U.S. Department of Agriculture Passed through Michigan Department of Education Child Nutrition Cluster ? COVID-19 School Breakfast Program #10.553, National School Lunch Program #10.555, Summer Food Service Program for Children #10.559 #2022-002: Material Weakness in Controls over Compliance: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding #2021-002 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management and procurement do not meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: Grand Rapids Christian Schools has written policies and procedures contained within the Schools? Policy Manual and the Accounting Procedures Manual that apply to the operations and administration of the Schools. Certain of these policies and procedures cover activities relevant to the federal awards programs and address some of the direct and material compliance matters important to the major federal program. However, the Schools has not adopted the policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that apply to its federal programs. Recommendations: Grand Rapids Christian Schools should adopt the following written policies as required by Uniform Guidance: ?Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ?Identification - Title of the award, federal assistance number ?Complete disclosure of accurate and current financial results of each federal award ?Source and application of funds for federal award activity ?Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability to access the records (?200.333 - ?200.337) ?Written procedure to implement cash management requirements (see below) ?Written procedures for determining the allowability of costs (see below) ?Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ?Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the School ensures compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ?Procurement Standards (2 CFR 200.317 ? 200.326) The School must have and use documented procurement procedures, including written standards that promote full and open vendor competition. Written conflict of interest standards must cover the actions of employees engaged in the selection, award and administration of contracts. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Views of Responsible Officials and Planned Corrective Actions: ?Grand Rapids Christian Schools follows procurement and record retention standards provided by the USDA. ?GRCS does not have actual written policies and procedures for Financial Management, Cash Management, Allowable Costs, and Procurement Standards, but do have practices in place to follow USDA guidelines. In the case of cash management, the only location that takes cash is GRCHS. In that instance, along with Meal Magic, cash registers are zeroed out and balanced to Meal Magic and cash deposits are made daily. ?GRCS Business Office will work with the Food Service Director to begin formulating written policies and procedures specific to Grand Rapids Christian Schools. GRCS will utilize the resources from Uniform Guidance and the Code of Federal Regulations (CFR) to develop policies that are compliant with those requirements prior to June 30, 2023.
U.S. Department of Agriculture Passed through Michigan Department of Education Child Nutrition Cluster ? COVID-19 School Breakfast Program #10.553, National School Lunch Program #10.555, Summer Food Service Program for Children #10.559 #2022-002: Material Weakness in Controls over Compliance: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding #2021-002 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management and procurement do not meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: Grand Rapids Christian Schools has written policies and procedures contained within the Schools? Policy Manual and the Accounting Procedures Manual that apply to the operations and administration of the Schools. Certain of these policies and procedures cover activities relevant to the federal awards programs and address some of the direct and material compliance matters important to the major federal program. However, the Schools has not adopted the policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that apply to its federal programs. Recommendations: Grand Rapids Christian Schools should adopt the following written policies as required by Uniform Guidance: ?Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ?Identification - Title of the award, federal assistance number ?Complete disclosure of accurate and current financial results of each federal award ?Source and application of funds for federal award activity ?Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability to access the records (?200.333 - ?200.337) ?Written procedure to implement cash management requirements (see below) ?Written procedures for determining the allowability of costs (see below) ?Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ?Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the School ensures compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ?Procurement Standards (2 CFR 200.317 ? 200.326) The School must have and use documented procurement procedures, including written standards that promote full and open vendor competition. Written conflict of interest standards must cover the actions of employees engaged in the selection, award and administration of contracts. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Views of Responsible Officials and Planned Corrective Actions: ?Grand Rapids Christian Schools follows procurement and record retention standards provided by the USDA. ?GRCS does not have actual written policies and procedures for Financial Management, Cash Management, Allowable Costs, and Procurement Standards, but do have practices in place to follow USDA guidelines. In the case of cash management, the only location that takes cash is GRCHS. In that instance, along with Meal Magic, cash registers are zeroed out and balanced to Meal Magic and cash deposits are made daily. ?GRCS Business Office will work with the Food Service Director to begin formulating written policies and procedures specific to Grand Rapids Christian Schools. GRCS will utilize the resources from Uniform Guidance and the Code of Federal Regulations (CFR) to develop policies that are compliant with those requirements prior to June 30, 2023.
U.S. Department of Agriculture Passed through Michigan Department of Education Child Nutrition Cluster ? COVID-19 School Breakfast Program #10.553, National School Lunch Program #10.555, Summer Food Service Program for Children #10.559 #2022-002: Material Weakness in Controls over Compliance: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding #2021-002 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management and procurement do not meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: Grand Rapids Christian Schools has written policies and procedures contained within the Schools? Policy Manual and the Accounting Procedures Manual that apply to the operations and administration of the Schools. Certain of these policies and procedures cover activities relevant to the federal awards programs and address some of the direct and material compliance matters important to the major federal program. However, the Schools has not adopted the policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that apply to its federal programs. Recommendations: Grand Rapids Christian Schools should adopt the following written policies as required by Uniform Guidance: ?Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ?Identification - Title of the award, federal assistance number ?Complete disclosure of accurate and current financial results of each federal award ?Source and application of funds for federal award activity ?Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability to access the records (?200.333 - ?200.337) ?Written procedure to implement cash management requirements (see below) ?Written procedures for determining the allowability of costs (see below) ?Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ?Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the School ensures compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ?Procurement Standards (2 CFR 200.317 ? 200.326) The School must have and use documented procurement procedures, including written standards that promote full and open vendor competition. Written conflict of interest standards must cover the actions of employees engaged in the selection, award and administration of contracts. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Views of Responsible Officials and Planned Corrective Actions: ?Grand Rapids Christian Schools follows procurement and record retention standards provided by the USDA. ?GRCS does not have actual written policies and procedures for Financial Management, Cash Management, Allowable Costs, and Procurement Standards, but do have practices in place to follow USDA guidelines. In the case of cash management, the only location that takes cash is GRCHS. In that instance, along with Meal Magic, cash registers are zeroed out and balanced to Meal Magic and cash deposits are made daily. ?GRCS Business Office will work with the Food Service Director to begin formulating written policies and procedures specific to Grand Rapids Christian Schools. GRCS will utilize the resources from Uniform Guidance and the Code of Federal Regulations (CFR) to develop policies that are compliant with those requirements prior to June 30, 2023.
