Finding Text
FINDING 2024-006
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
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): S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed a system of internal controls to ensure
compliance with requirements related to the grant agreement and the Equipment and Real Property
Management compliance requirement.
A property record or capital asset listing is required to be maintained for all equipment, property
improvements, and property purchased with the COVID-19 - Education Stabilization Fund (ESF) grant
awards to ensure adequate safeguards are in place to prevent loss or damage of items. The School
Corporation hired a consultant to compile and provide a fixed asset report that contained all inventory and
assets purchased that exceeded the School Corporation's capitalization threshold. The consultant
prepared the report; however, the School Corporation did not have any policies or procedures in place to
review the asset listing to ensure the listing was complete.
The School Corporation's capital asset listing did not include all the required asset information for
assets purchased with federal awards. The following information for each asset was not included in the
School Corporations capital asset listing: the source of funding for the property (including the federal award
identification number (FAIN)), and percentage of federal participation in the project costs for the federal
award under which the property was acquired. In addition, assets were not properly safeguarded and
maintained.
During the audit period, the School Corporation purchased assets and completed improvement
projects totaling $1,794,965 with ESF funds. These assets were not included on the asset listing or physical
inventory prepared by the consultant.
Additionally, the School Corporation was unable to provide a listing of capital asset deletions during
the audit period. Therefore, we could not determine if the disposition of any equipment or real property
acquired under federal awards was properly reflected in the property records.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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 200.313(d) states in part:
". . .
(1) Property records must be maintained that include a description of the property, a serial
number or other identification number, the source of funding for the property (including
the FAIN), who holds title, the acquisition date, and cost of the property, percentage of
Federal participation in the project costs for the Federal award under which the
property was acquired, the location, use and condition of the property, and any ultimate
disposition data including the date of disposal and sale price of the property.
(2) A physical inventory of the property must be taken and the results reconciled with the
property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss,
damage, or theft of the property. Any loss, damage, or theft must be investigated.
(4) Adequate maintenance procedures must be developed to keep the property in good
condition. . . ."
2 CFR 200.313(e) states in part:
"When original or replacement equipment acquired under a Federal award is no longer needed
for the original project or program or for other activities currently or previously supported by a
Federal awarding agency, except as otherwise provided in Federal statutes, regulations, or
Federal awarding agency disposition instructions, the non-Federal entity must request
disposition instructions from the Federal awarding agency if required by the terms and
conditions of the Federal award. . . ."
Cause
The School Corporation did not develop a system of internal controls to ensure that all items over
the capital asset threshold were added to the listing, the capital asset listing included all required
information, and that items purchased were properly maintained and safeguarded.
Effect
Noncompliance with the grant agreement and the compliance requirement could result in the
repayment of federal funds.
Questioned Costs
There were no questioned costs identified.
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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the necessary
information, new assets are properly added, disposals are properly documented, and any discrepancies
are reconciled.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.