FINDING 2023-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include proper segregation of duties, that would likely be effective in preventing, or detecting
and correcting, noncompliance. The School Corporation was required to submit annual data reports to the
Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but
was not limited to, current period expenditures, prior period expenditures, and expenditures per activity.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by one employee without documentation to support an oversight or review process
to prevent, or detect and correct, errors.
In addition, the School Corporation was unable to provide supporting documentation for any of the
information contained in the six reports submitted during the audit period. Ledgers and reimbursement
requests were used to verify the information in three of the six reports; however, the other three reports
could not be substantiated. The following errors were noted:
The ESSER II, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 1 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The ESSER III, Year 2 report was not supported by the School Corporation's records, was
not accurate and complete, and was not mathematically accurate.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the three reports noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following:
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, ESSER reports were not supported by the School Corporation's records, were
not accurate and complete, and were not mathematically accurate. Additionally, key line items were not
supported by the records.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of internal
controls and develop policies and procedures to ensure supporting documentation is used and retained
for all required reports submitted on behalf of the Education Stabilization Fund program funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.