U.S. Department of Agriculture Passed through Michigan Department of Education Child Nutrition Cluster ? COVID-19 School Breakfast Program #10.553, National School Lunch Program #10.555, Summer Food Service Program for Children #10.559 #2022-002: Material Weakness in Controls over Compliance: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding #2021-002 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management and procurement do not meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: Grand Rapids Christian Schools has written policies and procedures contained within the Schools? Policy Manual and the Accounting Procedures Manual that apply to the operations and administration of the Schools. Certain of these policies and procedures cover activities relevant to the federal awards programs and address some of the direct and material compliance matters important to the major federal program. However, the Schools has not adopted the policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that apply to its federal programs. Recommendations: Grand Rapids Christian Schools should adopt the following written policies as required by Uniform Guidance: ?Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ?Identification - Title of the award, federal assistance number ?Complete disclosure of accurate and current financial results of each federal award ?Source and application of funds for federal award activity ?Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability to access the records (?200.333 - ?200.337) ?Written procedure to implement cash management requirements (see below) ?Written procedures for determining the allowability of costs (see below) ?Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ?Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the School ensures compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ?Procurement Standards (2 CFR 200.317 ? 200.326) The School must have and use documented procurement procedures, including written standards that promote full and open vendor competition. Written conflict of interest standards must cover the actions of employees engaged in the selection, award and administration of contracts. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Views of Responsible Officials and Planned Corrective Actions: ?Grand Rapids Christian Schools follows procurement and record retention standards provided by the USDA. ?GRCS does not have actual written policies and procedures for Financial Management, Cash Management, Allowable Costs, and Procurement Standards, but do have practices in place to follow USDA guidelines. In the case of cash management, the only location that takes cash is GRCHS. In that instance, along with Meal Magic, cash registers are zeroed out and balanced to Meal Magic and cash deposits are made daily. ?GRCS Business Office will work with the Food Service Director to begin formulating written policies and procedures specific to Grand Rapids Christian Schools. GRCS will utilize the resources from Uniform Guidance and the Code of Federal Regulations (CFR) to develop policies that are compliant with those requirements prior to June 30, 2023.
U.S. Department of Agriculture Passed through Michigan Department of Education Child Nutrition Cluster ? COVID-19 School Breakfast Program #10.553, National School Lunch Program #10.555, Summer Food Service Program for Children #10.559 #2022-002: Material Weakness in Controls over Compliance: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding #2021-002 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management and procurement do not meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: Grand Rapids Christian Schools has written policies and procedures contained within the Schools? Policy Manual and the Accounting Procedures Manual that apply to the operations and administration of the Schools. Certain of these policies and procedures cover activities relevant to the federal awards programs and address some of the direct and material compliance matters important to the major federal program. However, the Schools has not adopted the policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that apply to its federal programs. Recommendations: Grand Rapids Christian Schools should adopt the following written policies as required by Uniform Guidance: ?Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ?Identification - Title of the award, federal assistance number ?Complete disclosure of accurate and current financial results of each federal award ?Source and application of funds for federal award activity ?Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability to access the records (?200.333 - ?200.337) ?Written procedure to implement cash management requirements (see below) ?Written procedures for determining the allowability of costs (see below) ?Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ?Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the School ensures compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ?Procurement Standards (2 CFR 200.317 ? 200.326) The School must have and use documented procurement procedures, including written standards that promote full and open vendor competition. Written conflict of interest standards must cover the actions of employees engaged in the selection, award and administration of contracts. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Views of Responsible Officials and Planned Corrective Actions: ?Grand Rapids Christian Schools follows procurement and record retention standards provided by the USDA. ?GRCS does not have actual written policies and procedures for Financial Management, Cash Management, Allowable Costs, and Procurement Standards, but do have practices in place to follow USDA guidelines. In the case of cash management, the only location that takes cash is GRCHS. In that instance, along with Meal Magic, cash registers are zeroed out and balanced to Meal Magic and cash deposits are made daily. ?GRCS Business Office will work with the Food Service Director to begin formulating written policies and procedures specific to Grand Rapids Christian Schools. GRCS will utilize the resources from Uniform Guidance and the Code of Federal Regulations (CFR) to develop policies that are compliant with those requirements prior to June 30, 2023.
