FINDING 2023-001 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.245D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. There were two contracted vendors paid in excess of $2,000 with the COVID-19 - Education Stabilization Fund grant award during the audit period for construction related projects. Both contracts, totaling $2,296,300, were selected for testing. Neither of the contracts included the required prevailing wage rate clause. In addition, certified payrolls were not submitted to the School Corporation by either contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clauses . . . (1) Minimum wages. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH GIBSON 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, construction contracts entered into did not contain the required wage rate requirements clause nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts have language including prevailing wage rates and obtain payroll records to ensure wages are paid properly. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.245D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. There were two contracted vendors paid in excess of $2,000 with the COVID-19 - Education Stabilization Fund grant award during the audit period for construction related projects. Both contracts, totaling $2,296,300, were selected for testing. Neither of the contracts included the required prevailing wage rate clause. In addition, certified payrolls were not submitted to the School Corporation by either contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clauses . . . (1) Minimum wages. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH GIBSON 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, construction contracts entered into did not contain the required wage rate requirements clause nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts have language including prevailing wage rates and obtain payroll records to ensure wages are paid properly. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.245D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. There were two contracted vendors paid in excess of $2,000 with the COVID-19 - Education Stabilization Fund grant award during the audit period for construction related projects. Both contracts, totaling $2,296,300, were selected for testing. Neither of the contracts included the required prevailing wage rate clause. In addition, certified payrolls were not submitted to the School Corporation by either contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clauses . . . (1) Minimum wages. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH GIBSON 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, construction contracts entered into did not contain the required wage rate requirements clause nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts have language including prevailing wage rates and obtain payroll records to ensure wages are paid properly. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.245D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. There were two contracted vendors paid in excess of $2,000 with the COVID-19 - Education Stabilization Fund grant award during the audit period for construction related projects. Both contracts, totaling $2,296,300, were selected for testing. Neither of the contracts included the required prevailing wage rate clause. In addition, certified payrolls were not submitted to the School Corporation by either contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clauses . . . (1) Minimum wages. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH GIBSON 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, construction contracts entered into did not contain the required wage rate requirements clause nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts have language including prevailing wage rates and obtain payroll records to ensure wages are paid properly. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted one ESSER I report, two ESSER II reports, and two ESSER III reports, for a total of five reports. Although the Treasurer prepared the annual data collection report, and the ESSER Program Director or Assistant Superintendent of Schools, both of whom are knowledgeable about the program, reviewed and approved the report prior to submission, the internal control was not effective and did not prevent, or detect and correct, errors prior to submission. INDIANA STATE BOARD OF ACCOUNTS 16 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) All five reports were selected for testing. Neither of the ESSER II annual data reports were accurately supported by the School Corporation's records. The errors identified were as follows: The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021, reported total expenses of $58,917; however, the School Corporation's ledger for the same period had total expenses of $1,306. The ESSER II, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022, reported total expenses of $60,441; however, the School Corporation's ledger for the same period had total expenses of $63,565. The lack of effective internal controls and noncompliance were isolated to the S425D210013 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 17 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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, the reports were not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reports submitted on behalf of the COVID-19 - Education Stabilization Fund program are supported by the School Corporation's underlying accounting records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted one ESSER I report, two ESSER II reports, and two ESSER III reports, for a total of five reports. Although the Treasurer prepared the annual data collection report, and the ESSER Program Director or Assistant Superintendent of Schools, both of whom are knowledgeable about the program, reviewed and approved the report prior to submission, the internal control was not effective and did not prevent, or detect and correct, errors prior to submission. INDIANA STATE BOARD OF ACCOUNTS 16 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) All five reports were selected for testing. Neither of the ESSER II annual data reports were accurately supported by the School Corporation's records. The errors identified were as follows: The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021, reported