FINDING 2024-003 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: 84.027; 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2022-2023, the Cooperative had one vendor, with disbursements, totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2022-2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000, but exceeded the $50,000 micropurchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023-2024, three vendors with disbursements, totaling $175,125, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. 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 vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 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.gov 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 Cooperative noted that the ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified prior to entering into any covered transactions. 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: 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: 84.027; 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2022-2023, the Cooperative had one vendor, with disbursements, totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2022-2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000, but exceeded the $50,000 micropurchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023-2024, three vendors with disbursements, totaling $175,125, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. 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 vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 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.gov 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 Cooperative noted that the ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified prior to entering into any covered transactions. 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: 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: 84.027; 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2022-2023, the Cooperative had one vendor, with disbursements, totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2022-2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000, but exceeded the $50,000 micropurchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023-2024, three vendors with disbursements, totaling $175,125, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. 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 vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 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.gov 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 Cooperative noted that the ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified prior to entering into any covered transactions. 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: 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: 84.027; 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2022-2023, the Cooperative had one vendor, with disbursements, totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2022-2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000, but exceeded the $50,000 micropurchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023-2024, three vendors with disbursements, totaling $175,125, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. 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 vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF STEUBEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 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.gov 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 Cooperative noted that the ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified prior to entering into any covered transactions. 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 - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2022-003. 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. 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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 micropurchase threshold but below the simplified acquisition threshold. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "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." 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: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 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." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2022-003. 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. 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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 micropurchase threshold but below the simplified acquisition threshold. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "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." 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: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 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." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2022-003. 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. 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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 micropurchase threshold but below the simplified acquisition threshold. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "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." 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: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 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." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2022-003. 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. 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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 micropurchase threshold but below the simplified acquisition threshold. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "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." 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: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 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." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2022-003. 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. 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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 micropurchase threshold but below the simplified acquisition threshold. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "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." 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: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 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." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2022-003. 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. 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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 micropurchase threshold but below the simplified acquisition threshold. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "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." 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: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 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." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Child Nutrition Cluster - Eligibility 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not established effective internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a Summer Food Service Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced-price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be Direct Certified. For a Direct Certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct Certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 21 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's process for determining student eligibility based on income was that the Food Service Director made the initial eligibility determination and the High School Treasurer reviewed the determination made. Per the School Corporation, 10 percent of free or reduced-priced applications received were subject to this process. However, the School Corporation did not provide a list of student applications which had been reviewed during the audit period. Therefore, it could not be determined whether the internal control over free and reduced-price applications was in place. The Food Service Director directly imports the initial list of directly-certified students into the school lunch software at the beginning of each school year. Students who are determined to be directly-certified after the initial import are manually entered into the school lunch software by the Food Service Director. There was no documented review or other internal control in place to ensure students who were directlycertified were entered into the system correctly. A sample of 40 students receiving free or reduced-priced meals that were selected for testing to determine whether required eligibility determinations were made, participants were determined to be eligible, and that only eligible individuals participated in the program. Of the 40 students receiving free or reduced-priced meals that were selected for testing, supporting documentation was not provided for 1 student selected for testing. Therefore, it could not be determined that the correct eligibility status was made in the system software for this student. 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). . . ." 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. INDIANA STATE BOARD OF ACCOUNTS 22 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. (c) Determination of eligibility . . . (2) Use of prior year's eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency's discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause The School Corporation was unable to provide documentation of student eligibility as noted in the Condition and Context and did not have internal controls over Direct Certification. The School Corporation did not have policies and procedures in place to properly maintain supporting documentation or establish internal controls over Direct Certification. INDIANA STATE BOARD OF ACCOUNTS 23 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a student's eligibility for free or reduced-price meals could not be determined. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure only eligible students receive benefits. 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 - Eligibility 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not established effective internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a Summer Food Service Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced-price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be Direct Certified. For a Direct Certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct Certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 21 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's process for determining student eligibility based on income was that the Food Service Director made the initial eligibility determination and the High School Treasurer reviewed the determination made. Per the School Corporation, 10 percent of free or reduced-priced applications received were subject to this process. However, the School Corporation did not provide a list of student applications which had been reviewed during the audit period. Therefore, it could not be determined whether the internal control over free and reduced-price applications was in place. The Food Service Director directly imports the initial list of directly-certified students into the school lunch software at the beginning of each school year. Students who are determined to be directly-certified after the initial import are manually entered into the school lunch software by the Food Service Director. There was no documented review or other internal control in place to ensure students who were directlycertified were entered into the system correctly. A sample of 40 students receiving free or reduced-priced meals that were selected for testing to determine whether required eligibility determinations were made, participants were determined to be eligible, and that only eligible individuals participated in the program. Of the 40 students receiving free or reduced-priced meals that were selected for testing, supporting documentation was not provided for 1 student selected for testing. Therefore, it could not be determined that the correct eligibility status was made in the system software for this student. 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). . . ." 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. INDIANA STATE BOARD OF ACCOUNTS 22 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. (c) Determination of eligibility . . . (2) Use of prior year's eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency's discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause The School Corporation was unable to provide documentation of student eligibility as noted in the Condition and Context and did not have internal controls over Direct Certification. The School Corporation did not have policies and procedures in place to properly maintain supporting documentation or establish internal controls over Direct Certification. INDIANA STATE BOARD OF ACCOUNTS 23 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a student's eligibility for free or reduced-price meals could not be determined. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure only eligible students receive benefits. 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 - Eligibility 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not established effective internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a Summer Food Service Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced-price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be Direct Certified. For a Direct Certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct Certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 21 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's process for determining student eligibility based on income was that the Food Service Director made the initial eligibility determination and the High School Treasurer reviewed the determination made. Per the School Corporation, 10 percent of free or reduced-priced applications received were subject to this process. However, the School Corporation did not provide a list of student applications which had been reviewed during the audit period. Therefore, it could not be determined whether the internal control over free and reduced-price applications was in place. The Food Service Director directly imports the initial list of directly-certified students into the school lunch software at the beginning of each school year. Students who are determined to be directly-certified after the initial import are manually entered into the school lunch software by the Food Service Director. There was no documented review or other internal control in place to ensure students who were directlycertified were entered into the system correctly. A sample of 40 students receiving free or reduced-priced meals that were selected for testing to determine whether required eligibility determinations were made, participants were determined to be eligible, and that only eligible individuals participated in the program. Of the 40 students receiving free or reduced-priced meals that were selected for testing, supporting documentation was not provided for 1 student selected for testing. Therefore, it could not be determined that the correct eligibility status was made in the system software for this student. 