U.S. Department of Agriculture Passed through Michigan Department of Education Child Nutrition Cluster ? COVID-19 School Breakfast Program #10.553, National School Lunch Program #10.555, Summer Food Service Program for Children #10.559 #2022-002: Material Weakness in Controls over Compliance: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding #2021-002 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management and procurement do not meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: Grand Rapids Christian Schools has written policies and procedures contained within the Schools? Policy Manual and the Accounting Procedures Manual that apply to the operations and administration of the Schools. Certain of these policies and procedures cover activities relevant to the federal awards programs and address some of the direct and material compliance matters important to the major federal program. However, the Schools has not adopted the policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that apply to its federal programs. Recommendations: Grand Rapids Christian Schools should adopt the following written policies as required by Uniform Guidance: ?Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ?Identification - Title of the award, federal assistance number ?Complete disclosure of accurate and current financial results of each federal award ?Source and application of funds for federal award activity ?Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability to access the records (?200.333 - ?200.337) ?Written procedure to implement cash management requirements (see below) ?Written procedures for determining the allowability of costs (see below) ?Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ?Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the School ensures compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ?Procurement Standards (2 CFR 200.317 ? 200.326) The School must have and use documented procurement procedures, including written standards that promote full and open vendor competition. Written conflict of interest standards must cover the actions of employees engaged in the selection, award and administration of contracts. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Views of Responsible Officials and Planned Corrective Actions: ?Grand Rapids Christian Schools follows procurement and record retention standards provided by the USDA. ?GRCS does not have actual written policies and procedures for Financial Management, Cash Management, Allowable Costs, and Procurement Standards, but do have practices in place to follow USDA guidelines. In the case of cash management, the only location that takes cash is GRCHS. In that instance, along with Meal Magic, cash registers are zeroed out and balanced to Meal Magic and cash deposits are made daily. ?GRCS Business Office will work with the Food Service Director to begin formulating written policies and procedures specific to Grand Rapids Christian Schools. GRCS will utilize the resources from Uniform Guidance and the Code of Federal Regulations (CFR) to develop policies that are compliant with those requirements prior to June 30, 2023.
FINDING 2022-003 Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Number and Year (or Other Identifying Numbers): 19611-042-PN01, 20611-042-PN01, 21611-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a)Establish and maintain effective internal control over Federal award that provides reasonable assurancethat the non-Federal entity is managing the Federal awards in compliance with Federal statutes,regulations, and the terms and conditions of the Federal award. These internal controls should be incompliance with guidance in 'Standards for Internal Control in the Federal Government' issued by theComptroller General of the United States or the 'Internal Control Integrated Framework', issued by theCommittee 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: ? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). The School Corporation did not have adequate internal controls in place to ensure that the Cooperative complied with the earmarking requirements. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 19611-042-PN01 and 20611-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to IDOE as required. The School Corporation?s minimum earmarking requirements for the 19611-042-PN01 and 20611-042-PN01 grant awards were $1,095 and $1,791, respectively. The lack of internal controls and noncompliance were isolated to the 19611-042-PN01 and 20611-042- Identification of repeat finding: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan
FINDING 2022-003 Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Number and Year (or Other Identifying Numbers): 19611-042-PN01, 20611-042-PN01, 21611-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a)Establish and maintain effective internal control over Federal award that provides reasonable assurancethat the non-Federal entity is managing the Federal awards in compliance with Federal statutes,regulations, and the terms and conditions of the Federal award. These internal controls should be incompliance with guidance in 'Standards for Internal Control in the Federal Government' issued by theComptroller General of the United States or the 'Internal Control Integrated Framework', issued by theCommittee 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: ? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). The School Corporation did not have adequate internal controls in place to ensure that the Cooperative complied with the earmarking requirements. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 19611-042-PN01 and 20611-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to IDOE as required. The School Corporation?s minimum earmarking requirements for the 19611-042-PN01 and 20611-042-PN01 grant awards were $1,095 and $1,791, respectively. The lack of internal controls and noncompliance were isolated to the 19611-042-PN01 and 20611-042- Identification of repeat finding: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan
Finding 2022-003: Payroll Records Documentation Assistance Listing Number and Title: 59.075 Shuttered Venue Operators Grant Program Federal Agency: Small Business Administration Federal Award Number: SBAHQ21SV004136 Grant Period: 7/12/2021 through 6/30/2022 Criteria Costs charged to U.S. Federal Government programs must adequately documented (CFR 200.403 (h)). Conditions Documentation of payroll expenses were not always complete, including documentation of employee payrates, timesheets, and the distribution of costs to general ledger accounts. Cause The Organization?s procedures surrounding payroll tend to be less formal than the rules of the Uniform Guidance stipulate. Effect The risk of incurring costs not allowed by federal grants is moderate. Context The fiscal year ended June 30, 2022 was the first year the Organization was required to have an audit conducted under the rules of the Uniform Guidance. Recommendation Payroll processing procedures should be strengthened.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus (COVID-19). During fiscal year 2020-2021, 2 of 40 vendor claims tested and 4 of 13 payroll claims tested paid for supplies, services, and payroll without an explanation for how the expenditures prevented, prepared for, or responded to COVID-19. The total of unsupported expenditures for DJ services, gaming chairs, and additional payroll and stipends was $15,787. These amounts were considered questioned costs. 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. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." Public Law 116-136, Section 18003(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational H. R. 748?287 agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students? academic progress and assist educators in meeting students? academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and non-mechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e) states: "USES OF FUNDS.?A local educational agency that receives funds under this section? (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can H. R. 1319?18 continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. H. R. 1319?19 (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause The School Corporation's management had not developed a system of internal control that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs Known questioned costs of $15,787 were identified as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish internal controls to ensure that documentation will be maintained and made available for audit related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus (COVID-19). During fiscal year 2020-2021, 2 of 40 vendor claims tested and 4 of 13 payroll claims tested paid for supplies, services, and payroll without an explanation for how the expenditures prevented, prepared for, or responded to COVID-19. The total of unsupported expenditures for DJ services, gaming chairs, and additional payroll and stipends was $15,787. These amounts were considered questioned costs. 