Finding Text
FINDING 2024-003
Subject: Title I Grants to Local Educational Agencies - Earmarking
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listings Number: 84.010
Federal Award Number and Year (or Other Identifying Number): S010A210014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
Condition and Context
Homeless children and youth are automatically eligible for services under Title I, Part A, whether
or not they live in a Title I school attendance area or meet the academic standards required of other children
for eligibility. The School Corporation is required to reserve (set-aside) the funds necessary to provide
homeless children services comparable to services provided in Title I, Part A schools. The set-aside is to
be a reasonable amount of funds to meet the needs of the homeless population in the school community.
At the end of each grant period, if the School Corporation's obligation to provide services to students
experiencing homelessness has been met, but the amount needed to meet that obligation was less than
the amount the school had reserved, the school may carry over those unused funds to support any
allowable Title I, Part A activities in the next school year. However, if at the end of each grant period the
School Corporation's obligation to provide services has not been met, the funds must be carried over to the
next school year to provide services to those students experiencing homelessness, in addition to reserving
funds from that next school year's grant award for that purpose.
The 2021-2022 grant award homeless reservation was $8,600. The School Corporation did not
spend any of the funds, but was determined to have met its obligation based on documentation provided.
However, through inspection of the final grant report, it was determined that $276 of the $8,600 was used
inappropriately in the current school year for other Title I, Part A activities and not for the needs of the
homeless student population.
The lack of internal controls and noncompliance were isolated to the 2022-2023 school year.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.400 states in part:
"The application of these cost principles is based on the fundamental premises that:
(a) The recipient and subrecipient are responsible for the efficient and effective administration
of the Federal award through sound management practices.
(b) The recipient and subrecipient are responsible for administering Federal funds in a
manner consistent with Federal statutes, regulations, and the terms and conditions of the
Federal award. . . ."
20 USC 6313(c)(3)(A) states:
"A local educational agency shall reserve such funds as are necessary under this part, determined
in accordance with subparagraphs (B) and (C), to provide services comparable to those
provided to children in schools funded under this part to serve -
(i) homeless children and youths, including providing educationally related support
services to children in shelters and other locations where children may live;
(ii) children in local institutions for neglected children; and
(iii) if appropriate, children in local institutions for delinquent children, and neglected or
delinquent children in community day programs."
Cause
Total expenditures for the grant were not adequately monitored to ensure funds from the homeless
reservation were not spent on other activities.
Effect
A portion of the homeless reservation was spent on activities not related to the homeless
population.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish a system of internal
controls, including segregation of duties, related to the grant agreement and the earmarking compliance
requirements. An internal control system, including segregation of duties, should be designed and operate
effectively to provide reasonable assurance that material noncompliance with the grant agreement or a
compliance requirement of a federal program will be prevented, or detected and corrected, on a timely
basis. In order to have an effective internal control system, it is important to have proper segregation of
duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to
have a separation of functions over certain activities related to the program. The fundamental premise of
segregation of duties is that an individual or small group of individuals should not be in a position to initiate,
approve, undertake, and review the same activity.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.