2023-008: Annual Performance Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Head Start Assistance Listing Number: 93.600 Award Number and Year: 04HE001242-01-00 (April 1, 2021 – March 31, 2023), 04CH011182-03-00 (August 1, 2019 – July 31, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Mississippi State University (MSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – Grantees must submit an annual performance report to the U.S. Department of Health and Human Services each year of the project period using the Real Property Status Report SF-429. Condition: The University filed the Real Property Status Report SF-429 after the deadline. Questioned Costs: None. Context: This condition occurred 1 of 1 reports selected for testing. Cause: The SF 429 report was submitted late due to human error. Effect: The institution is not able to file the reports on time which could affect future participation in the program. Repeat Finding: No Recommendation: We recommend the institutions review and revise its current reporting procedures and review requirements to ensure that the reports are submitted accurately and timely. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-009: Common Origination and Disbursement (COD) Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.268 Award Number and Year: P268K231706(March 25, 2022- August 31, 2028) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Jackson State University (JSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – From the 2022-23 FSA Handbook: The date funds are credited to a student’s account in the institution’s general ledger or any subledger of the general ledger or paid to a student directly is the disbursement date the financial aid office reports to COD. The Common Origination and Disbursement (COD) additional requirements are: (1) Schools must use the COD system to request and receive federal student aid funds, including Direct Loans, Pell Grants, and Campus-Based aid programs. Schools must ensure that all disbursements of federal student aid are made through the COD system. (2) Schools must reconcile their records with the COD system to ensure that all disbursements are accurately reported and recorded. (3) Schools must comply with COD reporting requirements, including reporting disbursements, adjustments, and cancellations in a timely and accurate manner. Condition: The Fall 2022 and Spring 2023 disbursement dates in COD for Parent Plus Direct Loans did not match the disbursement date on the student ledgers. Questioned Costs: None Context: This condition occurred for 2 out of the 8 students selected for testing. Cause: A change in personnel during the 22-23 academic year caused this process to not be completed timely. Effect: The COD disbursement date is reported to the Direct Loan servicers and is the time when interest begins to accrue on the loan funds. Inaccurate disbursement date reporting may lead to inaccurate student loan interest accruals. Repeat Finding: No Recommendation: We recommend that the entity strengthen its internal controls to ensure that all disbursement dates are reported to COD correctly. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-010: NSLDS Enrollment Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.063, 84.268 Award Number and Year: P063P211695 (March 25, 2022- August 31, 2028), P268K221695 (March 25, 2022- August 31, 2028), P063P221706 (March 25, 2022- August 31, 2028), P268K231706 (March 25, 2022- August 31, 2028), P063P211722 (March 25, 2022- August 31, 2028), P063P221722 (March 25, 2022- August 31, 2028), P268K221722 (March 25, 2022- August 31, 2028), P268K231722 (March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Alcorn State University (ASU), Jackson State University (JSU), and University of Mississippi Medical Center (UMMC) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – All schools participating (or approved to participate) in the Federal Student Aid programs must have an arrangement to report student enrollment data to the NSLDS through a Roster file (formerly called the Student Status Confirmation Report or SSCR). The School is required to report changes in the student’s enrollment status, the effective date of the status and an anticipated completion date. Changes in enrollment to less than half-time, graduated, or withdrawn status must be reported within 30 days. However, if a Roster file is expected within 60 days, you may provide the data on that Roster file (34CFR section 682.610). Condition: Enrollment dates and statuses did not agree to institution records or were not reported timely. Questioned Costs: None Context: Based on the audit procedures, the following discrepancies were noted: For 1 out of 4 ASU students, the status was not certified every 60 days. For 5 out of 8 JSU students, the effective enrollment date per institution records and NSLDS did not agree. For 1 out of 8 JSU students, the status change was not reported timely or certified within 60 days. For 1 out of 8 JSU students, NSLDS campus enrollment status has not been updated or verified. For 2 out of 4 UMMC students, the effective enrollment date per institution records and NSLDS did not agree. Cause: ASU Students were not reported in a timely manner doe to our enrollment certification officer being out of the office on extensive medical leave as well as the office being short staffed. JSU In some instances, the census and financial purge deadlines are extended to ensure students complete their registration requirements. When extensions are provided, the enrollment file is unable to be submitted timely and also causes delays in processing the Enrollment Error report. UMMC There were two students whose enrollment status changed from one term to the next but neither were captured in the enrollment file sent to the National Student Clearinghouse. Both students withdrew between enrollment submissions and early enough in the subsequent term, our clearinghouse enrollment report didn’t capture their enrollment change. Since they were not captured on our clearinghouse enrollment file, their enrollment status change (or their withdrawal from the institution) and effective date were not reported to the NSLDS. Effect: The NSLDS system is not updated with the student information which can cause over awarding should the student transfer to another institution and the students may not properly enter the repayment period. Repeat Finding: 2022-010 Recommendation: CLA recommends that the entity strengthen its internal controls to ensure that all enrollment records are reported correctly and timely. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-010: NSLDS Enrollment Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.063, 84.268 Award Number and Year: P063P211695 (March 25, 2022- August 31, 2028), P268K221695 (March 25, 2022- August 31, 2028), P063P221706 (March 25, 2022- August 31, 2028), P268K231706 (March 25, 2022- August 31, 2028), P063P211722 (March 25, 2022- August 31, 2028), P063P221722 (March 25, 2022- August 31, 2028), P268K221722 (March 25, 2022- August 31, 2028), P268K231722 (March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Alcorn State University (ASU), Jackson State University (JSU), and University of Mississippi Medical Center (UMMC) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – All schools participating (or approved to participate) in the Federal Student Aid programs must have an arrangement to report student enrollment data to the NSLDS through a Roster file (formerly called the Student Status Confirmation Report or SSCR). The School is required to report changes in the student’s enrollment status, the effective date of the status and an anticipated completion date. Changes in enrollment to less than half-time, graduated, or withdrawn status must be reported within 30 days. However, if a Roster file is expected within 60 days, you may provide the data on that Roster file (34CFR section 682.610). Condition: Enrollment dates and statuses did not agree to institution records or were not reported timely. Questioned Costs: None Context: Based on the audit procedures, the following discrepancies were noted: For 1 out of 4 ASU students, the status was not certified every 60 days. For 5 out of 8 JSU students, the effective enrollment date per institution records and NSLDS did not agree. For 1 out of 8 JSU students, the status change was not reported timely or certified within 60 days. For 1 out of 8 JSU students, NSLDS campus enrollment status has not been updated or verified. For 2 out of 4 UMMC students, the effective enrollment date per institution records and NSLDS did not agree. Cause: ASU Students were not reported in a timely manner doe to our enrollment certification officer being out of the office on extensive medical leave as well as the office being short staffed. JSU In some instances, the census and financial purge deadlines are extended to ensure students complete their registration requirements. When extensions are provided, the enrollment file is unable to be submitted timely and also causes delays in processing the Enrollment Error report. UMMC There were two students whose enrollment status changed from one term to the next but neither were captured in the enrollment file sent to the National Student Clearinghouse. Both students withdrew between enrollment submissions and early enough in the subsequent term, our clearinghouse enrollment report didn’t capture their enrollment change. Since they were not captured on our clearinghouse enrollment file, their enrollment status change (or their withdrawal from the institution) and effective date were not reported to the NSLDS. Effect: The NSLDS system is not updated with the student information which can cause over awarding should the student transfer to another institution and the students may not properly enter the repayment period. Repeat Finding: 2022-010 Recommendation: CLA recommends that the entity strengthen its internal controls to ensure that all enrollment records are reported correctly and timely. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-011: Outstanding Student Refund Checks Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P063P211695(March 25, 2022- August 31, 2028), P063P221695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P268K231695(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Alcorn State University (ASU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance- The Code of Federal Regulations, 34 CFR 668.164(h)(2) states that an institution that attempts to disburse funds by check and the check is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued that check. Condition: Student checks totaling $234 related to student refunds of Title IV federal financial aid were outstanding more than 240 days as of June 30, 2023. Questioned Costs: None. Context: This condition occurred for all 3 Title IV checks outstanding at year-end. Cause: Employee turnover in the finance area caused a lapse in the development and implementation of policies and procedures following the previous finding related to outstanding checks. Effect: The University is not in compliance with Department of Education requirements that all student refund checks that are outstanding for more than 240 days be returned to the Department. Repeat Finding: 2022-007 Recommendation: CLA recommends the University review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education by no later than 240 days. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-011: Outstanding Student Refund Checks Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P063P211695(March 25, 2022- August 31, 2028), P063P221695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P268K231695(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Alcorn State University (ASU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance- The Code of Federal Regulations, 34 CFR 668.164(h)(2) states that an institution that attempts to disburse funds by check and the check is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued that check. Condition: Student checks totaling $234 related to student refunds of Title IV federal financial aid were outstanding more than 240 days as of June 30, 2023. Questioned Costs: None. Context: This condition occurred for all 3 Title IV checks outstanding at year-end. Cause: Employee turnover in the finance area caused a lapse in the development and implementation of policies and procedures following the previous finding related to outstanding checks. Effect: The University is not in compliance with Department of Education requirements that all student refund checks that are outstanding for more than 240 days be returned to the Department. Repeat Finding: 2022-007 Recommendation: CLA recommends the University review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education by no later than 240 days. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-011: Outstanding Student Refund Checks Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P063P211695(March 25, 2022- August 31, 2028), P063P221695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P268K231695(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Alcorn State University (ASU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance- The Code of Federal Regulations, 34 CFR 668.164(h)(2) states that an institution that attempts to disburse funds by check and the check is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued that check. Condition: Student checks totaling $234 related to student refunds of Title IV federal financial aid were outstanding more than 240 days as of June 30, 2023. Questioned Costs: None. Context: This condition occurred for all 3 Title IV checks outstanding at year-end. Cause: Employee turnover in the finance area caused a lapse in the development and implementation of policies and procedures following the previous finding related to outstanding checks. Effect: The University is not in compliance with Department of Education requirements that all student refund checks that are outstanding for more than 240 days be returned to the Department. Repeat Finding: 2022-007 Recommendation: CLA recommends the University review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education by no later than 240 days. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-011: Outstanding Student Refund Checks Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P063P211695(March 25, 2022- August 31, 2028), P063P221695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P268K231695(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Alcorn State University (ASU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance- The Code of Federal Regulations, 34 CFR 668.164(h)(2) states that an institution that attempts to disburse funds by check and the check is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued that check. Condition: Student checks totaling $234 related to student refunds of Title IV federal financial aid were outstanding more than 240 days as of June 30, 2023. Questioned Costs: None. Context: This condition occurred for all 3 Title IV checks outstanding at year-end. Cause: Employee turnover in the finance area caused a lapse in the development and implementation of policies and procedures following the previous finding related to outstanding checks. Effect: The University is not in compliance with Department of Education requirements that all student refund checks that are outstanding for more than 240 days be returned to the Department. Repeat Finding: 2022-007 Recommendation: CLA recommends the University review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education by no later than 240 days. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-012: Direct Loan Exit Counseling Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.268 Award Number and Year: P268K231706(March 25, 2022- August 31, 2028) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Jackson State University (JSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – All schools that participate in the Federal Student Aid programs are required to provide exit counseling to student borrowers who withdraw from school. This requirement is outlined in 34 CFR section 685.304. Specifically, exit counseling must be provided within 30 days after the school learns that the student borrower has withdrawn from school. Condition: Exit counseling was not sent to borrowers who graduated or withdrew during the 22-23 school year. Questioned Costs: None Context: This condition occurred for 3 out of 8 JSU students selected for testing Cause: A change in personnel during the 22-23 academic year caused this process to not be completed timely. Effect: Students are not receiving the required loan exit counseling which may contribute to a higher default rate. Repeat Finding: No Recommendation: We recommend that the entity review its policies and procedures to ensure that all exit counseling notifications are sent. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-013: The Gramm-Leach-Bliley Act (GLBA) Compliance Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A222226(March 25, 2022- August 31, 2028), P033P212226(March 25, 2022- August 31, 2028), P063P211695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P033A212226(March 25, 2022- August 31, 2028), P007A222257(March 25, 2022- August 31, 2028), P033A222257(March 25, 2022- August 31, 2028), P063P220252(March 23, 2022- August 31, 2028), P268K230252(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Alcorn State University (ASU) and Mississippi Valley State University (MVSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to perform Safeguards that address the required areas noted in GLBA 16 CFR 314.4, which are (1) the Institution designated a Qualified Individual responsible for implementing and monitoring the Institution’s information security program and (2) the Institution’s written information security program addresses the remaining six elements. Condition: Under an institution’s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Questioned Costs: None Context: This condition occurred for the institutions as follows: • For ASU, the institution’s policy did not identify a qualified individual (such as a CIO, ISO, CISO) responsible for the Information Security program. In addition, the written information security program (WISP) did not address certain required elements. • For MVSU, the institution’s WISP has not been approved by the individual leading the information security program. In addition, the WISP did not address certain required elements. Cause: ASU At the time of the audit, the University’s security program had not matured to the extent that published policies and procedures covered the items referred to in this finding. MVSU The University experienced turnover in the department responsible for this process. Effect: The student personal information could be vulnerable. Repeat Finding: 2022-008 Recommendation: CLA recommend that the University engage a third party or perform the risk assessment for the two areas required by the Gramm-Leach-Bliley Act and ensure that there are documented safeguards for identified risks which are included in the Written Information Security Program. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-013: The Gramm-Leach-Bliley Act (GLBA) Compliance Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A222226(March 25, 2022- August 31, 2028), P033P212226(March 25, 2022- August 31, 2028), P063P211695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P033A212226(March 25, 2022- August 31, 2028), P007A222257(March 25, 2022- August 31, 2028), P033A222257(March 25, 2022- August 31, 2028), P063P220252(March 23, 2022- August 31, 2028), P268K230252(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Alcorn State University (ASU) and Mississippi Valley State University (MVSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to perform Safeguards that address the required areas noted in GLBA 16 CFR 314.4, which are (1) the Institution designated a Qualified Individual responsible for implementing and monitoring the Institution’s information security program and (2) the Institution’s written information security program addresses the remaining six elements. Condition: Under an institution’s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Questioned Costs: None Context: This condition occurred for the institutions as follows: • For ASU, the institution’s policy did not identify a qualified individual (such as a CIO, ISO, CISO) responsible for the Information Security program. In addition, the written information security program (WISP) did not address certain required elements. • For MVSU, the institution’s WISP has not been approved by the individual leading the information security program. In addition, the WISP did not address certain required elements. Cause: ASU At the time of the audit, the University’s security program had not matured to the extent that published policies and procedures covered the items referred to in this finding. MVSU The University experienced turnover in the department responsible for this process. Effect: The student personal information could be vulnerable. Repeat Finding: 2022-008 Recommendation: CLA recommend that the University engage a third party or perform the risk assessment for the two areas required by the Gramm-Leach-Bliley Act and ensure that there are documented safeguards for identified risks which are included in the Written Information Security Program. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-013: The Gramm-Leach-Bliley Act (GLBA) Compliance Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A222226(March 25, 2022- August 31, 2028), P033P212226(March 25, 2022- August 31, 2028), P063P211695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P033A212226(March 25, 2022- August 31, 2028), P007A222257(March 25, 2022- August 31, 2028), P033A222257(March 25, 2022- August 31, 2028), P063P220252(March 23, 2022- August 31, 2028), P268K230252(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Alcorn State University (ASU) and Mississippi Valley State University (MVSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to perform Safeguards that address the required areas noted in GLBA 16 CFR 314.4, which are (1) the Institution designated a Qualified Individual responsible for implementing and monitoring the Institution’s information security program and (2) the Institution’s written information security program addresses the remaining six elements. Condition: Under an institution’s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Questioned Costs: None Context: This condition occurred for the institutions as follows: • For ASU, the institution’s policy did not identify a qualified individual (such as a CIO, ISO, CISO) responsible for the Information Security program. In addition, the written information security program (WISP) did not address certain required elements. • For MVSU, the institution’s WISP has not been approved by the individual leading the information security program. In addition, the WISP did not address certain required elements. Cause: ASU At the time of the audit, the University’s security program had not matured to the extent that published policies and procedures covered the items referred to in this finding. MVSU The University experienced turnover in the department responsible for this process. Effect: The student personal information could be vulnerable. Repeat Finding: 2022-008 Recommendation: CLA recommend that the University engage a third party or perform the risk assessment for the two areas required by the Gramm-Leach-Bliley Act and ensure that there are documented safeguards for identified risks which are included in the Written Information Security Program. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-013: The Gramm-Leach-Bliley Act (GLBA) Compliance Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A222226(March 25, 2022- August 31, 2028), P033P212226(March 25, 2022- August 31, 2028), P063P211695(March 25, 2022- August 31, 2028), P268K221695(March 25, 2022- August 31, 2028), P033A212226(March 25, 2022- August 31, 2028), P007A222257(March 25, 2022- August 31, 2028), P033A222257(March 25, 2022- August 31, 2028), P063P220252(March 23, 2022- August 31, 2028), P268K230252(March 25, 2022- August 31, 2028), Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Alcorn State University (ASU) and Mississippi Valley State University (MVSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to perform Safeguards that address the required areas noted in GLBA 16 CFR 314.4, which are (1) the Institution designated a Qualified Individual responsible for implementing and monitoring the Institution’s information security program and (2) the Institution’s written information security program addresses the remaining six elements. Condition: Under an institution’s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Questioned Costs: None Context: This condition occurred for the institutions as follows: • For ASU, the institution’s policy did not identify a qualified individual (such as a CIO, ISO, CISO) responsible for the Information Security program. In addition, the written information security program (WISP) did not address certain required elements. • For MVSU, the institution’s WISP has not been approved by the individual leading the information security program. In addition, the WISP did not address certain required elements. Cause: ASU At the time of the audit, the University’s security program had not matured to the extent that published policies and procedures covered the items referred to in this finding. MVSU The University experienced turnover in the department responsible for this process. Effect: The student personal information could be vulnerable. Repeat Finding: 2022-008 Recommendation: CLA recommend that the University engage a third party or perform the risk assessment for the two areas required by the Gramm-Leach-Bliley Act and ensure that there are documented safeguards for identified risks which are included in the Written Information Security Program. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-014: Return of Title IV Funds Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.063 and 84.268 Award Number and Year: P063P221706 (March 25, 2022- August 31, 2028), P268K231706 (March 25, 2022- August 31, 2028) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Jackson State University (JSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student's withdrawal date (34CFR section 668.22). Condition: The return of funds was calculated improperly. Questioned Costs: None Context: For 1 out of 8 JSU students, the institution made an error in the R2T4 calculation. The school incorrectly deemed the student to have withdrawn after the 60% point of the semester, when in fact the student withdrew before the 60% point resulting in the institution needing to return Pell funds. Cause: A change in personnel during the 22-23 academic year caused this process to not be completed timely. The counselor over this process resigned during the summer semester and the unofficial R2T4s were not completed as efficiently for that short period. Effect: The students’ return of funds calculation was not done correctly and the return of funds back to the federal government was for the incorrect amount. Repeat Finding: No Recommendation: CLA recommend the University review the R2T4 requirements and implement procedures to ensure the R2T4 calculations are using the correct amount of term days and are accurately completed. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-014: Return of Title IV Funds Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.063 and 84.268 Award Number and Year: P063P221706 (March 25, 2022- August 31, 2028), P268K231706 (March 25, 2022- August 31, 2028) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Jackson State University (JSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student's withdrawal date (34CFR section 668.22). Condition: The return of funds was calculated improperly. Questioned Costs: None Context: For 1 out of 8 JSU students, the institution made an error in the R2T4 calculation. The school incorrectly deemed the student to have withdrawn after the 60% point of the semester, when in fact the student withdrew before the 60% point resulting in the institution needing to return Pell funds. Cause: A change in personnel during the 22-23 academic year caused this process to not be completed timely. The counselor over this process resigned during the summer semester and the unofficial R2T4s were not completed as efficiently for that short period. Effect: The students’ return of funds calculation was not done correctly and the return of funds back to the federal government was for the incorrect amount. Repeat Finding: No Recommendation: CLA recommend the University review the R2T4 requirements and implement procedures to ensure the R2T4 calculations are using the correct amount of term days and are accurately completed. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-015: SEFA Reporting of Expenditures Federal Agency: Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425F Award Number and Year: P425F201683 (May 6, 2020 – June 30, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance Applicable Institution: Mississippi University for Women (MUW) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The University drew funds in fiscal year 2022 for amounts earned in fiscal year 2022 but were not reported on the SEFA until fiscal year 2023. Questioned Costs: None Context: The University’s calculation of lost revenue was performed in fiscal year 2022 and funds were drawn at that time the charge to the grant in the general ledger did not occur until fiscal year 2023 resulting in an error to the SEFA. Cause: A journal entry for the lost revenue calculation was not entered in FY22 when the money was drawn down. Effect: The SEFA does not reflect the accurate amount of federal expenditures for the year. Repeat Finding: No Recommendation: We recommend the institution review and revise its current reporting procedures and review requirements to ensure that federal expenditures are properly identified and classified. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-016: Suspension and Debarment Federal Agency: Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425F Award Number and Year: P425F201683 (May 6, 2020 – June 30, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance Applicable Institution: Mississippi University for Women (MUW) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: We noted that the University does not have policies or procedures in place for compliance with suspension and debarment requirements. Questioned Costs: None Context: The University does not have a policy or procedure to verify a vendor’s suspension and debarment status. Cause: Due to personnel changes and undocumented policies and procedures, the individuals making purchases were not aware of the requirement. Effect: The University is not in compliance with suspension and debarment requirements for its federal programs. Repeat Finding: No Recommendation: We recommend that the University ensure its policies and procedures over suspension and debarment are being enforced to ensure evidence of compliance to suspension and debarment regulations are maintained. This can include maintaining evidence that management reviewed the SAM.gov website, maintaining a certification from the vendor, or including a clause in contract with vendors that they are not suspended or debarred. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-017: Quarterly and Annual HEERF Reporting Federal Agency: U.S. Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425E, 84.425F, 84.425J Award Number and Year: P425F201683 (May 6, 2020 – June 30, 2023) P425E200639 (April 21, 2020 – June 30, 2023) P425F202078 (May 7, 2020 – June 30, 2023) P425J200085 (May 1, 2020 – June 30, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Mississippi Valley State University (MVSU), Mississippi University for Women (MUW) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – Per Federal Register Notice of Public Posting Requirement of Grant Information for Higher Education Emergency Relief Fund (HEERF) Grantees dated 5/13/21, institutions are required to submit (in a time and manner required by the Secretary) a report to the Secretary describing the use of funds distributed from the HEERF. The Department further requires institutions to post all quarterly reports to their website in a publicly accessible location. According to the OPE Reporting and Data Collection website, quarterly reports should appear on separate documents by quarter and should not be cumulative. All institutions of higher education that received HEERF grant awards are required to submit a HEERF Annual Report. The HEERF Annual Report by the March 24, 2023 deadline. Condition: Mississippi Valley State University (MVSU) Quarterly Reporting: MVSU could not provide evidence of review over the quarterly report submitted for the quarter ended June 30, 2022. Annual Reporting: MVSU could not provide evidence of review over the annual report submitted March 25, 2023. Mississippi University for Women (MUW) Annual Reporting: MUW could not provide evidence of review over the annual report submitted March 24, 2023. Quarterly Reporting: MUW submitted an out-of-date quarterly form for the quarter ending September 30, 2022. In addition, MUW could not provide evidence of review over the quarterly report submitted for the quarter ended September 30, 2022. Questioned Costs: None. Context: Mississippi Valley State University (MVSU) Quarterly Reporting: MVSU could not provide evidence of review over the quarterly report submitted for the quarter ended June 30, 2022. Annual Reporting: MVSU could not provide evidence of review over the annual report submitted March 25, 2023. In addition, the report was submitted after the deadline. Mississippi University for Women (MUW) Annual Reporting: MUW could not provide evidence of review over the annual report submitted March 24, 2023. Quarterly Reporting: MUW submitted an out of date quarterly form for the quarter ending September 30, 2022. In addition, MUW could not provide evidence of review over the quarterly report submitted for the quarter ended September 30, 2022. Cause: MVSU Lack of proper internal controls to ensure that all reports are reviewed prior to posting quarterly reports to the University’s website and submitting annual performance reports. Previously, the State Director was not fully aware that reports must be reviewed prior to posting/submission. Effective July 10, 2023, quarterly reports are reviewed by the Director of Accounting and Vice President for Business and Finance prior to posting. The same procedure will apply to the annual performance report. The annual performance report provided for review was submitted after the deadline with no evidence that the report was submitted by the deadline. MUW Annual Reporting: All reports were reviewed prior to submission; however, there was no documented evidence that the review occurred. Quarterly reporting: The grant PI failed to communicate to the Grant Accountant that one of the reporting forms had been revised. Effect: Reports submitted are not in compliance with the reporting and information-sharing requirements established by the Department of Education. Repeat Finding: 2022-005 Recommendation: We recommend the institutions strengthen their understanding of the reporting requirements established by the grant and ensure supporting documentation is maintained to substantiate amounts reported. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-017: Quarterly and Annual HEERF Reporting Federal Agency: U.S. Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425E, 84.425F, 84.425J Award Number and Year: P425F201683 (May 6, 2020 – June 30, 2023) P425E200639 (April 21, 2020 – June 30, 2023) P425F202078 (May 7, 2020 – June 30, 2023) P425J200085 (May 1, 2020 – June 30, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Mississippi Valley State University (MVSU), Mississippi University for Women (MUW) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – Per Federal Register Notice of Public Posting Requirement of Grant Information for Higher Education Emergency Relief Fund (HEERF) Grantees dated 5/13/21, institutions are required to submit (in a time and manner required by the Secretary) a report to the Secretary describing the use of funds distributed from the HEERF. The Department further requires institutions to post all quarterly reports to their website in a publicly accessible location. According to the OPE Reporting and Data Collection website, quarterly reports should appear on separate documents by quarter and should not be cumulative. All institutions of higher education that received HEERF grant awards are required to submit a HEERF Annual Report. The HEERF Annual Report by the March 24, 2023 deadline. Condition: Mississippi Valley State University (MVSU) Quarterly Reporting: MVSU could not provide evidence of review over the quarterly report submitted for the quarter ended June 30, 2022. Annual Reporting: MVSU could not provide evidence of review over the annual report submitted March 25, 2023. Mississippi University for Women (MUW) Annual Reporting: MUW could not provide evidence of review over the annual report submitted March 24, 2023. Quarterly Reporting: MUW submitted an out-of-date quarterly form for the quarter ending September 30, 2022. In addition, MUW could not provide evidence of review over the quarterly report submitted for the quarter ended September 30, 2022. Questioned Costs: None. Context: Mississippi Valley State University (MVSU) Quarterly Reporting: MVSU could not provide evidence of review over the quarterly