FINDING 2023-005 Subject: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles, 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, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-113-PN01, 20611-113-PN01, 21611-113-PN01, 21619-014-PN01, 22611-113-PN01, 22619-014-PN01, 23611-113-PN01, 23619-014-PN01, 22611-113-ARP, 22619-113-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. In addition, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award. The School Corporation's process to ensure an expense was for an allowable cost in conformance with the cost principles and procured appropriately was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV), and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 9 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost in conformance with the cost principles and procured appropriately 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. 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: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles, 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, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-113-PN01, 20611-113-PN01, 21611-113-PN01, 21619-014-PN01, 22611-113-PN01, 22619-014-PN01, 23611-113-PN01, 23619-014-PN01, 22611-113-ARP, 22619-113-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. In addition, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award. The School Corporation's process to ensure an expense was for an allowable cost in conformance with the cost principles and procured appropriately was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV), and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 9 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost in conformance with the cost principles and procured appropriately 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. 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: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles, 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, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-113-PN01, 20611-113-PN01, 21611-113-PN01, 21619-014-PN01, 22611-113-PN01, 22619-014-PN01, 23611-113-PN01, 23619-014-PN01, 22611-113-ARP, 22619-113-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. In addition, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award. The School Corporation's process to ensure an expense was for an allowable cost in conformance with the cost principles and procured appropriately was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV), and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 9 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost in conformance with the cost principles and procured appropriately 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. 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: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles, 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, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-113-PN01, 20611-113-PN01, 21611-113-PN01, 21619-014-PN01, 22611-113-PN01, 22619-014-PN01, 23611-113-PN01, 23619-014-PN01, 22611-113-ARP, 22619-113-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. In addition, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award. The School Corporation's process to ensure an expense was for an allowable cost in conformance with the cost principles and procured appropriately was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV), and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 9 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost in conformance with the cost principles and procured appropriately 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. 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: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles, 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, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-113-PN01, 20611-113-PN01, 21611-113-PN01, 21619-014-PN01, 22611-113-PN01, 22619-014-PN01, 23611-113-PN01, 23619-014-PN01, 22611-113-ARP, 22619-113-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. In addition, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award. The School Corporation's process to ensure an expense was for an allowable cost in conformance with the cost principles and procured appropriately was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV), and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 9 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost in conformance with the cost principles and procured appropriately 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Title I Grants to Local Educational Agencies - Internal Controls Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-007. Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. The School Corporation's process to ensure an expense was for an allowable cost and in conformance with the cost principles was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV) and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 11 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost, in conformance with the cost principles and procured appropriately. 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Title I Grants to Local Educational Agencies - Internal Controls Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-007. Condition and Context Direct charges to a federal award are to be for allowable costs and made in conformance with the applicable cost principles. The School Corporation's process to ensure an expense was for an allowable cost and in conformance with the cost principles was for the Deputy Treasurer or Grant Administrator to prepare an Accounts Payable Voucher (APV) and the Corporation Treasurer to review and approve the APV. To test the internal control for effectiveness, a sample of 40 APVs charged to the grant was selected for testing. For 11 of the 40 APVs tested, there was not a documented review by the Corporation Treasurer. As such, we determined the internal control as designed could not be effective at ensuring an expense was for an allowable cost, in conformance with the cost principles and procured appropriately. 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not implemented 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Tile I application. The counts that are pre-populated should be based on the School Corporation's records as of October of the prior fiscal year. During the audit period, the School Corporation submitted two Title I Applications. The School Corporation was required to use the October 2020 Real Time Report data for the 2021-2022 Title I application and the October 2021 Real Time Report data for the 2022-2023 Title I Application submitted to the IDOE. Data to be submitted included student socioeconomic status information. The October 2021 Real Time Report used for the 2022-2023 Title I Application, was not available for review. As such, we were unable to verify the amounts reported in the grant application. Additionally, we were unable to verify if the correct socioeconomic status was properly reported for any of the students. The lack of internal controls and noncompliance were isolated to the October 2021 Real Time Report and 2022-2023 Title I Application. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." 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, proper documentation was not maintained to ensure enrollment and poverty statues in the Title I Application were accurate. 