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. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." Public Law 116-136, Section 18003(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational H. R. 748?287 agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students? academic progress and assist educators in meeting students? academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and non-mechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e) states: "USES OF FUNDS.?A local educational agency that receives funds under this section? (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can H. R. 1319?18 continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. H. R. 1319?19 (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause The School Corporation's management had not developed a system of internal control that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs Known questioned costs of $15,787 were identified as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish internal controls to ensure that documentation will be maintained and made available for audit related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus (COVID-19). During fiscal year 2020-2021, 2 of 40 vendor claims tested and 4 of 13 payroll claims tested paid for supplies, services, and payroll without an explanation for how the expenditures prevented, prepared for, or responded to COVID-19. The total of unsupported expenditures for DJ services, gaming chairs, and additional payroll and stipends was $15,787. These amounts were considered questioned costs. 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. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." Public Law 116-136, Section 18003(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational H. R. 748?287 agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students? academic progress and assist educators in meeting students? academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and non-mechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e) states: "USES OF FUNDS.?A local educational agency that receives funds under this section? (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can H. R. 1319?18 continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. H. R. 1319?19 (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause The School Corporation's management had not developed a system of internal control that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs Known questioned costs of $15,787 were identified as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish internal controls to ensure that documentation will be maintained and made available for audit related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus (COVID-19). During fiscal year 2020-2021, 2 of 40 vendor claims tested and 4 of 13 payroll claims tested paid for supplies, services, and payroll without an explanation for how the expenditures prevented, prepared for, or responded to COVID-19. The total of unsupported expenditures for DJ services, gaming chairs, and additional payroll and stipends was $15,787. These amounts were considered questioned costs. 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. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." Public Law 116-136, Section 18003(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational H. R. 748?287 agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students? academic progress and assist educators in meeting students? academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and non-mechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e) states: "USES OF FUNDS.?A local educational agency that receives funds under this section? (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can H. R. 1319?18 continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. H. R. 1319?19 (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause The School Corporation's management had not developed a system of internal control that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs Known questioned costs of $15,787 were identified as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish internal controls to ensure that documentation will be maintained and made available for audit related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2 C.F.R. ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR 200.403 (g) which provides that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. Further, 2 C.F.R ? 200.303(a) provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The School District has established approved rates of pay for employees. Further, timesheets and/or single funded certificates was used to document time and effort of personnel relating to Title I activities. However, in the current year the employees were to be moved from the Title I program and did not complete timesheets/single funded certificates, which resulted in an estimated amount of $127,443 in Title I expenditures that could not be supported as related to Title I activities. As such, the $127,443 from the Title I Fund AL # 84.010 is considered a questioned cost. Failure to make corrections to employess and maintain the appropriate time and effort documentation resulted in questioned costs and can result in reduced future federal funding or the requirement to repay the Ohio Department of Education. The Treasurer should ensure all employees charging salaries and benefits to federal grants are allowable under the current year program and maintain the appropriate documentation supporting the time spent on the grant, in accordance with the School District?s policy.
2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR ?200.403(h) requires costs, in order to be allowable under Federal awards, must be incurred during the approved budget period. The District expended $105,192 from the Education Stabilization Fund, American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER, AL#84.425U), for costs which were incurred July 1, 2020 to March 13, 2020. These costs were incurred outside the budget period of March 13, 2020 through September 30, 2024. These expenditures which were originally charged to the General Fund and the Athletic Fund in the amounts of $73,471 and $31,721, respectively, and subsequently reallocated to the ARP ESSER Fund are not allowable under the terms of the grant awxard and 2 CFR 200.403(h). 2 CFR ?200.403(a) and (b) requires costs, in order to be allowable under Federal awards, to be necessary and reasonable for the performance of the Federal award and conform to any limitations or exclusions set forth in the Federal award as to types or amounts of cost items. ARP ESSER funds may be used to support a wide range of activities, including activities that are necessary to maintain the operation of and continuity of services in the District and continuing to employ existing staff of the District. 2 CFR ?200.403(a) and (b) requires costs, in order to be allowable under Federal awards, to be necessary and reasonable for the performance of the Federal award and conform to any limitations or exclusions set forth in the Federal award as to types or amounts of cost items. ARP ESSER funds may be used to support a wide range of activities, including activities that are necessary to maintain the operation of and continuity of services in the District and continuing to employ existing staff of the District. Due to deficiencies in internal policies and procedures over compliance, the District expended $105,192 which was not allowed under the terms of the ESSER III grant award and 2 CFR 200.403. The accompanying financial statements were adjusted for this error. Expenditures were increased in the General Fund by $73,471 and the Athletic Fund by $31,721 and decreased in the Education Stabilization Fund, ARP ESSER by $105, 192. The District was able to provide expenditure in the amount of $105,192 from the General Fund which were substituted for these funds that were determined to be unallowable To help avoid potential loss or decrease of federal funding, the District should establish and implement policies and procedures to verify that all expenditures made from federal funds are necessary, reasonable and fully supported by underlying documentation. Failure to do so could result in unallowable expenditures being paid out of grant funds and potential costs in future audits.