total expenses of $58,917; however, the School Corporation's ledger for the same period had total expenses of $1,306. The ESSER II, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022, reported total expenses of $60,441; however, the School Corporation's ledger for the same period had total expenses of $63,565. The lack of effective internal controls and noncompliance were isolated to the S425D210013 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 17 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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, the reports were not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reports submitted on behalf of the COVID-19 - Education Stabilization Fund program are supported by the School Corporation's underlying accounting records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002 - ALLOWABLE COSTS AND ACTIVITIES Federal Program Information: Department of Education: ALN – 84.425 – Education Stabilization Fund Criteria: The following CFR applies to this finding: 2 CFR 200.303 Condition: During audit procedures, it was identified that the Unit does not have a process to document approval over disbursements. Unit’s control over timesheets and payroll charges are not consistently applied. Cause: The Unit does not have the necessary internal controls over compliance. Effect: Insufficient controls could allow for unallowable costs to be charged. Identification Of Questioned Costs: None Identified Context: There were 3 cash disbursements and all 3 were tested and found no process to document approval before payment is issued. 72 payroll charges out of a population of over 250. It was identified that salaried employees do not complete timesheets and instead track time with Absence and Substitute Report. It was found that 4 samples where the software generated leave report was not consistent with the Absence and Substitute Reports. Additionally 4 samples were identified where the unit could not provide justification for the pay rate. One contract was not provided for one staff person. This is not statistically valid sample. Repeat Finding: This is not a repeat finding Recommendation: It is recommended that the Unit implement internal control processes and procedures to ensure that they are following the criteria above. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Regional School Unit No. 70.
2023‐001 – SIGNIFICANT DEFICIENCY – Internal Controls over Allowable Costs Department of Health and Human Services – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution – ALN #93.498 – Program Years 2021 and 2022 Criteria: Per 2 CFR 200.303(a) and 2 CFR 200.403(g) non‐federal entities are required to establish and maintain effective internal controls over federal awards and adequately document costs charged to federal programs. Condition: For 10 out of the 60 expenses sampled, CommCare did not maintain the appropriate employee benefits enrollment forms. Cause: Appropriate policies and procedures were not implemented to maintain the appropriate employee benefits enrollment forms. Effect: Unallowable costs could be charged to federal grants and may be required to be repaid to the federal agency. Questioned Costs: None Auditor’s Recommendation: We recommend that CommCare design, implement, and monitor controls to ensure the appropriate benefits enrollment forms are maintained. Management Response: See corrective action plan on page 49.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Material Weakness in Internal Control over Compliance Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0 Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics. Questioned costs: None. Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics. Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat Finding: No. Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Internal Control over Compliance Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: DA-202201-00320-2022, DA-251-2022, DA-230-2022 Pass-Through Agency: King County Regional Homelessness Authority Pass-Through Number(s): DA-202201-00320, DA-251, DA-230 Award Period: January 1, 2022, to December 31, 2022, January 1, 2022, to December 31, 2022, January 1, 2022, to December 31, 2022 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.414(f) states that "...As described in § 200.403, costs must be consistently charged as either indirect or direct costs but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time". Condition: During testing of indirect costs, 3 of the 11 contracts tested exceeded the 10% de minimis indirect cost rate elected by the organization. Questioned costs: ALN Contract Known Questioned Costs Likely Questioned Costs 21.027 DA-202201-00320 $5,554 None 21.027 DA-251 $22,994 None 21.027 DA-230 $463 None Context: CLA tested the entire population (11 contracts) for indirect costs charged to the major program. Of the contracts tested, 3 were found to be out of compliance with the provisions for 2 CFR 200.303(a) and 2 CFR 200.414(f). Indirect costs exceeding the 10% de minimis cost rate elected by CCS totaled $29,011. Cause: Due to the high volume of client assistance in these programs, there can be several general ledger reclassifications in each month. This is because clients may be eligible for a specific funding source or contract that differs from the original coding. This can lead to multiple general ledgers being sent between the accounting department and the program compliance teams. At times there has been a lack of communication to confirm the general ledger is finalized with indirect at 10%. Program managers will accidentally invoice before the adjustment. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. Repeat Finding: No. Recommendation: CLA recommends that emphasis be placed during the billing process to ensure that no more than the 10% de minimis cost rate is charged each month. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Internal Control over Compliance Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: DA-202201-00320-2022, DA-251-2022, DA-230-2022 Pass-Through Agency: King County Regional Homelessness Authority Pass-Through Number(s): DA-202201-00320, DA-251, DA-230 Award Period: January 1, 2022, to December 31, 2022, January 1, 2022, to December 31, 2022, January 1, 2022, to December 31, 2022 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.414(f) states that "...As described in § 200.403, costs must be consistently charged as either indirect or direct costs but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time". Condition: During testing of indirect costs, 3 of the 11 contracts tested exceeded the 10% de minimis indirect cost rate elected by the organization. Questioned costs: ALN Contract Known Questioned Costs Likely Questioned Costs 21.027 DA-202201-00320 $5,554 None 21.027 DA-251 $22,994 None 21.027 DA-230 $463 None Context: CLA tested the entire population (11 contracts) for indirect costs charged to the major program. Of the contracts tested, 3 were found to be out of compliance with the provisions for 2 CFR 200.303(a) and 2 CFR 200.414(f). Indirect costs exceeding the 10% de minimis cost rate elected by CCS totaled $29,011. Cause: Due to the high volume of client assistance in these programs, there can be several general ledger reclassifications in each month. This is because clients may be eligible for a specific funding source or contract that differs from the original coding. This can lead to multiple general ledgers being sent between the accounting department and the program compliance teams. At times there has been a lack of communication to confirm the general ledger is finalized with indirect at 10%. Program managers will accidentally invoice before the adjustment. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. Repeat Finding: No. Recommendation: CLA recommends that emphasis be placed during the billing process to ensure that no more than the 10% de minimis cost rate is charged each month. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Internal Control over Compliance Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: DA-202201-00320-2022, DA-251-2022, DA-230-2022 Pass-Through Agency: King County Regional Homelessness Authority Pass-Through Number(s): DA-202201-00320, DA-251, DA-230 Award Period: January 1, 2022, to December 31, 2022, January 1, 2022, to December 31, 2022, January 1, 2022, to December 31, 2022 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.414(f) states that "...As described in § 200.403, costs must be consistently charged as either indirect or direct costs but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time". Condition: During testing of indirect costs, 3 of the 11 contracts tested exceeded the 10% de minimis indirect cost rate elected by the organization. Questioned costs: ALN Contract Known Questioned Costs Likely Questioned Costs 21.027 DA-202201-00320 $5,554 None 21.027 DA-251 $22,994 None 21.027 DA-230 $463 None Context: CLA tested the entire population (11 contracts) for indirect costs charged to the major program. Of the contracts tested, 3 were found to be out of compliance with the provisions for 2 CFR 200.303(a) and 2 CFR 200.414(f). Indirect costs exceeding the 10% de minimis cost rate elected by CCS totaled $29,011. Cause: Due to the high volume of client assistance in these programs, there can be several general ledger reclassifications in each month. This is because clients may be eligible for a specific funding source or contract that differs from the original coding. This can lead to multiple general ledgers being sent between the accounting department and the program compliance teams. At times there has been a lack of communication to confirm the general ledger is finalized with indirect at 10%. Program managers will accidentally invoice before the adjustment. Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. Repeat Finding: No. Recommendation: CLA recommends that emphasis be placed during the billing process to ensure that no more than the 10% de minimis cost rate is charged each month. Views of responsible officials: There is no disagreement with the audit finding.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Condition – During our testing, there was no formal review separate from the preparer over the reserve fund reconciliation for the federal program. Cause – The Home did not have an adequate internal control policy in place to ensure review and approval over the reserve fund. Effect – The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context/Sampling – Sampling was not used. The Home has two required reserve accounts that were tested. Repeat Finding from Prior Years – Yes, 2022‐003 Recommendation – We recommend that the Home enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials – Management agrees with the finding.
FINDING 2023-002 Subject: Special Education Cluster (IDEA) - Reporting Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-058-PN01; 22611-058-PN01 21619-056-PN01; 22619-056-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation utilized separate funds to account for the financial activity of the special education programs. The ledger activity for these funds was used as the basis for the expenditures claimed for reimbursement on the reimbursement requests submitted to the Indiana Department of Education (IDOE). The School Corporation failed to properly review the reimbursement requests submitted to the IDOE. Although the Assistant Accounting Manager prepared the reimbursement requests, and the Accounting Manager reviewed the requests prior to submission through the IDOE information portal, the internal control was not effective and did not prevent, or detect and correct, material noncompliance. Testing of the reimbursement requests submitted during the audit period identified the following issues: Award 21611-058-PN01 - Seven reimbursement requests were filed during the audit period; all of which were selected for testing. For five of the seven reimbursement requests tested, the expenditures did not agree to the ledger. For four of the five reimbursement requests in which the expenditures did not agree to the ledger, the errors were due to timing issues as expenses were claimed for reimbursement prior to being incurred. As such, the expenditures claimed for reimbursement on two of the requests exceeded the amount per the ledger, with the amount per the ledger then exceeding the expenditures requested for reimbursement by the same amount on the subsequent request. The expenditures included in the fifth reimbursement request exceeded the ledger amount, resulting in a $17 excess reimbursement over what the School Corporation was entitled to receive. Award 22611-058-PN01 - Three reimbursement requests were filed during the audit period; all of which were selected for testing. For two of the three reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $416,468. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. Award 21619-056-PN01 - Two reimbursement requests were filed during the audit period; all of which were selected for testing. For one of two reimbursement requests tested, the expenditures included on the reimbursement request exceeded the ledger amount, resulting in a $72 excess reimbursement. Award 22619-056-PN01 - Four reimbursement requests were filed during the audit period; all of which were selected for testing. For one of four reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $7,538. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. The lack of internal controls and noncompliance were isolated to the 21611-058-PN01, 22611-058-PN01, 21619-056-PN01, and 22619-056-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, requests for reimbursement were not supported by the ledgers. 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 requests for reimbursement are supported by the ledgers. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Special Education Cluster (IDEA) - Reporting Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-058-PN01; 22611-058-PN01 21619-056-PN01; 22619-056-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation utilized separate funds to account for the financial activity of the special education programs. The ledger activity for these funds was used as the basis for the expenditures claimed for reimbursement on the reimbursement requests submitted to the Indiana Department of Education (IDOE). The School Corporation failed to properly review the reimbursement requests submitted to the IDOE. Although the Assistant Accounting Manager prepared the reimbursement requests, and the Accounting Manager reviewed the requests prior to submission through the IDOE information portal, the internal control was not effective and did not prevent, or detect and correct, material noncompliance. Testing of the reimbursement requests submitted during the audit period identified the following issues: Award 21611-058-PN01 - Seven reimbursement requests were filed during the audit period; all of which were selected for testing. For five of the seven reimbursement requests tested, the expenditures did not agree to the ledger. For four of the five reimbursement requests in which the expenditures did not agree to the ledger, the errors were due to timing issues as expenses were claimed for reimbursement prior to being incurred. As such, the expenditures claimed for reimbursement on two of the requests exceeded the amount per the ledger, with the amount per the ledger then exceeding the expenditures requested for reimbursement by the same amount on the subsequent request. The expenditures included in the fifth reimbursement request exceeded the ledger amount, resulting in a $17 excess reimbursement over what the School Corporation was entitled to receive. Award 22611-058-PN01 - Three reimbursement requests were filed during the audit period; all of which were selected for testing. For two of the three reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $416,468. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. Award 21619-056-PN01 - Two reimbursement requests were filed during the audit period; all of which were selected for testing. For one of two reimbursement requests tested, the expenditures included on the reimbursement request exceeded the ledger amount, resulting in a $72 excess reimbursement. Award 22619-056-PN01 - Four reimbursement requests were filed during the audit period; all of which were selected for testing. For one of four reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $7,538. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. The lack of internal controls and noncompliance were isolated to the 21611-058-PN01, 22611-058-PN01, 21619-056-PN01, and 22619-056-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, requests for reimbursement were not supported by the ledgers. 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 requests for reimbursement are supported by the ledgers. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Special Education Cluster (IDEA) - Reporting Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-058-PN01; 22611-058-PN01 21619-056-PN01; 22619-056-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation utilized separate funds to account for the financial activity of the special education programs. The ledger activity for these funds was used as the basis for the expenditures claimed for reimbursement on the reimbursement requests submitted to the Indiana Department of Education (IDOE). The School Corporation failed to properly review the reimbursement requests submitted to the IDOE. Although the Assistant Accounting Manager prepared the reimbursement requests, and the Accounting Manager reviewed the requests prior to submission through the IDOE information portal, the internal control was not effective and did not prevent, or detect and correct, material noncompliance. Testing of the reimbursement requests submitted during the audit period identified the following issues: Award 21611-058-PN01 - Seven reimbursement requests were filed during the audit period; all of which were selected for testing. For five of the seven reimbursement requests tested, the expenditures did not agree to the ledger. For four of the five reimbursement requests in which the expenditures did not agree to the ledger, the errors were due to timing issues as expenses were claimed for reimbursement prior to being incurred. As such, the expenditures claimed for reimbursement on two of the requests exceeded the amount per the ledger, with the amount per the ledger then exceeding the expenditures requested for reimbursement by the same amount on the subsequent request. The expenditures included in the fifth reimbursement request exceeded the ledger amount, resulting in a $17 excess reimbursement over what the School Corporation was entitled to receive. Award 22611-058-PN01 - Three reimbursement requests were filed during the audit period; all of which were selected for testing. For two of the three reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $416,468. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. Award 21619-056-PN01 - Two reimbursement requests were filed during the audit period; all of which were selected for testing. For one of two reimbursement requests tested, the expenditures included on the reimbursement request exceeded the ledger amount, resulting in a $72 excess reimbursement. Award 22619-056-PN01 - Four reimbursement requests were filed during the audit period; all of which were selected for testing. For one of four reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $7,538. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. The lack of internal controls and noncompliance were isolated to the 21611-058-PN01, 22611-058-PN01, 21619-056-PN01, and 22619-056-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, requests for reimbursement were not supported by the ledgers. 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 requests for reimbursement are supported by the ledgers. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Special Education Cluster (IDEA) - Reporting Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-058-PN01; 22611-058-PN01 21619-056-PN01; 22619-056-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation utilized separate funds to account for the financial activity of the special education programs. The ledger activity for these funds was used as the basis for the expenditures claimed for reimbursement on the reimbursement requests submitted to the Indiana Department of Education (IDOE). The School Corporation failed to properly review the reimbursement requests submitted to the IDOE. Although the Assistant Accounting Manager prepared the reimbursement requests, and the Accounting Manager reviewed the requests prior to submission through the IDOE information portal, the internal control was not effective and did not prevent, or detect and correct, material noncompliance. Testing of the reimbursement requests submitted during the audit period identified the following issues: Award 21611-058-PN01 - Seven reimbursement requests were filed during the audit period; all of which were selected for testing. For five of the seven reimbursement requests tested, the expenditures did not agree to the ledger. For four of the five reimbursement requests in which the expenditures did not agree to the ledger, the errors were due to timing issues as expenses were claimed for reimbursement prior to being incurred. As such, the expenditures claimed for reimbursement on two of the requests exceeded the amount per the ledger, with the amount per the ledger then exceeding the expenditures requested for reimbursement by the same amount on the subsequent request. The expenditures included in the fifth reimbursement request exceeded the ledger amount, resulting in a $17 excess reimbursement over what the School Corporation was entitled to receive. Award 22611-058-PN01 - Three reimbursement requests were filed during the audit period; all of which were selected for testing. For two of the three reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $416,468. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. Award 21619-056-PN01 - Two reimbursement requests were filed during the audit period; all of which were selected for testing. For one of two reimbursement requests tested, the expenditures included on the reimbursement request exceeded the ledger amount, resulting in a $72 excess reimbursement. Award 22619-056-PN01 - Four reimbursement requests were filed during the audit period; all of which were selected for testing. For one of four reimbursement requests tested, the amount per the ledger exceeded the expenditures claimed by a total of $7,538. Upon inquiry of the School Corporation to understand why this happened, the officials indicated that total expenditures exceeded the budgeted allocations per the awards. Therefore, the net difference was subtracted from the reimbursement request to determine the amount to request. As such, there was no supporting documentation that detailed the expenditures requested for or excluded from the reimbursement request. The lack of internal controls and noncompliance were isolated to the 21611-058-PN01, 22611-058-PN01, 21619-056-PN01, and 22619-056-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, requests for reimbursement were not supported by the ledgers. 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 requests for reimbursement are supported by the ledgers. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027; 84.173; 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-058-PN01, 21611-058-PN01, 22611-058-PN01, 22611-056-ARP, 20619-056-PN01, 21619-056-PN01, 22619-056-PN01, 22619-056-ARP, 23611-056-PN01 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 prior audit report. The prior audit finding number was 2021-002. Condition and Context Procurement - Policy The School Corporation had adopted a purchasing policy; however, the policy did not conform to the procurement standards outlined in 2 CFR 200.318 through 2 CFR 200.326. The policy did not reflect applicable state laws and regulations, avoid acquisition of unnecessary or duplicative items, ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service being procured, and ensure that all solicitations identify all requirements which the offerors must fulfill and other factors to be used in evaluating bids or proposals. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily 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 micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were forty-seven vendors identified that fell within the small purchases threshold. Eight of the vendors were selected for testing. For eight of eight vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined there was a process in place to verify that vendors were not suspended or debarred, or otherwise excluded or disqualified from participation in the federal award, prior to entering into a covered transaction. One employee was responsible for checking SAM exclusions by running a vendor exclusion list and comparing that list to a vendor history report from the School Corporation's financial software. However, there was no documented oversight, review, or approval process to ensure the process was completed and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed and implemented 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper 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, goods that fell within the small purchase threshold were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation hired a consultant to compile and provide to them a fixed asset report that was to contain all inventory and assets purchased that exceeded the School Corporation's capitalization threshold through June 30, 2023. The consultant prepared the report; however, the School Corporation did not have any policies or procedures in place to ensure the listing was complete, nor was there any documentation that differences between the compiled asset report and the School Corporation's equipment records were reviewed and resolved. A property record or capital asset listing would include the following for each asset: 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. During the audit period, the School Corporation purchased 29 pieces of equipment with ESSER funds totaling $1,079,249, none of the equipment was included on the asset listing prepared by the consultant. 