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 design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Tile I application. The counts that are pre-populated should be based on the School Corporation's records as of October of the prior fiscal year. During the audit period, the School Corporation submitted two Title I Applications. The School Corporation was required to use the October 2020 Real Time Report data for the 2021-2022 Title I application and the October 2021 Real Time Report data for the 2022-2023 Title I Application submitted to the IDOE. Data to be submitted included student socioeconomic status information. The October 2021 Real Time Report used for the 2022-2023 Title I Application, was not available for review. As such, we were unable to verify the amounts reported in the grant application. Additionally, we were unable to verify if the correct socioeconomic status was properly reported for any of the students. The lack of internal controls and noncompliance were isolated to the October 2021 Real Time Report and 2022-2023 Title I Application. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." 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, proper documentation was not maintained to ensure enrollment and poverty statues in the Title I Application were accurate. 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 design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-008 Subject: Title I Grants to Local Educational Agencies - Matching, Level of Effort, Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context Earmarking A portion of the School Corporation's Title I allocation was required to be set aside for homeless reservation. The required amount to be set aside was indicated in the Title I grant application. The School Corporation is responsible for monitoring each required set aside throughout the life of the grant to ensure the obligation is met. There was no oversight or review process in place to ensure monitoring of each required set aside. The School Corporation did not provide documentation to show that the obligation was met, or not met, to service all the homeless students in the School Corporation and did not transfer the unused funds to the next grant award. Level of Effort - Individual Transactions (Vendor) The Form 9 (financial) data was submitted by the School Corporation to the Indiana Department of Education (IDOE) semi-annually. The data reported included the School Corporation's expenditures recorded during that period. The IDOE calculated Maintenance of Effort based on the expenditure information submitted on the Form 9 for that fiscal year. To verify amounts used by the IDOE in their computation were derived from the books and records of the School Corporation, costs were reviewed to ensure they were recorded properly as to account and object code and reported correctly on the Form 9. The School Corporation did not have an oversight process in place to ensure that expenditures for vendor were posted to the correct fund, account, and object codes. 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). . . ." 20 USC 6313I(3)(A) states: "A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve— (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs." Cause A proper system of internal controls, which would include segregation of key functions, 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, proper documentation was not maintained to ensure the obligation to service homeless students was met or unmet. 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 design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-008 Subject: Title I Grants to Local Educational Agencies - Matching, Level of Effort, Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context Earmarking A portion of the School Corporation's Title I allocation was required to be set aside for homeless reservation. The required amount to be set aside was indicated in the Title I grant application. The School Corporation is responsible for monitoring each required set aside throughout the life of the grant to ensure the obligation is met. There was no oversight or review process in place to ensure monitoring of each required set aside. The School Corporation did not provide documentation to show that the obligation was met, or not met, to service all the homeless students in the School Corporation and did not transfer the unused funds to the next grant award. Level of Effort - Individual Transactions (Vendor) The Form 9 (financial) data was submitted by the School Corporation to the Indiana Department of Education (IDOE) semi-annually. The data reported included the School Corporation's expenditures recorded during that period. The IDOE calculated Maintenance of Effort based on the expenditure information submitted on the Form 9 for that fiscal year. To verify amounts used by the IDOE in their computation were derived from the books and records of the School Corporation, costs were reviewed to ensure they were recorded properly as to account and object code and reported correctly on the Form 9. The School Corporation did not have an oversight process in place to ensure that expenditures for vendor were posted to the correct fund, account, and object codes. 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). . . ." 20 USC 6313I(3)(A) states: "A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve— (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs." Cause A proper system of internal controls, which would include segregation of key functions, 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, proper documentation was not maintained to ensure the obligation to service homeless students was met or unmet. 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 design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
REFERENCE: 2023-101 CFDA NUMBER 84.425D – COVID 19 – EDUCATION STABILIZATION FUND U.S. DEPARTMENT OF EDUCATION – 2023 PASSED THROUGH ARIZONA STATE DEPARTMENT OF EDUCATION GRANT NUMBER: S425D210038 QUESTIONED COSTS N/A CONDITION For the only employee paid under the School Safety Grant, the two semi-annual certifications for the employee did not cover the time period for wages charged to the grant. The certifications covered the school year period of July 18, 2022 to May 26, 2023, rather than the fiscal year period of July 1, 2022 through June 30, 2023. Additionally, although the certifications were signed by a supervisor, the date of review was not documented. Alternative procedures were performed to ensure that the costs were allowable to the program. CRITERIA In accordance with 2 CFR, Subtitle A, Chapter II, Part 200, Subpart E General Provisions for Selected Items of Cost, §200.430(i), (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. In accordance with OMB Compliance Supplement, Part 6 – Internal Control, The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. EFFECT Distribution of the employee's salary or wages among specific activities or cost objectives was not properly documented and did not agree actual activities incurred. CAUSE Although internal controls were properly designed, there were deficiencies in the execution of the controls. RECOMMENDATION AND BENEFIT Semi-annual certifications and time and effort logs, should be reviewed to ensure that the time periods spent on the federal programs support the expenditures charged to the grant. Additionally, the certifications and logs should be reviewed to ensure that they are properly signed and dated by a supervisor. This will help ensure compliance with federal requirements and only allowable costs are charged to the program. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.
