial aid team to formally document the review of the reconciliations being performed on a timely basis. Effect: The University is not complying with internal policy and federal requirements to ensure federal funds are properly reconciled. Repeat Finding: No Recommendation: The University should ensure all necessary employees receive proper training, support, and time to follow the university policies and federal requirements related to monthly reconciliations and maintenance of documentation. Views of Responsible Officials: There is no disagreement with the audit finding.
2024-003 Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 1505-0271 - 2021 Award Period: March 3, 2021 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: 2 CFR 200.214 Suspension and Debarment restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; of (b) Collecting a certification from that person; or (c) Adding a clause of condition to the covered transaction with that person. Controls: 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 comply 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: The Town did not determine the suspension and debarment status of vendors with expenditures exceeding $25,000 on a timely basis, as required by federal regulations. Questioned Cost: None Context: Four of the Five vendors we selected for testing had the suspension and debarment status verified, however it was not performed timely. Cause: The Town’s procedures and internal controls over suspension and debarment are not sufficient to ensure that all vendors’ suspension and debarment status is verified timely. Effect: Failure to verify the suspension and debarment status of vendors may result in the Town issuing payments to vendors what are suspended and debarred and not authorized to provide services under the program. Repeat Finding: Yes, Finding 2023-003 Recommendation: We recommend management ensure policies and procedures include the three options for determining suspension and debarment status listed in 2 CFR 180.300 and that controls are sufficient to ensure that the suspension and debarment status is verified for all vendors prior to issuance of the contract. View of responsible officials and planned corrected actions: Management concurs with this finding. Management has implemented a policy going forward to ensure all vendors entered into a contract will sign a suspension and debarment agreement.
2024-003 Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 1505-0271 - 2021 Award Period: March 3, 2021 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: 2 CFR 200.214 Suspension and Debarment restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; of (b) Collecting a certification from that person; or (c) Adding a clause of condition to the covered transaction with that person. Controls: 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 comply 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: The Town did not determine the suspension and debarment status of vendors with expenditures exceeding $25,000 on a timely basis, as required by federal regulations. Questioned Cost: None Context: Four of the Five vendors we selected for testing had the suspension and debarment status verified, however it was not performed timely. Cause: The Town’s procedures and internal controls over suspension and debarment are not sufficient to ensure that all vendors’ suspension and debarment status is verified timely. Effect: Failure to verify the suspension and debarment status of vendors may result in the Town issuing payments to vendors what are suspended and debarred and not authorized to provide services under the program. Repeat Finding: Yes, Finding 2023-003 Recommendation: We recommend management ensure policies and procedures include the three options for determining suspension and debarment status listed in 2 CFR 180.300 and that controls are sufficient to ensure that the suspension and debarment status is verified for all vendors prior to issuance of the contract. View of responsible officials and planned corrected actions: Management concurs with this finding. Management has implemented a policy going forward to ensure all vendors entered into a contract will sign a suspension and debarment agreement.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-087-ARP, 22619-087-ARP 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, which would include segregation of duties, was not in place at the School Corporation in order 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. During the audit period, the School Corporation had six vendors, totaling $165,726, that were determined to require small purchase procedures. Two vendors were selected for testing. For the two vendors tested, the School Corporation procured $82,669 in services and could not provide evidence of open competition or quotes for the purchases. INDIANA STATE BOARD OF ACCOUNTS 15 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the School Corporation had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; procedures ensure that all solicitations identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. 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 vendor. Three covered transactions for goods or services that exceeded $25,000 paid from the Special Education funds during the audit period were identified. The School Corporation did not verify the vendor's suspension and debarment status prior to payment for any of the three vendors. Amounts paid to the vendors totaled $131,637. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the School Corporation was unable to provide documentation to demonstrate it had properly procured services. In addition, the Treasurer and Assistant Superintendent of Schools assumed the vendor's suspension and debarment status was verified and quotes were being obtained or reasoning for a single source provider was being documented. There was not adequate oversight to ensure proper procurement procedures were being followed. Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Without a proper system of internal controls in place that operated effectively, material noncompliance 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 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 that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-087-ARP, 22619-087-ARP 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, which would include segregation of duties, was not in place at the School Corporation in order 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. During the audit period, the School Corporation had six vendors, totaling $165,726, that were determined to require small purchase procedures. Two vendors were selected for testing. For the two vendors tested, the School Corporation procured $82,669 in services and could not provide evidence of open competition or quotes for the purchases. INDIANA STATE BOARD OF ACCOUNTS 15 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the School Corporation had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; procedures ensure that all solicitations identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. 