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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (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. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, assets purchased with federal dollars, ESSER funds, were not properly added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether federal funds were used to acquire the asset, nor were any discrepancies in the records reconciled. 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 assets are properly included on the asset listing. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation hired a consultant to compile and provide to them a fixed asset report that was to contain all inventory and assets purchased that exceeded the School Corporation's capitalization threshold through June 30, 2023. The consultant prepared the report; however, the School Corporation did not have any policies or procedures in place to ensure the listing was complete, nor was there any documentation that differences between the compiled asset report and the School Corporation's equipment records were reviewed and resolved. A property record or capital asset listing would include the following for each asset: 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. During the audit period, the School Corporation purchased 29 pieces of equipment with ESSER funds totaling $1,079,249, none of the equipment was included on the asset listing prepared by the consultant. 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 federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (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. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, assets purchased with federal dollars, ESSER funds, were not properly added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether federal funds were used to acquire the asset, nor were any discrepancies in the records reconciled. 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 assets are properly included on the asset listing. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed, nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Four contracts entered into by the School Corporation during the audit period were to be paid from multiple fund sources, including COVID-19 - Education Stabilization Fund grant funds. Total contract expenditures from the COVID-19 - Education Stabilization Fund grant funds during the audit period was $2,518,768. All four contracts tested did not contain the required prevailing wage rate clause. Furthermore, eight invoices were tested and did not include the required certified payrolls from the contractors. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clause . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (i) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, construction contracts entered into did not contain the required wage rate requirements clauses, nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response While the need to have the prevailing wage rate clause, was not required at the initial inception of the contracts, as federal dollars were not the funding source, once it was determined federal funds were going to be utilized in whole or in part all requirements of the federal funds being utilized should have been considered. Any additional requirements necessitated by the change in funding source should have been incorporated into existing and future contracts. In addition, certified payroll documentation should have been obtained and reviewed by the School Corporation to ensure that contractors complied with wage rate requirements.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed, nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Four contracts entered into by the School Corporation during the audit period were to be paid from multiple fund sources, including COVID-19 - Education Stabilization Fund grant funds. Total contract expenditures from the COVID-19 - Education Stabilization Fund grant funds during the audit period was $2,518,768. All four contracts tested did not contain the required prevailing wage rate clause. Furthermore, eight invoices were tested and did not include the required certified payrolls from the contractors. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clause . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (i) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, construction contracts entered into did not contain the required wage rate requirements clauses, nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response While the need to have the prevailing wage rate clause, was not required at the initial inception of the contracts, as federal dollars were not the funding source, once it was determined federal funds were going to be utilized in whole or in part all requirements of the federal funds being utilized should have been considered. Any additional requirements necessitated by the change in funding source should have been incorporated into existing and future contracts. In addition, certified payroll documentation should have been obtained and reviewed by the School Corporation to ensure that contractors complied with wage rate requirements.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed, nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Four contracts entered into by the School Corporation during the audit period were to be paid from multiple fund sources, including COVID-19 - Education Stabilization Fund grant funds. Total contract expenditures from the COVID-19 - Education Stabilization Fund grant funds during the audit period was $2,518,768. All four contracts tested did not contain the required prevailing wage rate clause. Furthermore, eight invoices were tested and did not include the required certified payrolls from the contractors. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clause . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (i) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, construction contracts entered into did not contain the required wage rate requirements clauses, nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response While the need to have the prevailing wage rate clause, was not required at the initial inception of the contracts, as federal dollars were not the funding source, once it was determined federal funds were going to be utilized in whole or in part all requirements of the federal funds being utilized should have been considered. Any additional requirements necessitated by the change in funding source should have been incorporated into existing and future contracts. In addition, certified payroll documentation should have been obtained and reviewed by the School Corporation to ensure that contractors complied with wage rate requirements.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed, nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Four contracts entered into by the School Corporation during the audit period were to be paid from multiple fund sources, including COVID-19 - Education Stabilization Fund grant funds. Total contract expenditures from the COVID-19 - Education Stabilization Fund grant funds during the audit period was $2,518,768. All four contracts tested did not contain the required prevailing wage rate clause. Furthermore, eight invoices were tested and did not include the required certified payrolls from the contractors. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clause . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (i) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, construction contracts entered into did not contain the required wage rate requirements clauses, nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response While the need to have the prevailing wage rate clause, was not required at the initial inception of the contracts, as federal dollars were not the funding source, once it was determined federal funds were going to be utilized in whole or in part all requirements of the federal funds being utilized should have been considered. Any additional requirements necessitated by the change in funding source should have been incorporated into existing and future contracts. In addition, certified payroll documentation should have been obtained and reviewed by the School Corporation to ensure that contractors complied with wage rate requirements.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#460360899 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: Our testing identified four months of other general and administrative expenses claimed under the federal program did not consider the credit to be received back from a third-party vendor for service time not performed by the third party vendor. Cause: Monument Health prepaid a third-party vendor for services to be performed and at the end of the service period, Monument Health did not consider the refunds to be received back from a third-party vendor when claiming expenses under the federal program. Effect: The secondary review and approval over final expenditures claimed under the federal program did not identify this matter and therefore, expenses were overclaimed under the federal program and included within the special report submitted to the federal agency. Questioned Costs: The Period 4 report incorrectly included $64,404 of other general and administrative expenses. However, the Period 4 report also included approximately $6,077,500 of unused lost revenue. As a result, there are no questioned costs for activities allowed or unallowed and allowable costs/cost principles. Context: A non-statistical sample of 19 ($228,440) out of a population of 92 transactions relating to general and administrative and healthcare related expenses ($263,750), including mortgage/rent, supplies, purchased services, information technology, and facilities were tested. Summary level testing was also performed as it relates to incremental increased personnel costs relating to nursing contract labor and special incentives provided to employees. Repeat Finding from Prior Year: No Recommendation: We recommend management review the third party vendor invoices and reduce unused lost revenue in any future federal reports. Views of Responsible Officials: Management agrees with the finding.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021-2022, FY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not designed or implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and only for the operation of the food service program. The School Corporation entered into two cost reimbursement contracts with two food service management companies (FSMC) during the audit period. Four invoices for payment to the FSMC, which totaled $746,491, were selected for testing. Supporting documentation was presented for only $319,679 of the costs invoiced. Due to the lack of supporting documentation, we were unable to determine if the remaining costs paid, $426,812, were allowable expenditures. The costs that were not properly documented were considered questioned costs. In the supporting documentation presented for audit, sales tax was erroneously paid totaling $861. These unallowable costs were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in manner suitable for contract cost determination and verification. (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 24 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause 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. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required supporting documentation could be provided to verify costs paid to the FSMC were allowable and only for the operation of the school food program. In addition, unallowable costs, sales tax, were paid. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Special Tests and Provisions - School Food Service Accounts compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $427,673 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all costs are adequately documented and only allowable costs are paid from the school food accounts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.