REFERENCE: 2023-101 CFDA NUMBER 84.425D – COVID 19 – EDUCATION STABILIZATION FUND U.S. DEPARTMENT OF EDUCATION – 2023 PASSED THROUGH ARIZONA STATE DEPARTMENT OF EDUCATION GRANT NUMBER: S425D210038 QUESTIONED COSTS N/A CONDITION For the only employee paid under the School Safety Grant, the two semi-annual certifications for the employee did not cover the time period for wages charged to the grant. The certifications covered the school year period of July 18, 2022 to May 26, 2023, rather than the fiscal year period of July 1, 2022 through June 30, 2023. Additionally, although the certifications were signed by a supervisor, the date of review was not documented. Alternative procedures were performed to ensure that the costs were allowable to the program. CRITERIA In accordance with 2 CFR, Subtitle A, Chapter II, Part 200, Subpart E General Provisions for Selected Items of Cost, §200.430(i), (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. In accordance with OMB Compliance Supplement, Part 6 – Internal Control, The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. EFFECT Distribution of the employee's salary or wages among specific activities or cost objectives was not properly documented and did not agree actual activities incurred. CAUSE Although internal controls were properly designed, there were deficiencies in the execution of the controls. RECOMMENDATION AND BENEFIT Semi-annual certifications and time and effort logs, should be reviewed to ensure that the time periods spent on the federal programs support the expenditures charged to the grant. Additionally, the certifications and logs should be reviewed to ensure that they are properly signed and dated by a supervisor. This will help ensure compliance with federal requirements and only allowable costs are charged to the program. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Also, 45 CFR 96.85 requires recipients to meet income eligibility thresholds for the LIHEAP program. Condition: During testing of eligibility, the following items were noted: • Two beneficiaries had income entered incorrectly, causing the benefits to be overstated. • One beneficiary had income entered incorrectly but there was no impact on the benefit. • One beneficiary’s income was not entered for consideration, which caused the beneficiary to be incorrectly labeled as eligible. Questioned costs: $ 512 (Net known questioned costs) Context: Errors were noted in 4 of the 40 beneficiaries (10 percent) tested. Cause: Internal controls did not catch the errors in the input of the income information. Effect: Ineligible participants can lead to questioned costs. Repeat Finding: No. Recommendation: We recommend that KDCF strengthen internal controls in place to mitigate this from happening in the future. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Also, 45 CFR 96.85 requires recipients to meet income eligibility thresholds for the LIHEAP program. Condition: During testing of eligibility, the following items were noted: • Two beneficiaries had income entered incorrectly, causing the benefits to be overstated. • One beneficiary had income entered incorrectly but there was no impact on the benefit. • One beneficiary’s income was not entered for consideration, which caused the beneficiary to be incorrectly labeled as eligible. Questioned costs: $ 512 (Net known questioned costs) Context: Errors were noted in 4 of the 40 beneficiaries (10 percent) tested. Cause: Internal controls did not catch the errors in the input of the income information. Effect: Ineligible participants can lead to questioned costs. Repeat Finding: No. Recommendation: We recommend that KDCF strengthen internal controls in place to mitigate this from happening in the future. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Part 170 requires subawards to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). Condition: During testing of the Federal Funding Accountability and Transparency Act (FFATA) report, it was noted that the one report tested was not filed timely. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $ 5,850,379 $ 0 $ 5,850,379 $ 0 $ 0 Questioned costs: None. Context: While the report was not filed timely, the supporting documentation that was needed to file the report was gathered by KDCF and the filing was actually completed. Cause: KDCF was understaffed during most of the fiscal year which impacted the timeliness. KDCF hired an individual to assist in getting the filings up to date, but it was too late for some reports that were already beyond the due date. Effect: Compliance with the reporting requirement for this program is not being met and the information is not being provided on the public website. Repeat Finding: Yes, Finding 2022-007 Recommendation: We recommend that KDCF continue with the process implemented during the fiscal year, which includes tracking the timely submission of the FFATA reports. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Part 170 requires subawards to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). Condition: During testing of the Federal Funding Accountability and Transparency Act (FFATA) report, it was noted that the one report tested was not filed timely. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $ 5,850,379 $ 0 $ 5,850,379 $ 0 $ 0 Questioned costs: None. Context: While the report was not filed timely, the supporting documentation that was needed to file the report was gathered by KDCF and the filing was actually completed. Cause: KDCF was understaffed during most of the fiscal year which impacted the timeliness. KDCF hired an individual to assist in getting the filings up to date, but it was too late for some reports that were already beyond the due date. Effect: Compliance with the reporting requirement for this program is not being met and the information is not being provided on the public website. Repeat Finding: Yes, Finding 2022-007 Recommendation: We recommend that KDCF continue with the process implemented during the fiscal year, which includes tracking the timely submission of the FFATA reports. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Part 170 requires subawards to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). Condition: During testing of the Federal Funding Accountability and Transparency Act (FFATA) reports, it was noted that the reports were not filed timely or not filed at all for the fiscal year. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 8 1 8 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $ 6,046,626 $ 166,455 $ 6,046,626 $ 0 $ 0 Questioned costs: None. Context: While the reports were not filed timely and one report was not filed as of the audit testing date, the supporting documentation that was needed to file the reports was gathered by KDCF and the filing was actually completed. The report not filed was filed subsequent to the audit testing date. Cause: KDCF was understaffed during most of the fiscal year which impacted the timeliness. KDCF hired an individual to assist in getting the filings up to date, but it was too late for some reports that were already beyond the due date. Effect: Compliance with the reporting requirement for this program is not being met and the information is not being provided on the public website. Repeat Finding: No. Recommendation: We recommend that KDCF continue with the process implemented during the fiscal year, that includes tracking the timely submission of the FFATA reports. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include timely submission to ensure the compliance of all reports submitted to the federal agency. Condition: During our testing of performance reports, we noted five out the five tested reports lacked documentation of review. Questioned costs: None. Context: Out of the five reports tested, all five reports did not have supporting documentation that reports were reviewed by an authorized official. Cause: The agency had staffing turnover during the fiscal year causing lack of evidence of review over the submitted reports. Effect: Reports not being formally reviewed could cause errors to get reported related to the program objectives. Repeat Finding: Yes, Finding 2022 - 011 Recommendation: We recommend the agency implement procedures to ensure reports are properly reviewed as well as increase training efforts on reporting requirements if there is future staffing turnover. Views of responsible officials: Management disagrees with the audit finding. There is review and final approval of these quarterly financial reports by the ELC program director prior to submission. The fiscal analyst at KDHE provides these financial reports to the ELC program manager and the ELC program director. The COVID and CORE ELC data from these reports are manually entered into ELC RedCap (for the years that correspond to this audit) and now ELC CAMP. COVID financial reports are then uploaded into GrantSolutions; the core ELC financial reports do not have to be uploaded to GrantSolutions. There is no mechanism to include a signature on these reports, but submission to ELC CAMP and GrantSolutions indicate the reports have been reviewed. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Evidence of review was not able to be provided.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include timely submission to ensure the compliance of all reports submitted to the federal agency. Condition: During our testing of performance reports, we noted five out the five tested reports lacked documentation of review. Questioned costs: None. Context: Out of the five reports tested, all five reports did not have supporting documentation that reports were reviewed by an authorized official. Cause: The agency had staffing turnover during the fiscal year causing lack of evidence of review over the submitted reports. Effect: Reports not being formally reviewed could cause errors to get reported related to the program objectives. Repeat Finding: Yes, Finding 2022 - 011 Recommendation: We recommend the agency implement procedures to ensure reports are properly reviewed as well as increase training efforts on reporting requirements if there is future staffing turnover. Views of responsible officials: Management disagrees with the audit finding. There is review and final approval of these quarterly financial reports by the ELC program director prior to submission. The fiscal analyst at KDHE provides these financial reports to the ELC program manager and the ELC program director. The COVID and CORE ELC data from these reports are manually entered into ELC RedCap (for the years that correspond to this audit) and now ELC CAMP. COVID financial reports are then uploaded into GrantSolutions; the core ELC financial reports do not have to be uploaded to GrantSolutions. There is no mechanism to include a signature on these reports, but submission to ELC CAMP and GrantSolutions indicate the reports have been reviewed. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Evidence of review was not able to be provided.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient’s DUNS or UEI number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is research and development (R&D) and indirect cost rate for federal award. Condition: During our testing, we noted subrecipients had required information omitted from the sub agreements to the subrecipients including Assistance Listing Number (ALN) and title, subrecipient’s DUNS/UEI number, Federal Award Identification Number (FAIN), identification of whether the award is R&D, and indirect cost rate for federal award. Questioned costs: None. Context: Seventeen out of the seventeen subrecipients (100 percent) (with awards totaling $796,482) did not include required information in sub agreements issued to subrecipients. Cause: Lack of sufficient controls in place to ensure that subaward agreements contain all required information. Effect: Failure to communicate required information could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: Yes, finding 2022 -012 Recommendation: We recommend that the agency review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient’s DUNS or UEI number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is research and development (R&D) and indirect cost rate for federal award. Condition: During our testing, we noted subrecipients had required information omitted from the sub agreements to the subrecipients including Assistance Listing Number (ALN) and title, subrecipient’s DUNS/UEI number, Federal Award Identification Number (FAIN), identification of whether the award is R&D, and indirect cost rate for federal award. Questioned costs: None. Context: Seventeen out of the seventeen subrecipients (100 percent) (with awards totaling $796,482) did not include required information in sub agreements issued to subrecipients. Cause: Lack of sufficient controls in place to ensure that subaward agreements contain all required information. Effect: Failure to communicate required information could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: Yes, finding 2022 -012 Recommendation: We recommend that the agency review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 180.300 prohibits entities from contracting with or making subawards under “covered transactions” to parties that are suspended or debarred from doing business with the federal government. A contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. In order to comply with federal suspension and debarment requirements, the State can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. Condition: During our testing of twenty-seven covered transactions (twelve vendors and fifteen subrecipients), we noted that management was not able to provide supporting documentation for one vendor that suspension and debarment procedures were performed before the start of the procurement contract. Questioned costs: None. Context: For one of the twelve vendors tested (8.3 percent of vendors), management was not able to provide supporting documentation that suspension and debarment verification procedures were performed before the start of the procurement contract. Cause: Lack of sufficient tracking and monitoring procedures related to tracking of suspension and debarment for vendors and subrecipients. Effect: Failure to obtain the required certifications or perform verification procedures with the SAM website before the procurement of good or services could result in the payment of federal funds to vendors that are suspended or debarred from participation in federal assistance programs, which could lead to questioned costs. Repeat Finding: Yes, Finding 2022 - 014 Recommendation: We recommend the agency either obtain certifications from vendors stating their organization is not suspended, debarred, or otherwise excluded from participation in federal assistance programs or document the procedures performed to verify the vendor is not identified as suspended or debarred on the SAM website. We recommend that the agency have proper procedures in place to ensure that all contractual documentation is maintained and able to be located. Views of responsible officials: Management disagrees with the audit finding. Verification is completed at the time the contract is signed by KDHE so the date of signature corresponds with the date of SAM verification. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Evidence of SAM verification occurring prior to or the same time as the contract being signed was not provided.
