Finding Text
Information on the federal program:
Subject: Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Audit Finding: Material Weakness, Material Noncompliance, Qualified Opinion
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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements.
Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above.
Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, Allowable Costs/Cost Principles compliance requirements could result in the loss of future federal funds to the School Corporation.
Questioned Costs: $61,841 (Known)
Context: For testing of activities allowed and unallowed, a sample of 21 vendor vouchers were selected for testing. Two vouchers totaling $61,841 were related to disbursements for floor replacement costs incurred and charged to the ESSER III grant award. The School Corporation received approval from the Indiana Department of Education (IDOE) through the grant application to utilize a portion of the ESSER II grant award for floor replacement throughout the School Corporation. During the audit period, the School Corporation had $88,600 that was disbursed and reported on the SEFA for ESSER II and $142,400 that was disbursed and reported on the SEFA for ESSER III for floor replacement. The School Corporation did not receive approval from the Indiana Department of Education (IDOE) to use ESSER III funding for the flooring project as required for construction or remodeling related projects. The total amount of the flooring project funded by the ESSER III grant, including amounts paid prior to the audit, was $219,992. The portion of the flooring project paid by the ESSER II grant was $163,000 which was properly approved by IDOE. Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements to ensure only allowable costs are charged to the grant award.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.