Finding Text
FINDING 2024-004
Information on the federal program:
Subject: Special Education Cluster (IDEA) – Activities Allowed or Unallowed
Federal Agency: Department of Education
Federal Program: Special Education Grants to States, Special Education Preschool Grants
Assistance Listing Number: 84.027
Federal Award Numbers and Years (or Other Identifying Numbers): H027A220084, H027A230084
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards
carried out through grants, cost reimbursement contracts, and other agreements with state and local
governments. To be allowable, under federal awards, cost must meet certain criteria:
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.
d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any
other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as
an indirect cost.
e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state
and local governments and Indian tribes only, as otherwise provided for in this part.
f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally
financed program in either the current or a prior period.
g) Be adequately documented.
h) Cost must be incurred during the approved budget period.
Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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
terms and conditions of the Federal award.
Condition: An effective internal control system was not in place at the School District to ensure compliance
with requirements related to the Special Education Cluster and Activities Allowed or Unallowed.
Cause: The School District's management had not developed a system of internal controls that would have
ensured compliance with the Activities Allowed or Unallowed compliance requirement.
Effect: The failure to establish an effective internal control system placed the School District at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There we no questioned costs identified.
Context: During the testing of a sample of 40 payroll disbursements charged to the Special Education
Cluster during the audit period, the following exceptions were noted:
For eight transactions selected, management was unable to provide an approved contract to
support the selected employees' bi-weekly pay rate.
For two transactions selected, management was unable to provide approved timecards for the
selected hourly employee and time period.
For seven transactions selected, management was unable to provide time and effort logs to
support the allocation of one employee’s salary between the federal grant and the Education fund.
The lack of controls was systematic throughout the audit period.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the School District's management establish a system of internal
controls related to payroll disbursement charged to federal awards to ensure that the costs allocated are
properly supported by contracts, timecards, and that the methodology for salary employees allocated to
grant are supported by time and effort documentation.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.