report submitted for the quarter ended June 30, 2022. Annual Reporting: MVSU could not provide evidence of review over the annual report submitted March 25, 2023. In addition, the report was submitted after the deadline. Mississippi University for Women (MUW) Annual Reporting: MUW could not provide evidence of review over the annual report submitted March 24, 2023. Quarterly Reporting: MUW submitted an out of date quarterly form for the quarter ending September 30, 2022. In addition, MUW could not provide evidence of review over the quarterly report submitted for the quarter ended September 30, 2022. Cause: MVSU Lack of proper internal controls to ensure that all reports are reviewed prior to posting quarterly reports to the University’s website and submitting annual performance reports. Previously, the State Director was not fully aware that reports must be reviewed prior to posting/submission. Effective July 10, 2023, quarterly reports are reviewed by the Director of Accounting and Vice President for Business and Finance prior to posting. The same procedure will apply to the annual performance report. The annual performance report provided for review was submitted after the deadline with no evidence that the report was submitted by the deadline. MUW Annual Reporting: All reports were reviewed prior to submission; however, there was no documented evidence that the review occurred. Quarterly reporting: The grant PI failed to communicate to the Grant Accountant that one of the reporting forms had been revised. Effect: Reports submitted are not in compliance with the reporting and information-sharing requirements established by the Department of Education. Repeat Finding: 2022-005 Recommendation: We recommend the institutions strengthen their understanding of the reporting requirements established by the grant and ensure supporting documentation is maintained to substantiate amounts reported. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-017: Quarterly and Annual HEERF Reporting Federal Agency: U.S. Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425E, 84.425F, 84.425J Award Number and Year: P425F201683 (May 6, 2020 – June 30, 2023) P425E200639 (April 21, 2020 – June 30, 2023) P425F202078 (May 7, 2020 – June 30, 2023) P425J200085 (May 1, 2020 – June 30, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution(s): Mississippi Valley State University (MVSU), Mississippi University for Women (MUW) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – Per Federal Register Notice of Public Posting Requirement of Grant Information for Higher Education Emergency Relief Fund (HEERF) Grantees dated 5/13/21, institutions are required to submit (in a time and manner required by the Secretary) a report to the Secretary describing the use of funds distributed from the HEERF. The Department further requires institutions to post all quarterly reports to their website in a publicly accessible location. According to the OPE Reporting and Data Collection website, quarterly reports should appear on separate documents by quarter and should not be cumulative. All institutions of higher education that received HEERF grant awards are required to submit a HEERF Annual Report. The HEERF Annual Report by the March 24, 2023 deadline. Condition: Mississippi Valley State University (MVSU) Quarterly Reporting: MVSU could not provide evidence of review over the quarterly report submitted for the quarter ended June 30, 2022. Annual Reporting: MVSU could not provide evidence of review over the annual report submitted March 25, 2023. Mississippi University for Women (MUW) Annual Reporting: MUW could not provide evidence of review over the annual report submitted March 24, 2023. Quarterly Reporting: MUW submitted an out-of-date quarterly form for the quarter ending September 30, 2022. In addition, MUW could not provide evidence of review over the quarterly report submitted for the quarter ended September 30, 2022. Questioned Costs: None. Context: Mississippi Valley State University (MVSU) Quarterly Reporting: MVSU could not provide evidence of review over the quarterly report submitted for the quarter ended June 30, 2022. Annual Reporting: MVSU could not provide evidence of review over the annual report submitted March 25, 2023. In addition, the report was submitted after the deadline. Mississippi University for Women (MUW) Annual Reporting: MUW could not provide evidence of review over the annual report submitted March 24, 2023. Quarterly Reporting: MUW submitted an out of date quarterly form for the quarter ending September 30, 2022. In addition, MUW could not provide evidence of review over the quarterly report submitted for the quarter ended September 30, 2022. Cause: MVSU Lack of proper internal controls to ensure that all reports are reviewed prior to posting quarterly reports to the University’s website and submitting annual performance reports. Previously, the State Director was not fully aware that reports must be reviewed prior to posting/submission. Effective July 10, 2023, quarterly reports are reviewed by the Director of Accounting and Vice President for Business and Finance prior to posting. The same procedure will apply to the annual performance report. The annual performance report provided for review was submitted after the deadline with no evidence that the report was submitted by the deadline. MUW Annual Reporting: All reports were reviewed prior to submission; however, there was no documented evidence that the review occurred. Quarterly reporting: The grant PI failed to communicate to the Grant Accountant that one of the reporting forms had been revised. Effect: Reports submitted are not in compliance with the reporting and information-sharing requirements established by the Department of Education. Repeat Finding: 2022-005 Recommendation: We recommend the institutions strengthen their understanding of the reporting requirements established by the grant and ensure supporting documentation is maintained to substantiate amounts reported. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-018: Equipment Records Federal Agency: Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425C Award Number and Year: GEER (November 8, 2021 – September 30, 2023) Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Applicable Institution: Jackson State University (JSU) Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance – Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR section 200.313(d)(1)). Condition: Property records did not contain accurate information related to certain equipment purchases. Questioned Costs: None Context: We noted the following discrepancies with the property records of the University: • For 2 out of 8 equipment assets selected for testing, the cost of the property per the invoice did not agree to the cost included on the property record. • For 1 out of 8 equipment assets selected for testing, the description of the property on the property record was inaccurate. • For 1 out of 8 equipment assets selected for testing, the serial number included on the property record did not match the serial number on the equipment. Cause: Personnel made inaccurate entries on the front end of receiving and tagging the equipment. Effect: The University is not in compliance with equipment requirements for its federal programs. As a result, equipment may not be properly accounted for and inventoried. Repeat Finding: No Recommendation: We recommend the institution strengthen its controls and processes related to capturing information relating to equipment purchases and ensure that property records properly reflect the required information. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: CDBG – Entitlement Grants Cluster Assistance Listing Number: 14.218 Federal Agency: Department of Housing and Urban Development Federal Award Number: N/A Pass‐Through Agency: N/A Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria Under 2 CFR §200.303, the Town is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Town is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109‐282), as amended by Section 6202 of Pub. L. No. 110‐252, that are codified in 2 CFR Part 170, 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). Condition The Town did not report first‐tier subawards of $30,000 or more to the FSRS as required by the Transparency Act. Cause The Town was unaware that such subawards were required to be reported through the FSRS. Effect The Town was not in full compliance with federal reporting requirements. Context During fiscal year 2023, the Town made four first‐tier subawards of over $30,000 to subrecipients. The Town did not report any of the subawards to the FSRS. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Town should implement controls and procedures to ensure that all federal reporting requirements are tracked and necessary reports submitted. Views Of Responsible Officials See Corrective Action Plan.
Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: CDBG – Entitlement Grants Cluster Assistance Listing Number: 14.218 Federal Agency: Department of Housing and Urban Development Federal Award Number: N/A Pass‐Through Agency: N/A Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria Under 2 CFR §200.303, the Town is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Town is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109‐282), as amended by Section 6202 of Pub. L. No. 110‐252, that are codified in 2 CFR Part 170, 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). Condition The Town did not report first‐tier subawards of $30,000 or more to the FSRS as required by the Transparency Act. Cause The Town was unaware that such subawards were required to be reported through the FSRS. Effect The Town was not in full compliance with federal reporting requirements. Context During fiscal year 2023, the Town made four first‐tier subawards of over $30,000 to subrecipients. The Town did not report any of the subawards to the FSRS. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Town should implement controls and procedures to ensure that all federal reporting requirements are tracked and necessary reports submitted. Views Of Responsible Officials See Corrective Action Plan.
Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: CDBG – Entitlement Grants Cluster Assistance Listing Number: 14.218 Federal Agency: Department of Housing and Urban Development Federal Award Number: N/A Pass‐Through Agency: N/A Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria Under 2 CFR §200.303, the Town is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Town is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109‐282), as amended by Section 6202 of Pub. L. No. 110‐252, that are codified in 2 CFR Part 170, 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). Condition The Town did not report first‐tier subawards of $30,000 or more to the FSRS as required by the Transparency Act. Cause The Town was unaware that such subawards were required to be reported through the FSRS. Effect The Town was not in full compliance with federal reporting requirements. Context During fiscal year 2023, the Town made four first‐tier subawards of over $30,000 to subrecipients. The Town did not report any of the subawards to the FSRS. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Town should implement controls and procedures to ensure that all federal reporting requirements are tracked and necessary reports submitted. Views Of Responsible Officials See Corrective Action Plan.
Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: CDBG – Entitlement Grants Cluster Assistance Listing Number: 14.218 Federal Agency: Department of Housing and Urban Development Federal Award Number: N/A Pass‐Through Agency: N/A Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria Under 2 CFR §200.303, the Town is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Town is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109‐282), as amended by Section 6202 of Pub. L. No. 110‐252, that are codified in 2 CFR Part 170, 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). Condition The Town did not report first‐tier subawards of $30,000 or more to the FSRS as required by the Transparency Act. Cause The Town was unaware that such subawards were required to be reported through the FSRS. Effect The Town was not in full compliance with federal reporting requirements. Context During fiscal year 2023, the Town made four first‐tier subawards of over $30,000 to subrecipients. The Town did not report any of the subawards to the FSRS. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Town should implement controls and procedures to ensure that all federal reporting requirements are tracked and necessary reports submitted. Views Of Responsible Officials See Corrective Action Plan.
Criteria or specific requirement: Code of Federal Regulations 2 CFR 200.303 Title 34, Subtitle B, Chapter VI, Part 674.19 requires that in administering its Federal Perkins Loan program, an institution shall establish and maintain an internal control system of checks and balances that ensures that no office can both authorize payments and disburse funds to students. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party service is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicer’s most recent Title IV compliance audit. Condition: The College utilizes a third-party service provider for Perkins Loan servicing. Federal regulations require the institution to perform due diligence on the third-party servicer to ensure they are following federal regulations. The College did not perform their due diligence for fiscal year 2023. Context: The due diligence typically performed by the College is the review of the third-party servicer’s compliance report. However, the third-party servicer was delated in having this report issued. The College did not have an alternate plan for performing due diligence over the third-party servicer. Questioned costs: None. Cause: The third-party servicer did not have their Title IV compliance audit report completed for the year ending June 30, 2023, so that the College could perform their required due diligence on the third-party servicer and the College did not have an alternate plan established. Effect: The College did not perform due diligence to ensure that the third-party service is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Repeat Finding: No Recommendation: We recommend the College implement a procedure with the third-party servicer to ensure that their Title IV compliance report is completed timely or develop other due diligence procedures to meet the federal regulations. Views of responsible officials and management’s response: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program Title: Education Stabilization Fund Assistance Listing Number: 84.425F Federal Award Identification Number and Year: P425F203030; award year 2020-21 Award Period: July 01, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. There are three components to reporting for the Higher Education Emergency Relief Fund (HEERF): 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. Condition: During our testing of HEERF reporting requirements on the System, we noted one of the three quarterly reports tested for Granite State College was published to the College’s website outside of the 10-day timeframe requirement. Context: The College’s policies and procedures did not successfully track the compliance to reporting requirements, specifically the timely submission of the reports to the College’s website. Cause: The policies and procedures of the College did not ensure that grant reporting compliance requirements were timely met. Questioned Costs: None Possible Asserted Effect: Third parties do not have timely access to funding and expenditure information. Repeat Finding: Yes, 2022-001
Finding Reference Number: 2023-001 Student Financial Aid Cluster: Federal Direct Student Loans (Assistance Listing 84.268) Federal Award Year: 2023 U.S. Department of Education Compliance Requirement: Eligibility Type of Finding: Significant Deficiency and Noncompliance Prior Year Finding: N/A Statistically Valid Sample: No Criteria Under 34 CFR 685.203(d) and (e) aggregate loan limits for Direct Subsidized Loans and Direct Unsubidized Loans are established, outlining a borrowers maximum allowable outstanding loan debt, excluding capitalized interest. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over the eligibility process, we identified 1 out of 40 instances where the student was awarded a federal direct loan and the maximum total aggregate outstanding loan debt as a result of the award was exceeded by $2,500. Cause The cause of the condition found was related to a student that had a C Flag and a comment code related to loan limits. When the College cleared the C Flag, College did not verify the student’s outstanding loan balance through the National student Loan Data System (NSLDS) as required by the College’s internal policies and procedures. Instead, the College reviewed the student’s aggregate loan balance within Colleague, the College’s internal system. Possible Asserted Effect The effect of the condition found is that the student received a federal direct loan that exceeded the aggregate loan limit. Questioned Costs $2,500 Recommendation We recommend that the College review its existing internal controls surrounding the clearance of C-Flags to ensure that NSLDS is reviewed prior to clearing the C-Flag to ensure that students will not be awarded a direct loan that would result in the maximum aggregate limit being exceeded. View of Responsible Officials The College concurs. The College runs weekly reports from the Ellucian Colleague system to identify students with CFlags and comment codes for loan limits. While reviewing the report if a student has comment codes for loan limits, the staff member running the reports will research and assign the issue to the appropriate Financial Aid Assistant Director to adjust the loan accordingly. For the student identified, the loan limit was calculated incorrectly in the Colleague system and the student was awarded a federal direct loan that exceeded their maximum total aggregate outstanding loan debt by $2,500. It is our belief this was not an issue of identifying the CFLAG, it was human error with reduction of loans. To correct the issue this student was awarded institutional aid to cover the amount loans were reduced. To confirm that no other student’s were impacted by a similar issue, a CFLAG full audit report was run for 2023. The report was reviewed to determine if there were any other students that had an aggregate loan limit issues. It was confirmed that this student was the only issue.