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 vendor. Three covered transactions for goods or services that exceeded $25,000 paid from the Special Education funds during the audit period were identified. The School Corporation did not verify the vendor's suspension and debarment status prior to payment for any of the three vendors. Amounts paid to the vendors totaled $131,637. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the School Corporation was unable to provide documentation to demonstrate it had properly procured services. In addition, the Treasurer and Assistant Superintendent of Schools assumed the vendor's suspension and debarment status was verified and quotes were being obtained or reasoning for a single source provider was being documented. There was not adequate oversight to ensure proper procurement procedures were being followed. Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Without a proper system of internal controls in place that operated effectively, material noncompliance 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 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 that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-087-ARP, 22619-087-ARP 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, which would include segregation of duties, was not in place at the School Corporation in order 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. During the audit period, the School Corporation had six vendors, totaling $165,726, that were determined to require small purchase procedures. Two vendors were selected for testing. For the two vendors tested, the School Corporation procured $82,669 in services and could not provide evidence of open competition or quotes for the purchases. INDIANA STATE BOARD OF ACCOUNTS 15 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the School Corporation had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; procedures ensure that all solicitations identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. 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 vendor. Three covered transactions for goods or services that exceeded $25,000 paid from the Special Education funds during the audit period were identified. The School Corporation did not verify the vendor's suspension and debarment status prior to payment for any of the three vendors. Amounts paid to the vendors totaled $131,637. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the School Corporation was unable to provide documentation to demonstrate it had properly procured services. In addition, the Treasurer and Assistant Superintendent of Schools assumed the vendor's suspension and debarment status was verified and quotes were being obtained or reasoning for a single source provider was being documented. There was not adequate oversight to ensure proper procurement procedures were being followed. Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Without a proper system of internal controls in place that operated effectively, material noncompliance 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 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 that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-087-ARP, 22619-087-ARP 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, which would include segregation of duties, was not in place at the School Corporation in order 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. During the audit period, the School Corporation had six vendors, totaling $165,726, that were determined to require small purchase procedures. Two vendors were selected for testing. For the two vendors tested, the School Corporation procured $82,669 in services and could not provide evidence of open competition or quotes for the purchases. INDIANA STATE BOARD OF ACCOUNTS 15 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the School Corporation had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; procedures ensure that all solicitations identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. 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 vendor. Three covered transactions for goods or services that exceeded $25,000 paid from the Special Education funds during the audit period were identified. The School Corporation did not verify the vendor's suspension and debarment status prior to payment for any of the three vendors. Amounts paid to the vendors totaled $131,637. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 16 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the School Corporation was unable to provide documentation to demonstrate it had properly procured services. In addition, the Treasurer and Assistant Superintendent of Schools assumed the vendor's suspension and debarment status was verified and quotes were being obtained or reasoning for a single source provider was being documented. There was not adequate oversight to ensure proper procurement procedures were being followed. Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 WARRICK COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Without a proper system of internal controls in place that operated effectively, material noncompliance 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 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 that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024-002 Policies Regarding Internal Controls Over Federal Awards (Significant Deficiency in Internal Controls over Compliance and Noncompliance —All Awards) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.303(a) The recipient and subrecipient of federal awards 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. Condition and Context: The Agency historically updated their documentation of internal controls in conjunction with the annual audit. However, the Agency was unable to provide internally produced written policies regarding the internal controls over state and federal awards. Cause: A misunderstanding of the requirements to maintain written policies over federal awards. Effect: The Agency is not in compliance with requirements for recipients and subrecipients of federal awards per 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.303. Accounting department staff lack clearly documented guidance for implementing internal controls over federal awards. Questioned Costs: None Recommendations: Management should familiarize themselves with the requirements of 2 CFR 200 regarding the specific written policies required to be maintained for recipients and subrecipients of federal awards. Management should develop and maintain internally produced written policies regarding the internal controls over federal awards as described in 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.303. Written policies over internal controls over federal awards developed by management should be approved by the Board of Directors or designated committee. Written policies should be made available to accounting department staff involved in the accounting procedures related to federal award expenditures. Views of Responsible Officials and Planned Corrective Actions: Management is committed to compliance in accordance with all grant agreements and will work to formally document the Agency’s internal controls over Federal and State awards. Additional training will be provided as needed to prevent future findings.