Criteria or specific requirement: 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 180.300 prohibits entities from contracting with or making subawards under “covered transactions” to parties that are suspended or debarred from doing business with the federal government. A contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. In order to comply with federal suspension and debarment requirements, the State can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. Condition: During our testing of twenty-seven covered transactions (twelve vendors and fifteen subrecipients), we noted that management was not able to provide supporting documentation for one vendor that suspension and debarment procedures were performed before the start of the procurement contract. Questioned costs: None. Context: For one of the twelve vendors tested (8.3 percent of vendors), management was not able to provide supporting documentation that suspension and debarment verification procedures were performed before the start of the procurement contract. Cause: Lack of sufficient tracking and monitoring procedures related to tracking of suspension and debarment for vendors and subrecipients. Effect: Failure to obtain the required certifications or perform verification procedures with the SAM website before the procurement of good or services could result in the payment of federal funds to vendors that are suspended or debarred from participation in federal assistance programs, which could lead to questioned costs. Repeat Finding: Yes, Finding 2022 - 014 Recommendation: We recommend the agency either obtain certifications from vendors stating their organization is not suspended, debarred, or otherwise excluded from participation in federal assistance programs or document the procedures performed to verify the vendor is not identified as suspended or debarred on the SAM website. We recommend that the agency have proper procedures in place to ensure that all contractual documentation is maintained and able to be located. Views of responsible officials: Management disagrees with the audit finding. Verification is completed at the time the contract is signed by KDHE so the date of signature corresponds with the date of SAM verification. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Evidence of SAM verification occurring prior to or the same time as the contract being signed was not provided.
Criteria or specific requirement: 2 CFR Part 170 requires subaward to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During testing it was discovered that management did not document the review of the submitted reports. Also, we noted that the State also has submitted FFATA Reports to FSRS for vendors when this reporting is not required for vendors. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 1 0 0 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $41,680 0 0 0 0 Questioned costs: None. Context: No evidence of review was noted for the one FFATA report tested. The agency also submitted information for vendors when it wasn’t applicable to them. Cause: Management has no documented process for review of reports and no documented process to ensure only subawards are submitted to FSRS. Effect: FFATA reports could contain errors that a review would normally identify. Also, vendor contracts can be incorrectly represented as subawards to FSRS. Repeat Finding: No Recommendation: We recommend that the agency implement controls to ensure reports are reviewed before submission and that a process is implemented to ensure only subawards are reported to FSRS. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR Part 170 requires subaward to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During testing it was discovered that management did not document the review of the submitted reports. Also, we noted that the State also has submitted FFATA Reports to FSRS for vendors when this reporting is not required for vendors. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 1 0 0 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $41,680 0 0 0 0 Questioned costs: None. Context: No evidence of review was noted for the one FFATA report tested. The agency also submitted information for vendors when it wasn’t applicable to them. Cause: Management has no documented process for review of reports and no documented process to ensure only subawards are submitted to FSRS. Effect: FFATA reports could contain errors that a review would normally identify. Also, vendor contracts can be incorrectly represented as subawards to FSRS. Repeat Finding: No Recommendation: We recommend that the agency implement controls to ensure reports are reviewed before submission and that a process is implemented to ensure only subawards are reported to FSRS. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR Part 170 requires subawards to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During testing, we noted that FFATA reports were not submitted timely and there was not a documented review of the submitted reports. Also, we noted that the State also has submitted FFATA Reports to FSRS for vendors when this reporting is not required for vendors. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 6 0 6 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $2,291,464 $0 $2,291,464 0 0 Questioned costs: None. Context: For six of the six FFATA reports tested (100 percent), a lack of timely submission was noted and no evidence of review was noted. The agency submitted information for vendors when it wasn’t applicable to them. Cause: Management has no documented process for the review of FFATA reports and no documented process to ensure that only subawards are submitted to FSRS. Effect: FFATA reports could contain errors that a review would normally identify. Also, vendor contracts can be incorrectly represented as subawards to FSRS. Repeat Finding: No Recommendation: We recommend that the agency implement controls to ensure reports are reviewed before submission, that a process is updated to ensure that reports are submitted timely, and that a process is implemented to ensure only subawards are reported to FSRS. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR Part 170 requires subawards to be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During testing, we noted that FFATA reports were not submitted timely and there was not a documented review of the submitted reports. Also, we noted that the State also has submitted FFATA Reports to FSRS for vendors when this reporting is not required for vendors. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 6 0 6 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $2,291,464 $0 $2,291,464 0 0 Questioned costs: None. Context: For six of the six FFATA reports tested (100 percent), a lack of timely submission was noted and no evidence of review was noted. The agency submitted information for vendors when it wasn’t applicable to them. Cause: Management has no documented process for the review of FFATA reports and no documented process to ensure that only subawards are submitted to FSRS. Effect: FFATA reports could contain errors that a review would normally identify. Also, vendor contracts can be incorrectly represented as subawards to FSRS. Repeat Finding: No Recommendation: We recommend that the agency implement controls to ensure reports are reviewed before submission, that a process is updated to ensure that reports are submitted timely, and that a process is implemented to ensure only subawards are reported to FSRS. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR Part 170 requires subawards be reported to the Federal Funding and Accountability Transparency Act Subaward Reporting System (FSRS). 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During testing, we noted that FFATA reports were not submitted timely, FFATA reports were not submitted at all, and there was not a documented review of the submitted reports Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 33 14 33 14 not reported 14 not reported Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $2,775,992 $961,031 $2,775,992 $961,031 Not Reported $961,031 Not Reported Questioned costs: None. Context: Thirty-three of the thirty-three FFATA reports tested (100 percent) were not submitted timely, 14 of 33 FFATA reports tested were not able to be provided, and for thirty-three of the thirty-three reports tested lacked evidence of review. Cause: Management could not obtain UEI numbers for the subawards for the reports not submitted and lacked a control process to ensure reports are submitted timely and formally reviewed. Effect: Compliance with the reporting requirement for this program is not being met and FFATA reports could contain errors that a review would normally identify. Repeat Finding: Yes, Finding 2022 - 008 Recommendation: We recommend that the agency implement controls to ensure subrecipients provide a UEI number before the subaward is entered into and implement procedures to ensure reports are submitted timely and formally reviewed. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient’s DUNS/UEI number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing Number (ALN) and name, identification of whether the award is R&D and indirect cost rate for federal award. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Subaward agreements with subrecipients, including Assistance Listing Number (ALN) and title, subrecipient’s DUNS/UEI number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award, were not included. Questioned costs: None. Context: Sixty out of the sixty subrecipients (100 percent) tested did not have required information in the applicable subawards. Cause: Lack of sufficient internal controls to ensure subawards include required information. Effect: Failure to communicate required information could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: Yes, Finding 2022 - 009 Recommendation: We recommend that the agency review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR Part 200, Subpart F requires the pass-through entity to verify that subrecipients expected to be audited, met this requirement. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Management did not track, determine or monitor the audit verification requirement for any subrecipients. Questioned costs: None Context: Sixty out of the sixty subrecipients (100 percent) were not monitored related to the audit verification requirement. Cause: Lack of sufficient tracking and monitoring procedures related to subrecipient audit verification. Effect: Failure to verify and review subrecipient audits could result in subrecipients lacking required audits or audit findings that directly impact the program’s compliance requirements. Repeat Finding: Yes, Finding 2022 - 010 Recommendation: We recommend that the agency review its procedures for monitoring of annual audits for subrecipients. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 42 CFR part 442, providers must meet the prescribed health and safety standards for hospitals, nursing facilities, and ICF/IID. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: From a sample of sixty providers, nine of the providers did not have a recertification survey completed within the required timeframe which is used to meet the provider health and safety standards. Questioned costs: None. Context: Nine of the sixty providers sampled received payments from the State without meeting the prescribed health and safety standards, which is an error rate of 15%. A non-statistical sampling method was used to select the sample. Cause: Due to staffing shortages and a focus on completing Tier One workload requirements, KDHE has not been able to conduct all of the recertification surveys timely. Effect: Compliance with the prescribed health and safety standards for this program is not being met. Providers who are not meeting the health and safety standards, are still able to receive payments. Repeat Finding: Yes, Finding 2022-003 Recommendation: We recommend the State train all staff members to properly verify providers are meeting the prescribed health and safety standards before making payments to those providers. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 42 CFR part 442, providers must meet the prescribed health and safety standards for hospitals, nursing facilities, and ICF/IID. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: From a sample of sixty providers, nine of the providers did not have a recertification survey completed within the required timeframe which is used to meet the provider health and safety standards. Questioned costs: None. Context: Nine of the sixty providers sampled received payments from the State without meeting the prescribed health and safety standards, which is an error rate of 15%. A non-statistical sampling method was used to select the sample. Cause: Due to staffing shortages and a focus on completing Tier One workload requirements, KDHE has not been able to conduct all of the recertification surveys timely. Effect: Compliance with the prescribed health and safety standards for this program is not being met. Providers who are not meeting the health and safety standards, are still able to receive payments. Repeat Finding: Yes, Finding 2022-003 Recommendation: We recommend the State train all staff members to properly verify providers are meeting the prescribed health and safety standards before making payments to those providers. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 42 CFR part 442, providers must meet the prescribed health and safety standards for hospitals, nursing facilities, and ICF/IID. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: From a sample of sixty providers, nine of the providers did not have a recertification survey completed within the required timeframe which is used to meet the provider health and safety standards. Questioned costs: None. Context: Nine of the sixty providers sampled received payments from the State without meeting the prescribed health and safety standards, which is an error rate of 15%. A non-statistical sampling method was used to select the sample. Cause: Due to staffing shortages and a focus on completing Tier One workload requirements, KDHE has not been able to conduct all of the recertification surveys timely. Effect: Compliance with the prescribed health and safety standards for this program is not being met. Providers who are not meeting the health and safety standards, are still able to receive payments. Repeat Finding: Yes, Finding 2022-003 Recommendation: We recommend the State train all staff members to properly verify providers are meeting the prescribed health and safety standards before making payments to those providers. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 42 CFR part 442, providers must meet the prescribed health and safety standards for hospitals, nursing facilities, and ICF/IID. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: From a sample of sixty providers, nine of the providers did not have a recertification survey completed within the required timeframe which is used to meet the provider health and safety standards. Questioned costs: None. Context: Nine of the sixty providers sampled received payments from the State without meeting the prescribed health and safety standards, which is an error rate of 15%. A non-statistical sampling method was used to select the sample. Cause: Due to staffing shortages and a focus on completing Tier One workload requirements, KDHE has not been able to conduct all of the recertification surveys timely. Effect: Compliance with the prescribed health and safety standards for this program is not being met. Providers who are not meeting the health and safety standards, are still able to receive payments. Repeat Finding: Yes, Finding 2022-003 Recommendation: We recommend the State train all staff members to properly verify providers are meeting the prescribed health and safety standards before making payments to those providers. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 42 CFR part 442, providers must meet the prescribed health and safety standards for hospitals, nursing facilities, and ICF/IID. 2 CFR 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: From a sample of sixty providers, nine of the providers did not have a recertification survey completed within the required timeframe which is used to meet the provider health and safety standards. Questioned costs: None. Context: Nine of the sixty providers sampled received payments from the State without meeting the prescribed health and safety standards, which is an error rate of 15%. A non-statistical sampling method was used to select the sample. Cause: Due to staffing shortages and a focus on completing Tier One workload requirements, KDHE has not been able to conduct all of the recertification surveys timely. Effect: Compliance with the prescribed health and safety standards for this program is not being met. Providers who are not meeting the health and safety standards, are still able to receive payments. Repeat Finding: Yes, Finding 2022-003 Recommendation: We recommend the State train all staff members to properly verify providers are meeting the prescribed health and safety standards before making payments to those providers. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2023-003 Subject: Child Nutrition Cluster - Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Federal Agency: Department of Agriculture Federal Program: National School Lunch Program Assistance Listings Number: 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022/2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 21 TELL CITY-TROY TOWNSHIP SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation designed a control that one employee would determine the number of applications required to be verified, select the required applications, request the income verification documentation for each application, and finally perform the verifications to determine if changes in eligibility status were warranted. A second employee would then review the verifications performed to ensure that the determinations were accurate prior to submission of the Verification Summary Report. In order to substantiate that the internal control was properly implemented and operating effectively, the three applications required to be verified by the School Corporation for fiscal year 2022-2023 were selected for testing. None of the applications contained evidence to indicate that the identified internal control was implemented as designed. The lack of internal controls was isolated to 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. INDIANA STATE BOARD OF ACCOUNTS 22 TELL CITY-TROY TOWNSHIP SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Equipment and Real Property Management compliance requirement. 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation utilized COVID-19 - Education Stabilization Fund (ESF) grant awards to purchase equipment throughout the audit period, including, but not limited to, the following: full serving lines with cashier stations, serving lines with flatware carts, milk coolers, dishwashers, and a double stack convection oven. The total equipment purchased was $300,131. All equipment was properly added to the capital asset listing; however, the following attributes were missing from the listing: the source of the funding (including the federal award identification number), who holds the title, percentage of federal participation in the project costs for federal awards under which the property was acquired, the condition of the property, and, if applicable, the disposition data. 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: INDIANA STATE BOARD OF ACCOUNTS 23 TELL CITY-TROY TOWNSHIP SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d)(1) states: "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, 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." 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, Education Stabilization 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 asset records include all the necessary information. 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): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Equipment and Real Property Management compliance requirement. 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation utilized COVID-19 - Education Stabilization Fund (ESF) grant awards to purchase equipment throughout the audit period, including, but not limited to, the following: full serving lines with cashier stations, serving lines with flatware carts, milk coolers, dishwashers, and a double stack convection oven. The total equipment purchased was $300,131. All equipment was properly added to the capital asset listing; however, the following attributes were missing from the listing: the source of the funding (including the federal award identification number), who holds the title, percentage of federal participation in the project costs for federal awards under which the property was acquired, the condition of the property, and, if applicable, the disposition data. 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: INDIANA STATE BOARD OF ACCOUNTS 23 TELL CITY-TROY TOWNSHIP SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d)(1) states: "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, 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." 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, Education Stabilization 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 asset records include all the necessary information. 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): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Equipment and Real Property Management compliance requirement. 