Finding Text
Information on the federal program:
Subject: Education Stabilization Fund – Internal Controls
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D, 84.425U
Federal Award Number: S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness
Criteria: 2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement equipment),
whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum,
meet the following requirements:
(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. . . ."
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 Equipment and Real Property
Management Requirements 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 establish an effective internal control system placed the School Corporation 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 were no questioned costs identified.
Context: For 3 of 3 sample items tested, we noted the School Corporation expended $556,400 on roof
renovations and $4,280,891 on HVAC upgrades which was charged to the ESSER II (84.425D) and ESSER
III (84.425U) grant awards. It was noted these capital asset acquisitions were not reported on the capital
asset listing for the School Corporation as of June 30, 2024. Additionally, we noted the School Corporation’s
capital asset listing did not contain all the required information, including the source of federal funding for
the property, outlined in the criteria above.
Identification as a repeat finding: This is a repeat finding from the immediately prior audit. The finding
number was 2022-001.
Recommendation: We recommend the School Corporation update the capital asset listing at least
annually to include all equipment and real property acquisitions and review for potential capital asset
dispositions. The capital asset listing should include all required information to track capital asset
acquisitions purchased with federal funding.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.