Finding Text
Information on the federal program:
Subject: Title I Grants to Local Educational Agencies – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listing Number: 84.010A
Federal Award Numbers: S010A210014, S010A220014, S010A230014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed. These records
must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance
with compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/
Time and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and
timely 'Semi-Annual Certification' forms."
Condition: The School Corporation had not established an effective internal control system related to
the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements
that employees who work 100 percent of their time on a federal award maintain semiannual
certifications as required by the pass-through agency, and that employees who work on a federal award
and a non-federal award have Program Activity Reports or equivalent documentation to support the
distribution of their salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal
controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost
Principles compliance requirement.
Effect: The failure to establish an effective internal control system enabled noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have
resulted in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Semiannual certifications are required by the pass-through agency. The required
supporting documentation (Personnel Activity Reports, Semi-Annual Certifications, or equivalent
documentation) for 4 of 40 payroll transactions selected for testing was not maintained properly. Payroll
expenditures account for approximately $1.264 million of total program expenditures of $1.318 million.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit report. The prior audit finding was 2022-003.
Recommendation: We recommended that the School Corporations' management establish controls
to ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement
including maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation
to support payroll charges allocated to federal grants.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.