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report for the Allowable Costs/Cost Principles. The prior audit finding number was 2021-003. Condition and Context Food Service - Expenditures 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 related to the payroll and payroll benefit costs charged to the grant. The School Corporation's process was to charge food service payroll and related benefits to a Foodservice Payroll fund, and then transfer funds from the Foodservice (School Lunch) fund to reimburse the Foodservice Payroll fund the following month. The amounts transferred from the School Lunch fund to the Foodservice Payroll fund did not always agree to the actual payroll paid. Six of the eleven transfers made during the audit period did not agree to actual payroll paid. This resulted in $144,679, in excess of actual payroll paid, being transferred from the School Lunch fund to the Foodservice Payroll fund. The transfers that were not properly supported were considered questioned costs. Food Service - Revenues 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 related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. The School Corporation's process was to receipt the School Lunch reimbursement received into a Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. One individual receipted the monthly reimbursement into the School Lunch fund, there was no documentation that an oversight or review process had been established to ensure the receipt was posted accurately. The April 2022 reimbursement of $158,679 was receipted into the Food Service Federal Reimbursement fund on July 7, 2022. The reimbursement had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from non-program foods . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls was not 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 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, unsupported costs were transferred out of the Foodservice fund and reimbursements were not timely receipted into the fund. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $144,679 were identified as explained in the Condition and Context. 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 costs transferred out are adequately documented and that reimbursements are timely receipted. 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: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit. The prior audit finding number was 2021-004. 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 related to a child receiving meals that was a direct certified or that submitted an electronic application. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the school, institution, or sponsor may obtain the information directly from the State or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. The Food Service Director ran the direct certification report weekly and uploaded it to the school lunch point-of-sale system. The Food Service Director verified the information was imported correctly by comparing reports from the point-of-sale system to the upload file. This process continued weekly; however, there was no documentation of the review to ensure the upload had imported correctly and students' status was updated accordingly. In addition, the School Corporation used a food software program to store, manage, and automatically make eligibility determinations dependent upon the information entered into the software by the parents, guardians, or school lunch employees. The School Corporation did not have a proper system of oversight or review to ensure that the federal income guidelines entered into the software program were accurate for fiscal year 2022-2023. The lack of internal controls was isolated to direct certifications and electronic applications during the 2022-2023 school year. 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 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. 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: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit. The prior audit finding number was 2021-004. 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 related to a child receiving meals that was a direct certified or that submitted an electronic application. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the school, institution, or sponsor may obtain the information directly from the State or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. The Food Service Director ran the direct certification report weekly and uploaded it to the school lunch point-of-sale system. The Food Service Director verified the information was imported correctly by comparing reports from the point-of-sale system to the upload file. This process continued weekly; however, there was no documentation of the review to ensure the upload had imported correctly and students' status was updated accordingly. In addition, the School Corporation used a food software program to store, manage, and automatically make eligibility determinations dependent upon the information entered into the software by the parents, guardians, or school lunch employees. The School Corporation did not have a proper system of oversight or review to ensure that the federal income guidelines entered into the software program were accurate for fiscal year 2022-2023. The lack of internal controls was isolated to direct certifications and electronic applications during the 2022-2023 school year. 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 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. 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: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit. The prior audit finding number was 2021-004. 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 related to a child receiving meals that was a direct certified or that submitted an electronic application. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the school, institution, or sponsor may obtain the information directly from the State or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. The Food Service Director ran the direct certification report weekly and uploaded it to the school lunch point-of-sale system. The Food Service Director verified the information was imported correctly by comparing reports from the point-of-sale system to the upload file. This process continued weekly; however, there was no documentation of the review to ensure the upload had imported correctly and students' status was updated accordingly. In addition, the School Corporation used a food software program to store, manage, and automatically make eligibility determinations dependent upon the information entered into the software by the parents, guardians, or school lunch employees. The School Corporation did not have a proper system of oversight or review to ensure that the federal income guidelines entered into the software program were accurate for fiscal year 2022-2023. The lack of internal controls was isolated to direct certifications and electronic applications during the 2022-2023 school year. 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 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. 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: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. 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 related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not 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 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, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 Listing Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Reporting, Special Tests and Provisions - Assessment System Security 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. Eligibility Data from the School Corporation's student software system was uploaded to the Indiana Department of Education's (IDOE) Data Exchange System. Enrollment and poverty information for the School Corporation was then abstracted by the IDOE from the Data Exchange System into the Title I application. The School Corporation had not designed or implemented an oversight or review process to ensure that the data was accurately uploaded by the IDOE into the Title I application. Reporting The School Corporation was required to submit final expenditure reports to the IDOE on or before December 31, after the September 30 deadline for encumbering prior school year funds. During the audit period, the School Corporation had final expenditure reports due for the S010A200014 and the S010A210014 grant awards. A single employee prepared and submitted the final reports without a documented review or oversight process in place to prevent, or detect and correct, errors. Special Tests and Provisions - Assessment System Security The School Corporation had a process in place to ensure that the assessment system security policy was reviewed and updated, if applicable, each year per the assessment security handbook. However, there was no documentation of that process to ensure that the policy was being reviewed. The lack of internal controls was systemic 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 was not designed by management of the School Corporation which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. 