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). . . ." 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. INDIANA STATE BOARD OF ACCOUNTS 22 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. (c) Determination of eligibility . . . (2) Use of prior year's eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency's discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause The School Corporation was unable to provide documentation of student eligibility as noted in the Condition and Context and did not have internal controls over Direct Certification. The School Corporation did not have policies and procedures in place to properly maintain supporting documentation or establish internal controls over Direct Certification. INDIANA STATE BOARD OF ACCOUNTS 23 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a student's eligibility for free or reduced-price meals could not be determined. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure only eligible students receive benefits. 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 - Eligibility 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not established effective internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a Summer Food Service Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced-price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be Direct Certified. For a Direct Certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct Certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 21 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's process for determining student eligibility based on income was that the Food Service Director made the initial eligibility determination and the High School Treasurer reviewed the determination made. Per the School Corporation, 10 percent of free or reduced-priced applications received were subject to this process. However, the School Corporation did not provide a list of student applications which had been reviewed during the audit period. Therefore, it could not be determined whether the internal control over free and reduced-price applications was in place. The Food Service Director directly imports the initial list of directly-certified students into the school lunch software at the beginning of each school year. Students who are determined to be directly-certified after the initial import are manually entered into the school lunch software by the Food Service Director. There was no documented review or other internal control in place to ensure students who were directlycertified were entered into the system correctly. A sample of 40 students receiving free or reduced-priced meals that were selected for testing to determine whether required eligibility determinations were made, participants were determined to be eligible, and that only eligible individuals participated in the program. Of the 40 students receiving free or reduced-priced meals that were selected for testing, supporting documentation was not provided for 1 student selected for testing. Therefore, it could not be determined that the correct eligibility status was made in the system software for this student. 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). . . ." 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. INDIANA STATE BOARD OF ACCOUNTS 22 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. (c) Determination of eligibility . . . (2) Use of prior year's eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency's discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause The School Corporation was unable to provide documentation of student eligibility as noted in the Condition and Context and did not have internal controls over Direct Certification. The School Corporation did not have policies and procedures in place to properly maintain supporting documentation or establish internal controls over Direct Certification. INDIANA STATE BOARD OF ACCOUNTS 23 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a student's eligibility for free or reduced-price meals could not be determined. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure only eligible students receive benefits. 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 - Eligibility 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not established effective internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a Summer Food Service Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced-price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be Direct Certified. For a Direct Certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct Certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 21 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's process for determining student eligibility based on income was that the Food Service Director made the initial eligibility determination and the High School Treasurer reviewed the determination made. Per the School Corporation, 10 percent of free or reduced-priced applications received were subject to this process. However, the School Corporation did not provide a list of student applications which had been reviewed during the audit period. Therefore, it could not be determined whether the internal control over free and reduced-price applications was in place. The Food Service Director directly imports the initial list of directly-certified students into the school lunch software at the beginning of each school year. Students who are determined to be directly-certified after the initial import are manually entered into the school lunch software by the Food Service Director. There was no documented review or other internal control in place to ensure students who were directlycertified were entered into the system correctly. A sample of 40 students receiving free or reduced-priced meals that were selected for testing to determine whether required eligibility determinations were made, participants were determined to be eligible, and that only eligible individuals participated in the program. Of the 40 students receiving free or reduced-priced meals that were selected for testing, supporting documentation was not provided for 1 student selected for testing. Therefore, it could not be determined that the correct eligibility status was made in the system software for this student. 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). . . ." 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. INDIANA STATE BOARD OF ACCOUNTS 22 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. (c) Determination of eligibility . . . (2) Use of prior year's eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency's discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause The School Corporation was unable to provide documentation of student eligibility as noted in the Condition and Context and did not have internal controls over Direct Certification. The School Corporation did not have policies and procedures in place to properly maintain supporting documentation or establish internal controls over Direct Certification. INDIANA STATE BOARD OF ACCOUNTS 23 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a student's eligibility for free or reduced-price meals could not be determined. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure only eligible students receive benefits. 