2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR ?200.403(h) requires costs, in order to be allowable under Federal awards, must be incurred during the approved budget period. The District expended $105,192 from the Education Stabilization Fund, American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER, AL#84.425U), for costs which were incurred July 1, 2020 to March 13, 2020. These costs were incurred outside the budget period of March 13, 2020 through September 30, 2024. These expenditures which were originally charged to the General Fund and the Athletic Fund in the amounts of $73,471 and $31,721, respectively, and subsequently reallocated to the ARP ESSER Fund are not allowable under the terms of the grant awxard and 2 CFR 200.403(h). 2 CFR ?200.403(a) and (b) requires costs, in order to be allowable under Federal awards, to be necessary and reasonable for the performance of the Federal award and conform to any limitations or exclusions set forth in the Federal award as to types or amounts of cost items. ARP ESSER funds may be used to support a wide range of activities, including activities that are necessary to maintain the operation of and continuity of services in the District and continuing to employ existing staff of the District. 2 CFR ?200.403(a) and (b) requires costs, in order to be allowable under Federal awards, to be necessary and reasonable for the performance of the Federal award and conform to any limitations or exclusions set forth in the Federal award as to types or amounts of cost items. ARP ESSER funds may be used to support a wide range of activities, including activities that are necessary to maintain the operation of and continuity of services in the District and continuing to employ existing staff of the District. Due to deficiencies in internal policies and procedures over compliance, the District expended $105,192 which was not allowed under the terms of the ESSER III grant award and 2 CFR 200.403. The accompanying financial statements were adjusted for this error. Expenditures were increased in the General Fund by $73,471 and the Athletic Fund by $31,721 and decreased in the Education Stabilization Fund, ARP ESSER by $105, 192. The District was able to provide expenditure in the amount of $105,192 from the General Fund which were substituted for these funds that were determined to be unallowable To help avoid potential loss or decrease of federal funding, the District should establish and implement policies and procedures to verify that all expenditures made from federal funds are necessary, reasonable and fully supported by underlying documentation. Failure to do so could result in unallowable expenditures being paid out of grant funds and potential costs in future audits.
FINDING 2022-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education - Grants to States, Special Education - Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (NEISEC). During fiscal year 2021-2022, the NEISEC operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the NEISEC. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the NEISEC complied with the earmarking requirements. The NEISEC did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The NEISEC did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. INDIANA STATE BOARD OF ACCOUNTS 18 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Non-Public Proportionate Share expenditures for the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . . " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education - Grants to States, Special Education - Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (NEISEC). During fiscal year 2021-2022, the NEISEC operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the NEISEC. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the NEISEC complied with the earmarking requirements. The NEISEC did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The NEISEC did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. INDIANA STATE BOARD OF ACCOUNTS 18 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Non-Public Proportionate Share expenditures for the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . . " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education - Grants to States, Special Education - Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (NEISEC). During fiscal year 2021-2022, the NEISEC operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the NEISEC. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the NEISEC complied with the earmarking requirements. The NEISEC did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The NEISEC did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. INDIANA STATE BOARD OF ACCOUNTS 18 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Non-Public Proportionate Share expenditures for the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . . " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 21611-053-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-005. Condition and Context The School Corporation is a member of the South LaPorte County Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-053-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. These were the amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-053-PN01 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 LAPORTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 21611-053-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-005. Condition and Context The School Corporation is a member of the South LaPorte County Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-053-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. These were the amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-053-PN01 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 LAPORTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 19 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 19 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 19 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Information on the federal program: Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Number and Year (or Other Identifying Numbers): 20611-042-PN01, 20619-042-PN01, 21611-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal 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: ? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to IDOE as required. The lack of internal controls and noncompliance were isolated to the 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Information on the federal program: Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Number and Year (or Other Identifying Numbers): 20611-042-PN01, 20619-042-PN01, 21611-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal 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: ? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to IDOE as required. The lack of internal controls and noncompliance were isolated to the 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Information on the federal program: Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Number and Year (or Other Identifying Numbers): 20611-042-PN01, 20619-042-PN01, 21611-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal 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: ? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to IDOE as required. The lack of internal controls and noncompliance were isolated to the 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Information on the federal program: Subject: Special Education Cluster - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Number and Year (or Other Identifying Numbers): 20611-042-PN01, 20619-042-PN01, 21611-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal 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: ? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to IDOE as required. The lack of internal controls and noncompliance were isolated to the 19611-042-PN01, 19619-042-PN01, 20611-042-PN01, 20619-042-PN01, 21611-042-PN01, 20619-042-PN01 grant awards. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish a system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on Federal Programs U.S. Department of Homeland Security ALN No. 97.036, Disaster Grants ? Public Assistance (Presidentially Declared Disasters); Award Number: 033-UECF5-00; Award Year: January 1, 2020 to July 1, 2022; Pass-Through Entity: State of Washington Military Department Emergency Medicine Division; Award Number: D20-368 Specific Requirements/Criteria Per CFR Part 200.403, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition During our testing of the internal controls and compliance over the Activities Allowed and Unallowed process, we noted controls that were designed to ensure that expenses related to the COVID-19 pandemic were actually incurred were ineffective in certain circumstances. To test the compliance of this process, we tested a total of 41 expense transactions to ensure the expense was incurred and attributable to coronavirus as per the terms and conditions of the grant agreement. Of the 41 expense transactions tested, 32 were related to the procurement of materials. We noted that for 1 of the 32 materials transactions tested, the reimbursement claimed was greater than the eligible coronavirus related expense. This difference was caused by the amount claimed for reimbursement for part of the transaction being based on an estimate of the materials to be received, but the amount of materials received was lower. The amount of costs associated with materials not received was included in the reimbursement request. The FEMA reimbursements associated with procurement of materials was $3,251,718 for the year ending June 30, 2022. Out of the 32 material transactions tested, the 1 transaction that was not supported by eligible costs was $37,665, resulting in likely questioned costs of $146,146. The sample was not intended to be, and was not, a statistically valid sample. Cause The above finding was caused by the control not being designed with sufficient precision to ensure a detail level of review was conducted to identify whether or not the materials claimed for reimbursement were based on actual incurred eligible coronavirus expenses. Effect The schedule of expenditures of federal awards is inappropriately stated as of June 30, 2022 because ineligible costs were charged to the program. Questioned Costs $37,665 Repeat Finding from Prior Year Yes ? Finding 2021-002 Recommendation We recommend that the Association implement procedures and policies to ensure that the amounts being claimed for reimbursement are based on actual expenditures incurred. Views of Responsible Officials and Planned Corrective Action Management agrees with the finding and recommendation. Internal controls will be strengthened in future periods to ensure that costs are incurred (receipt of goods/services) and payments are made prior to submitting a request for reimbursement. Ledger details for reimbursement requests will be filtered to exclude items not yet received or paid. The accounting team will review and pull supporting invoice and payment records to be reviewed by the Director of Finance prior to submission to ensure all expenditures have been paid prior to submitting a request for reimbursement.
U.S. Department of Education Higher Education Institutional Aid CFDA 84.031 Award Year 2022 Criteria or Specific Requirement - Allowable Costs. According to 2 CFR Section 200.403(b), allowable costs must conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Condition - The College charged faculty and staff wages unrelated to the Title V program to the grant during the fiscal year ended June 30, 2022. Questioned Costs - Grant Award Number: P031S190265 - 21. Error resulted in questioned costs of $34,056 awarded to the College. During review of the detailed listed of Title V revenue recorded, we identified certain expenses that did not appear consistent with the detailed federal grant schedule provided by management. Context - Out of a population of 26 payroll periods totaling $261,616, we selected one key item for $34,056 and a sample of four payroll periods totaling $27,661 to review the salaries paid to employees and charged to the federal award. The entire balance of the $34,056 key item was drawn down in error for staff wages and fringe benefits which were not related to the approved federal grant services. The sample was not, and was not intended to be, a statistically valid sample. Effect - College records did not support the salary expenses charged to the federal award. Cause - Management oversight when completing salary reconciliation. Identification as a Repeat Finding - Yes, see findings 2021-004 and 2020-009. Recommendation - The College should implement processes and controls to ensure that all employees paid with federal grant funds are compared against the budget amounts provided to the grant administrator. Views of Responsible Officials and Planned Corrective Actions - Adjustments have been made to drawdowns in April and June of 2022 in order to correct for these overdraws. However, even after these corrections, $694.47 was still overdrawn from FY22. This amount will be corrected in a future Title V draw for this amount. Salary drawdowns will be required to have backup payroll documentation for each draw in the future.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425W ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $99,748 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $13,647,015 were expended and reported on the Polk County School District?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 202.403 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed the following deficiencies: ? Bonuses totaling $37,327 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. ? A payment in the amount of $62,421 was made to the janitorial company utilized by the School District to provide bonuses to janitorial contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private janitorial company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Therefore, expenditures totaling $99,748 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $99,748 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425W ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $99,748 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $13,647,015 were expended and reported on the Polk County School District?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 202.403 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed the following deficiencies: ? Bonuses totaling $37,327 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. ? A payment in the amount of $62,421 was made to the janitorial company utilized by the School District to provide bonuses to janitorial contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private janitorial company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Therefore, expenditures totaling $99,748 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $99,748 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425W ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $99,748 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $13,647,015 were expended and reported on the Polk County School District?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 202.403 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed the following deficiencies: ? Bonuses totaling $37,327 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. ? A payment in the amount of $62,421 was made to the janitorial company utilized by the School District to provide bonuses to janitorial contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private janitorial company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Therefore, expenditures totaling $99,748 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $99,748 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425W ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $99,748 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $13,647,015 were expended and reported on the Polk County School District?