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 Listing Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Reporting, Special Tests and Provisions - Assessment System Security 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. Eligibility Data from the School Corporation's student software system was uploaded to the Indiana Department of Education's (IDOE) Data Exchange System. Enrollment and poverty information for the School Corporation was then abstracted by the IDOE from the Data Exchange System into the Title I application. The School Corporation had not designed or implemented an oversight or review process to ensure that the data was accurately uploaded by the IDOE into the Title I application. Reporting The School Corporation was required to submit final expenditure reports to the IDOE on or before December 31, after the September 30 deadline for encumbering prior school year funds. During the audit period, the School Corporation had final expenditure reports due for the S010A200014 and the S010A210014 grant awards. A single employee prepared and submitted the final reports without a documented review or oversight process in place to prevent, or detect and correct, errors. Special Tests and Provisions - Assessment System Security The School Corporation had a process in place to ensure that the assessment system security policy was reviewed and updated, if applicable, each year per the assessment security handbook. However, there was no documentation of that process to ensure that the policy was being reviewed. The lack of internal controls was systemic 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 was not designed by management of the School Corporation which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. 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 - Allowable Costs/Cost Principles 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): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion 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. Due to the lack of internal controls, the School Corporation had the following errors for payroll expenditures: 1. Two employees' gross payroll and benefits were reimbursed from the grant; however, their duties were not for the Title I program which resulted in questioned costs of $61,266. 2. One employee's gross payroll was split-funded between Title I and another School Corporation fund. There were no time and effort records to substantiate the gross payroll amount charged to the grant which resulted in questioned costs of $60,121. 3. One employee was overpaid per the contracted amount which resulted in questioned costs of $8,945. The School Corporation determined in May 2023 that the two employees' payroll and benefits were being charged to the grant when they should not have been and corrected the issue in its financial software system, making the correction back to July 1, 2022. The School Corporation, however, failed to notify the Indiana Department of Education that the School Corporation had been over reimbursed. The School Corporation received reimbursement for several gross payroll expenditures from one Title I grant fund. The School Corporation later made journal entries to move these gross payroll expenditures to another grant fund and received reimbursement again for those same gross payroll expenditures. As the School Corporation received reimbursement twice for the same gross payroll expenditures, the second reimbursement of the expenditures was considered questioned costs. The total amount of questions costs was $99,117. Total known questioned costs of $229,449 as detailed above represent 25 percent of the total federal expenditures for Title I. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 34 CFR 76.700 states: "A State and a subgrantee shall comply with § 76.500, the State plan, applicable statutes, regulations, and approved applications, and shall use Federal funds in accordance with those statutes, regulations, plan, and applications." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs were reimbursed that were not for Title I purposes, not supported by time and effort logs, overpaid, and reimbursed twice for the same expenditures. In addition, overpayment of reimbursements received were retained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $229,449 were identified in the Condition and Context. 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 - Allowable Costs/Cost Principles 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): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion 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. Due to the lack of internal controls, the School Corporation had the following errors for payroll expenditures: 1. Two employees' gross payroll and benefits were reimbursed from the grant; however, their duties were not for the Title I program which resulted in questioned costs of $61,266. 2. One employee's gross payroll was split-funded between Title I and another School Corporation fund. There were no time and effort records to substantiate the gross payroll amount charged to the grant which resulted in questioned costs of $60,121. 3. One employee was overpaid per the contracted amount which resulted in questioned costs of $8,945. The School Corporation determined in May 2023 that the two employees' payroll and benefits were being charged to the grant when they should not have been and corrected the issue in its financial software system, making the correction back to July 1, 2022. The School Corporation, however, failed to notify the Indiana Department of Education that the School Corporation had been over reimbursed. The School Corporation received reimbursement for several gross payroll expenditures from one Title I grant fund. The School Corporation later made journal entries to move these gross payroll expenditures to another grant fund and received reimbursement again for those same gross payroll expenditures. As the School Corporation received reimbursement twice for the same gross payroll expenditures, the second reimbursement of the expenditures was considered questioned costs. The total amount of questions costs was $99,117. Total known questioned costs of $229,449 as detailed above represent 25 percent of the total federal expenditures for Title I. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 34 CFR 76.700 states: "A State and a subgrantee shall comply with § 76.500, the State plan, applicable statutes, regulations, and approved applications, and shall use Federal funds in accordance with those statutes, regulations, plan, and applications." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs were reimbursed that were not for Title I purposes, not supported by time and effort logs, overpaid, and reimbursed twice for the same expenditures. In addition, overpayment of reimbursements received were retained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $229,449 were identified in the Condition and Context. 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) S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion 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. Earmarking A portion of the School Corporation's Title I allocation was required to be set aside for parental involvement and 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 and Payroll) 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 its computation were derived from the 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 payroll and vendor were posted to the correct fund, account, and object codes. Level of Effort - Maintenance of Effort The financial information submitted by the School Corporation to the IDOE through the Form 9 report, was used by the IDOE to calculate the School Corporation's Level of Effort - Maintenance of Effort. There was an oversight or review process at the School Corporation level over vendor and payroll expenditures; however, the oversight and review process was not documented to ensure the data used to complete the Form 9 was reported accurately in the correct fund, account, and object code. Level of Effort - Supplementing Not Supplanting The School Corporation may use Title I funds only to supplement the funds that would, in the absence of the Title I funds, be made available from state and local sources for the education of students participating in a Title I program. To demonstrate compliance, the School Corporation must demonstrate that it has a methodology (through written procedures) and followed the methodology to allocate state and local funds to each Title I school. They also must ensure that the Title I school received all the state and local funds it would otherwise receive if it were not receiving Title I funds. The School Corporation did not provide written procedures for the methodology used for the FY 2021 and FY 2022 Title I applications. The School Corporation had not developed written procedures for methodology; therefore, we were not able to determine how the School Corporation allocated funding per each school. The lack of internal controls and noncompliance were systemic 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 6313(c)(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." 20 USC 6691 states: "Funds made available under this subchapter shall be used to supplement, and not supplant, non-Federal funds that would otherwise be used for activities authorized under this subchapter." Cause A proper system of internal controls was not designed by management of the School Corporation which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation was not maintained to ensure the obligation to service homeless students was met or unmet. In addition, a written methodology of the allocation of state and local funds to each Title I school was not provided. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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.