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 - Eligibility 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not established effective internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a Summer Food Service Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced-price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be Direct Certified. For a Direct Certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct Certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 21 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's process for determining student eligibility based on income was that the Food Service Director made the initial eligibility determination and the High School Treasurer reviewed the determination made. Per the School Corporation, 10 percent of free or reduced-priced applications received were subject to this process. However, the School Corporation did not provide a list of student applications which had been reviewed during the audit period. Therefore, it could not be determined whether the internal control over free and reduced-price applications was in place. The Food Service Director directly imports the initial list of directly-certified students into the school lunch software at the beginning of each school year. Students who are determined to be directly-certified after the initial import are manually entered into the school lunch software by the Food Service Director. There was no documented review or other internal control in place to ensure students who were directlycertified were entered into the system correctly. A sample of 40 students receiving free or reduced-priced meals that were selected for testing to determine whether required eligibility determinations were made, participants were determined to be eligible, and that only eligible individuals participated in the program. Of the 40 students receiving free or reduced-priced meals that were selected for testing, supporting documentation was not provided for 1 student selected for testing. Therefore, it could not be determined that the correct eligibility status was made in the system software for this student. 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). . . ." 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. INDIANA STATE BOARD OF ACCOUNTS 22 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. (c) Determination of eligibility . . . (2) Use of prior year's eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency's discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause The School Corporation was unable to provide documentation of student eligibility as noted in the Condition and Context and did not have internal controls over Direct Certification. The School Corporation did not have policies and procedures in place to properly maintain supporting documentation or establish internal controls over Direct Certification. INDIANA STATE BOARD OF ACCOUNTS 23 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a student's eligibility for free or reduced-price meals could not be determined. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure only eligible students receive benefits. 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 - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness 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 payroll and vendor payments paid from the COVID-19 - Education Stabilization Fund was allowable and in conformance with the cost principles. The School Corporation did not implement or maintain supporting documentation of the reviews or approval by a knowledgeable person to ensure allowability and conformance with cost principles for payroll and vendor disbursements from the COVID-19 - Education Stabilization Fund grants. The lack of internal controls was a systematic issue during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include appropriate segregation of duties. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures, but did not establish proper internal controls. Effect The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements could have resulted in the loss of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirements listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that material noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. In order to have an effective internal control system, it is important to have proper segregation of duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to have a separation of functions over certain activities related to the program. The fundamental premise of segregation of duties is that an individual or small group of individuals should not be in a position to initiate, approve, undertake, and review the same activity. 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 - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness 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 payroll and vendor payments paid from the COVID-19 - Education Stabilization Fund was allowable and in conformance with the cost principles. The School Corporation did not implement or maintain supporting documentation of the reviews or approval by a knowledgeable person to ensure allowability and conformance with cost principles for payroll and vendor disbursements from the COVID-19 - Education Stabilization Fund grants. The lack of internal controls was a systematic issue during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include appropriate segregation of duties. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures, but did not establish proper internal controls. Effect The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements could have resulted in the loss of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirements listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that material noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. In order to have an effective internal control system, it is important to have proper segregation of duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to have a separation of functions over certain activities related to the program. The fundamental premise of segregation of duties is that an individual or small group of individuals should not be in a position to initiate, approve, undertake, and review the same activity. 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 - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness 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 payroll and vendor payments paid from the COVID-19 - Education Stabilization Fund was allowable and in conformance with the cost principles. The School Corporation did not implement or maintain supporting documentation of the reviews or approval by a knowledgeable person to ensure allowability and conformance with cost principles for payroll and vendor disbursements from the COVID-19 - Education Stabilization Fund grants. The lack of internal controls was a systematic issue during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include appropriate segregation of duties. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures, but did not establish proper internal controls. Effect The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements could have resulted in the loss of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirements listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that material noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. In order to have an effective internal control system, it is important to have proper segregation of duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to have a separation of functions over certain activities related to the program. The fundamental premise of segregation of duties is that an individual or small group of individuals should not be in a position to initiate, approve, undertake, and review the same activity. 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 - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property, is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. In addition, a physical inventory of all assets should be completed at least every two years. There were two assets purchased with grant funds selected for testing, totaling $100,847. The assets were included on the capital asset records but did not have a serial number or other identification number, the source of funding for the property (including the FAIN), or percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. INDIANA STATE BOARD OF ACCOUNTS 26 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures but did not establish proper internal controls. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, asset records did not include all of the required information. 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 asset records include all the required information. 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 - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property, is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. In addition, a physical inventory of all assets should be completed at least every two years. There were two assets purchased with grant funds selected for testing, totaling $100,847. The assets were included on the capital asset records but did not have a serial number or other identification number, the source of funding for the property (including the FAIN), or percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. INDIANA STATE BOARD OF ACCOUNTS 26 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures but did not establish proper internal controls. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, asset records did not include all of the required information. 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 asset records include all the required information. 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 - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property, is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. In addition, a physical inventory of all assets should be completed at least every two years. There were two assets purchased with grant funds selected for testing, totaling $100,847. The assets were included on the capital asset records but did not have a serial number or other identification number, the source of funding for the property (including the FAIN), or percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. INDIANA STATE BOARD OF ACCOUNTS 26 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures but did not establish proper internal controls. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, asset records did not include all of the required information. 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 asset records include all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-007 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness 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 reporting was accurate for disbursements from the education stabilization fund. INDIANA STATE BOARD OF ACCOUNTS 27 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not implement or maintain supporting documentation of the reviews or approval by a knowledgeable person to ensure reporting was accurate for disbursements from the COVID-19 - Education Stabilization Fund grant. The lack of effective internal controls was a systematic issue during 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). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include appropriate segregation of duties. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures but did not establish proper internal controls. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure compliance with reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-007 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness 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 reporting was accurate for disbursements from the education stabilization fund. INDIANA STATE BOARD OF ACCOUNTS 27 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not implement or maintain supporting documentation of the reviews or approval by a knowledgeable person to ensure reporting was accurate for disbursements from the COVID-19 - Education Stabilization Fund grant. The lack of effective internal controls was a systematic issue during 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). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include appropriate segregation of duties. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures but did not establish proper internal controls. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure compliance with reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-007 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness 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 reporting was accurate for disbursements from the education stabilization fund. INDIANA STATE BOARD OF ACCOUNTS 27 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not implement or maintain supporting documentation of the reviews or approval by a knowledgeable person to ensure reporting was accurate for disbursements from the COVID-19 - Education Stabilization Fund grant. The lack of effective internal controls was a systematic issue during 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). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include appropriate segregation of duties. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation has policies to establish internal controls and procedures but did not establish proper internal controls. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure compliance with reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024 – 003 Equipment and Real Property Management Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D, 84.425W Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425U210013, S425D210013, S425W210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matter Criteria or specific requirement: Per 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The School has had a lapse of greater than two years between physical inventories. Context: During the testing of Equipment for Real Property Management, we noted that the School had an interval between physical inventories that was greater than two years. Questioned costs: None Cause: The School has gone through leadership changes over the past few years in the business office that is responsible for compliance requirements and the inventory observation has not been completed in the transition period. Effect: The equipment was not inventoried within the two-year timeframe Repeat finding: No Recommendation: The School should ensure proper policies and procedures are in place to monitor the physical inventory requirements and ensure the physical inventory is completed and documented. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 003 Equipment and Real Property Management Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D, 84.425W Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425U210013, S425D210013, S425W210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matter Criteria or specific requirement: Per 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The School has had a lapse of greater than two years between physical inventories. Context: During the testing of Equipment for Real Property Management, we noted that the School had an interval between physical inventories that was greater than two years. Questioned costs: None Cause: The School has gone through leadership changes over the past few years in the business office that is responsible for compliance requirements and the inventory observation has not been completed in the transition period. Effect: The equipment was not inventoried within the two-year timeframe Repeat finding: No Recommendation: The School should ensure proper policies and procedures are in place to monitor the physical inventory requirements and ensure the physical inventory is completed and documented. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 003 Equipment and Real Property Management Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D, 84.425W Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425U210013, S425D210013, S425W210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matter Criteria or specific requirement: Per 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The School has had a lapse of greater than two years between physical inventories. Context: During the testing of Equipment for Real Property Management, we noted that the School had an interval between physical inventories that was greater than two years. Questioned costs: None Cause: The School has gone through leadership changes over the past few years in the business office that is responsible for compliance requirements and the inventory observation has not been completed in the transition period. Effect: The equipment was not inventoried within the two-year timeframe Repeat finding: No Recommendation: The School should ensure proper policies and procedures are in place to monitor the physical inventory requirements and ensure the physical inventory is completed and documented. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.
Finding 2024-001: Inaccurate Property Management Records Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Equipment Condition Found: The University did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with federal R&D Cluster program awards. The University conducts research at multiple locations throughout its campus where equipment purchased with federal awards is utilized and maintained. The University identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with University policy. The University is required to safeguard equipment purchased with federal awards, maintain current property records, and to perform a physical inventory of equipment on a biennial basis. During our physical observation of 60 pieces of equipment from the University’s property management records (with an original cost value of $4,672,419 and a net book value (NBV) of $1,635,234) purchased with federal R&D Cluster awards, we noted the following: - Three items (with an original cost value of $33,141 and a NBV of $1,309) did not have an asset tag affixed to them in accordance with University policy at the time of our observation. - One item (with an original cost value of $14,500 and a NBV of $0) was not able to be located for our testing. University management believes this item was disposed of but not appropriately removed from the property records and federal equipment listing. Additionally, during our physical observation of six pieces of equipment from multiple locations throughout the University’s campus, we observed that the items had asset tags affixed to them but were not included in the University’s property management records. As such, we were unable to determine the original cost value and NBV of these items. Further, we noted adequate management review controls have not been established to ensure property management records were accurately updated and equipment was properly tagged in accordance with University policy. The NBV of equipment related to the R&D Cluster program totaled $64,136,745 at June 30, 2024. Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. In addition, 2 CFR 200.303, requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are properly tagged. Cause: In discussing these conditions with University officials, they stated the decentralized nature of equipment record keeping process can result in delayed reporting of asset tagging and disposal. Possible Asserted Effect: Failure to maintain accurate property records may prohibit the University from properly safeguarding and maintaining equipment and may result in federal programs not receiving the appropriate share of proceeds from the disposals of equipment purchased with federal funds. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review its procedures for updating property records to ensure they accurately reflect equipment information. We also recommend the University properly tag equipment in accordance with its policy. Views of University Officials: The University concurs with the finding. The testing period for FY2024 fell within the remediation period from FY2023. The University will continue to address these concerns with departments by conducting equipment training and addressing untagged assets.
Finding 2024-002: Untimely Review of Subrecipient Single Audit Reports Federal Agency: The Corporation for National and Community Service U.S. Department of Agriculture (USDA) U.S. Department of Commerce (USDOC) U.S. Department of Defense (USDOD) U.S. Department of Education (USDE) U.S. Department of Energy (USDOE) U.S. Department of Health and Human Services (USDHHS) U.S. Department of Homeland Security (USDHS) U.S. Department of Housing and Urban Development (USHUD) U.S. Department of Interior (USDOI) U.S. Department of Justice (USDOJ) U.S. Department of Transportation (USDOT) U.S. Director of National Intelligence (USDNI) U.S. Environmental Protection Agency (USEPA) National Aeronautics and Space Administration (NASA) National Endowment for the Humanities (NEH) National Science Foundation (NSF) Social Security Administration (SSA) U.S. Department of Veteran Affairs (USDVA) All Pass-Through Entities Program Name: Research and Development (R&D) Cluster ALN and Program Expenditures: Various ($539,302,615) Federal Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Condition Found: The University did not review single audit reports received from its subrecipients for the R&D Cluster program on a timely basis. The University’s policy requires review of the single audit reports received from its subrecipients within six months of the date of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). During our testing of a sample of single audit report reviews for 40 subrecipients (with expenditures of $31,826,626), we noted the University did not review the single audit reports for nine subrecipients (with expenditures of $4,812,867) within six months of the date of acceptance of the single audit report by the FAC. Upon further review, management evaluated all the single audit report reviews performed during fiscal year 2024 for its subrecipients of the R&D Cluster program (195 single audit reviews for subrecipients with expenditures of $81,358,862) and determined that the single audit reports for 70 subrecipients (with expenditures of $48,019,701) were not reviewed within six months of the date of acceptance of the single audit report by the FAC. Specifically, these single audit reports were reviewed 181-392 days after acceptance by the FAC. The University’s subrecipient expenditures under the R&D Cluster program for the year ended June 30, 2024 were $81,358,862. Criteria: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision for audit findings pertaining to the Federal Award provided to the subrecipient from the pass-through entity within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed in a timely manner in accordance with University policy. Cause: In discussing these conditions with University officials, they stated this delay was an oversight due in part to limited staffing resources to review the single audits while the University was implementing a new financial system. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and grant agreements. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Views of University Officials The University concurs with the finding and has already begun to address these concerns. Although there was a delay in the review of single audit reports, the University did not miss or delay any required action with said subrecipients as a result. See separate report for planned corrective action.