Finding Text
FINDING 2024-005
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 Number: 84.425U
Federal Award Number and Year (or Other Identifying Numbers): S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Other Matters
INDIANA STATE BOARD OF ACCOUNTS
23
SCHOOL CITY OF HOBART
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-003.
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 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.
The School Corporation purchased five capital assets totaling $118,845.73 with ESSER III funds.
Of the five assets purchased, four were not included on the asset listing. The one asset that was included
in the asset listing did not list the source of the federal funding including the federal award number.
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:
(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.
INDIANA STATE BOARD OF ACCOUNTS
24
SCHOOL CITY OF HOBART
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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.
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.