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 202.403 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed the following deficiencies: ? Bonuses totaling $37,327 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. ? A payment in the amount of $62,421 was made to the janitorial company utilized by the School District to provide bonuses to janitorial contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private janitorial company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Therefore, expenditures totaling $99,748 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $99,748 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-041) Title: Internal control over CACFP claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $11,222 Likely Questioned Costs: Undeterminable. Due to the variety of institution types in the test population and varied meal claim counts, the projection of questioned costs utilizing the error rate related to the known exception and amount tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 226.7, .10, .11, and .16 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Each State agency shall establish procedures for institutions to properly submit claims for reimbursement (CFR). Such procedures must include State agency edit checks, including but not limited to ensuring that payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment, operating days, and approved meal types. Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must conduct reasonable edit checks on the sponsored centers? meal claims. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes (DCHs), and at-risk after school snack programs. Each child and adult care center, including day-care homes, must submit a monthly CFR to the State. CFRs by DCHs are first submitted to Sponsoring Organizations (SOs). SOs are responsible for reviewing and consolidating claims into one comprehensive CFR for submission to the State agency. The State reimburses the SOs and centers for actual meals served based on the CFR. The State utilizes the Child Nutrition Program Web (CNPWeb) system to process monthly claims. System edits were relied upon when the claims were submitted; however, edits were not properly implemented during fiscal year 2022. Furthermore, the Department did not obtain enrollment data from DCHs to set maximum claim reimbursement restrictions when processing claims. The Office of the State Auditor (OSA) tested meal counts claimed on 60 CFRs submitted by SOs and found that 14 contained discrepancies. The SOs? CFRs included meals claimed that exceeded the allowable licensed capacity for facilities included in the consolidated CFR. OSA relied on licensed capacity rather than enrollment data when testing claims, as enrollment data was not obtained by the Department. The meals claimed for reimbursement exceeded licensed capacity for 14 facilities. The amount paid over allowable capacity for these facilities totaled $11,222. The Department could not provide documentation to support that the amount paid in excess of capacity was allowable. OSA deemed monthly reimbursements to one SO to be significant to CACFP. To test a sample of claims for this SO, OSA selected all 12 months of the SO?s CFRs and used a risk-based approach for DCH claims and a random approach for all other claims. OSA selected a non-statistical random sample of claims from all other facilities and SOs for the remaining sample. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $5.7 million was paid through SOs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures that require: ? review, approval and testing of system controls to ensure that edit checks are operating as designed; and ? review of monthly CFRs for accuracy. We further recommend that the Department follow up with SOs to identify unallowable costs and recoup costs if warranted. Corrective Action Plan: See F-16 Management?s Response: The Department disagrees with this finding. As explained to OSA by DOE, DHHS, and USDA, Child Care Centers/Providers can enroll and claim over the licensed capacity. The claim edit check that was in place for SY22 for DCH Providers was Total Monthly Attendance x Approved Meal Types due to the fact that providers can enroll over the licensed capacity. Sponsors have been trained: Total Monthly Attendance equals the number of unique kids who attended during the day, are enrolled in CACFP and who ate at least one meal or snack during the day, then add up those daily totals for the month. To use licensed capacity as an edit check, which OSA did to calculate the costs in question, disallows provider reimbursement for eligible meals. CACFP Total Monthly Attendance is a better edit check as it only calculates attendance for enrolled participants. For the provider claims in question the CACFP Team tested them against the Total Monthly Attendance edit check and none suggest an overclaim. The CACFP Team discovered the missing enrollment edit check on 8/24/22 and immediately submitted a ticket to the web designers. This correction required multiple meetings with the web designers and in-depth system testing. The correction to the edit check was completed on 12/23/22. The claim edit checks now in place are: Attendance x Approved Meal Types (same as before) ? AND- Enrollment x Operating Days x Approved Meal Types. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor?s Concluding Remarks: In accordance with 7 CFR 226.7(k), the Department must establish procedures for facilities to properly submit claims; however, the Department did not have the following procedures in place: ? The Department did not obtain enrollment data to be utilized in the calculation of claims for reimbursement. ? The edit checks that the Department relied upon did not function as intended. The design and implementation of edit checks must ensure that: o payments are only made for approved meal types; and o the number of meals reimbursed does not exceed the total enrollment times the number of operating days times the approved meal types. The Department discovered that the edit checks were not operating as intended on August 24, 2022; however, the Department cannot provide evidence of when the failure occurred as the Department did not test system controls at any time during implementation. Furthermore, the discovery of failed edit checks was identified as a result of an inquiry made by USDA, not by Department controls. OSA also issued finding 2022-033, a material weakness for this system, due to the lack of controls over the system. As stated above and in the Condition of this finding, OSA could not use enrollment data to test the allowability of claims because this data was not obtained by the Department. As an alternative procedure, OSA identified DCHs with CFRs that exceeded licensed capacity and provided this information to the Department for consideration. The Department did not provide documentation to support the allowability of these CFRs, as OSA recognizes Child Care Centers/Providers can enroll and submit CFRs over licensed capacity. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award and must be adequately documented. Because the Department did not provide the requested documentation, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1115-01)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-051) Title: Internal control over CSLFRF expenditures needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: SLFRP0144 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $51,482,644 Likely Questioned Costs: $51,482,644 Criteria: 2 CFR 200.303; 2 CFR 200.403; 2 CFR 200.302; Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Interim Final Rule, Federal Register Volume 86, Issue 93 (May 17, 2021) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The CSLFRF Interim Final Rule states that recipients may make deposits into the State account of the Unemployment Trust Fund up to the level needed to restore the pre-pandemic balances of such account as of January 27, 2020, or to pay back advances received for the payment of benefits between January 27, 2020, and May 17, 2021, given the close nexus between Unemployment Trust Fund costs, solvency of Unemployment Trust Fund systems, and pandemic economic impacts. Condition: As part of the American Rescue Plan Act, the State was advanced $997 million in Federal CSLFRF to support its response to and recovery from the COVID-19 public health emergency. In response, Public Law 2021, Chapter 483, Section D-1 was enacted and states that ?notwithstanding any provision of law to the contrary, the State Controller shall transfer $80 million from the Federal Expenditures Fund ? ARP State Fiscal Recovery balance to the Department of Labor, Unemployment Compensation Fund no later than November 30, 2021.? To support the allowability of the $80 million transfer under the Public Health and Economic Impacts use category, the Maine Department of Labor (MDOL) prepared an analysis that compared the balance between January 25, 2020 ($502,137,397) and September 30, 2021 ($405,167,938). Under this use category, transfers to the Unemployment Trust Fund are only allowable up to the level needed to restore the Trust Fund to the pre-pandemic balance as of January 27, 2020. The Department of Administrative and Financial Services (DAFS) reviewed and approved the calculation for reasonableness and allowability. As a result, DAFS transferred $80 million from the Federal Fund to the State Unemployment Trust Fund on November 30, 2021. Using the State?s Trust Fund Balance Reports, the Office of the State Auditor (OSA) compared the January 27, 2020, balance ($499,966,386) to the September 30, 2021, balance ($471,449,030). The $28,517,356 difference represents the amount allowed to restore the State Unemployment Trust Fund to the pre-pandemic balance as of January 27, 2020, under the Public Health and Economic Impacts use category. MDOL and DAFS were unable to provide: ? documentation supporting the $405.2 million balance on September 30, 2021, used to substantiate allowability of the $80 million transfer, and ? a justification of why the Trust Fund Balance Reports were not used in the calculation. Therefore, the $80 million transfer exceeds the amount needed to restore the State Unemployment Trust Fund to the pre-pandemic balance by $51,482,644 under the Public Health and Economic Impacts use category. Context: The $80 million transfer to the State?s Unemployment Trust Fund represents approximately 66 percent of the $121.5 million in CSLFRF expenditures during fiscal year 2022. Cause: Misinterpretation of Federal guidance Effect: ? Noncompliance with Federal regulations ? Known questioned costs and potential disallowances Recommendation: We recommend that MDOL and DAFS review expenditures charged to CSLFRF, including the above-noted expenditure, to ensure that costs are adequately documented to support that only allowable costs are funded by CSLFRF. Corrective Action Plan: See F-19 Management?s Response: We disagree with this finding. Likewise, we are unable to determine why the auditor has identified a questioned cost or includes a recommendation that only allowable costs are funded by CSLFRF. The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category. Questioned costs are defined by the Uniform Guidance, 2CFR ? 200.1, Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; In this case, there was no violation of statute, regulation or terms of the federal award for the SLFRF program (ALN 21.027). Regardless of category, the transfer of $80M to the UI Trust is considered an allowable cost under the program; thus, there is no portion of the transfer that is considered unallowable and no basis for a questioned cost. (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or All parties agree that the transfer is allowable under the SLFRF program (ALN 21.027) and adequate documentation has been provided to support that determination. (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. All parties agree that the cost appears reasonable; consequently, there is no amount that should be questioned. All documentation to support the allowability of this transfer was provided to the auditor for review. There were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category; however, we provided documentation to support that the total amount was eligible under the Revenue Loss - Provision of Government Services use category. Although we have identified a weakness in internal control over compliance, there was no actual noncompliance. Consequently, there is no cost that is considered unallowable; therefore, there should be no questioned cost. DOL Contact: Kimberly Smith, Deputy Commissioner, DOL, 207-621-5096 DAFS Contact: Frank Wiltuck, Director of Internal Audit, OSC, 207-626-8420 Auditor?s Concluding Remarks: Management asserts, ?The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category.? However, OSC did not provide documentation to support this statement, as described below. OSA initially questioned the allowability of the $80 million transfer in November 2022. In the following months and in response to OSA?s request for all documentation to corroborate the allowability of the transfer, OSC only provided evidence to support the transfer under the CSLFRF Public Health and Economic Impacts use category. OSA reviewed this support and identified errors in the calculation for the allowable amount of the transfer under the CSLFRF Public Health and Economic Impacts use category. As a result of these errors, OSA notified the Department that a finding would be issued and costs of $51,482,644 would be questioned. In response to the finding communication from OSA, OSC initiated discussion of alternative use categories for CSLFRF under which the transferred amount would be considered allowable. OSC proposed recategorizing the unallowable portion of the transfer from the Public Health and Economic Impacts use category to the Provision of Government Services use category of CSLFRF. Though the unallowable portion of the transfer (the questioned costs) may ultimately be allowable under this alternative use category, the costs, at the time of the audit, were incurred under the Public Health and Economic Impacts use category. Management states, ?we are unable to determine why the auditor has identified a questioned cost? and has provided the definition of Questioned Costs as defined by 2 CFR 200.1. However, OSC?s interpretation implies that OSA should allow changes in supporting documentation that do not align with the original intent of the usage of funds. The recategorization of the unallowable costs to another use category may be part of OSC?s corrective action plan; however, the documentation provided as audit evidence does not properly support $51,482,644 in CSLFRF Public Health and Economic Impacts costs. OSA cannot allow the Department to alter supporting documentation to avoid questioned costs. If OSA permitted the State to alter supporting documentation whenever OSA identified unallowable costs, there would never be any questioned costs to report. This is not the intent of 2 CFR 200.1. Managements acknowledges ?there were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category? and ?we have identified a weakness in internal control over compliance,? which is the basis of this finding. The finding remains as stated. (State Number: 22-1699-01)
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal control that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 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 is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal control that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.