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation utilized COVID-19 - Education Stabilization Fund (ESF) grant awards to purchase equipment throughout the audit period, including, but not limited to, the following: full serving lines with cashier stations, serving lines with flatware carts, milk coolers, dishwashers, and a double stack convection oven. The total equipment purchased was $300,131. All equipment was properly added to the capital asset listing; however, the following attributes were missing from the listing: the source of the funding (including the federal award identification number), who holds the title, percentage of federal participation in the project costs for federal awards under which the property was acquired, the condition of the property, and, if applicable, the disposition data. 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: INDIANA STATE BOARD OF ACCOUNTS 23 TELL CITY-TROY TOWNSHIP SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d)(1) states: "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, 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." 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, Education Stabilization 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 asset records include all the necessary information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Education State Agency: Agency of Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported timely or accurately to FSRS. Context: Sixty subawards were selected for testing and many of these subawards were amended multiple times for a total of 573 transactions tested. Specifically, the following exceptions were noted: • 3 of 60 original subawards were not reported to FSRS. • 14 of 513 subaward amendments were not reported to FSRS. • 9 of 60 original subawards were not reported timely to FSRS. • 127 of 513 subaward amendments were not reported timely to FSRS. • 1 of 60 original subawards reported an incorrect amount to FSRS. • 2 of 513 subaward amendments reported an incorrect amount to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education Department of Finance and Management Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Agency of Education (Agency) was not in compliance with the funding techniques included in the State’s CMIA Treasury-State Agreement. The Department of Finance and Management (Finance) improperly calculated Federal interest liabilities for the program on the CMIA Annual Report. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: The funding techniques for the program require that cash draws are performed on a bi-weekly basis, or 26 times during the fiscal year. The Agency performed only ten cash draws during the fiscal year. Finance is the responsible State entity for calculation of interest and completion of the CMIA Annual Report. Since the Agency failed to request funds timely in accordance with the Treasury-State Agreement, Finance should not have calculated a federal interest liability for the program, however, a federal interest liability was reported in the amount of $7,966. Cause: The Agency’s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance’s CMIA Annual Report procedures were not sufficient to ensure that it calculated a federal interest liability for the program only when the State was entitled to the interest. Internal controls did not detect the error prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency does not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State’s cash flow. Improperly calculating the Federal interest liability could potentially allow the State to receive an interest payment to which it is not entitled per 2 CFR section 200.514. Questioned costs: $7,966, the amount of the federal interest liability improperly calculated and included on the Annual Report. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State’s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education Department of Finance and Management Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Agency of Education (Agency) was not in compliance with the funding techniques included in the State’s CMIA Treasury-State Agreement. The Department of Finance and Management (Finance) improperly calculated Federal interest liabilities for the program on the CMIA Annual Report. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: The funding techniques for the program require that cash draws are performed on a bi-weekly basis, or 26 times during the fiscal year. The Agency performed only ten cash draws during the fiscal year. Finance is the responsible State entity for calculation of interest and completion of the CMIA Annual Report. Since the Agency failed to request funds timely in accordance with the Treasury-State Agreement, Finance should not have calculated a federal interest liability for the program, however, a federal interest liability was reported in the amount of $7,966. Cause: The Agency’s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance’s CMIA Annual Report procedures were not sufficient to ensure that it calculated a federal interest liability for the program only when the State was entitled to the interest. Internal controls did not detect the error prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency does not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State’s cash flow. Improperly calculating the Federal interest liability could potentially allow the State to receive an interest payment to which it is not entitled per 2 CFR section 200.514. Questioned costs: $7,966, the amount of the federal interest liability improperly calculated and included on the Annual Report. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State’s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education Department of Finance and Management Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2021-2023), 4VT310307 (2020-2023), 4VT308907 (2022-2023) Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Agency of Education (Agency) was not in compliance with the funding techniques included in the State’s CMIA Treasury-State Agreement. The Department of Finance and Management (Finance) improperly calculated Federal interest liabilities for the program on the CMIA Annual Report. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: The funding techniques for the program require that cash draws are performed on a bi-weekly basis, or 26 times during the fiscal year. The Agency performed only ten cash draws during the fiscal year. Finance is the responsible State entity for calculation of interest and completion of the CMIA Annual Report. Since the Agency failed to request funds timely in accordance with the Treasury-State Agreement, Finance should not have calculated a federal interest liability for the program, however, a federal interest liability was reported in the amount of $7,966. Cause: The Agency’s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance’s CMIA Annual Report procedures were not sufficient to ensure that it calculated a federal interest liability for the program only when the State was entitled to the interest. Internal controls did not detect the error prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency does not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State’s cash flow. Improperly calculating the Federal interest liability could potentially allow the State to receive an interest payment to which it is not entitled per 2 CFR section 200.514. Questioned costs: $7,966, the amount of the federal interest liability improperly calculated and included on the Annual Report. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State’s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.