Finding Text
FINDING 2024-001
Subject: Special Education Cluster (IDEA) - Suspension and Debarment
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States,
Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X
Federal Award Numbers and Years (or Other Identifying Numbers): H027A190084, 22611-093-ARP,
H173A180104, H173A210104,
22619-093-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Prior to entering into a covered transaction for goods and services equal to or over $25,000 that
were paid with Special Education Cluster funds, recipients are required to verify that such contractors or
vendors are not suspended, debarred, or otherwise excluded from or ineligible for participation in federal
assistance programs or activities. The verification is to be done by checking SAM Exclusions, collecting a
certification from that person, or adding a clause or condition to the covered transaction with that person.
Upon inquiry of the School Corporation, the procedures in place over suspension and debarment
during the audit period were to verify new vendors, when being entered into the system, were not excluded
on SAM.gov. However, the School Corporation did not retain documentation of SAM.gov verifications, nor
were checks done each year to verify that applicable vendors were still considered eligible under federal
requirements. A population of six covered transactions for goods or services, totaling $569,754, that
equaled or exceeded $25,000 paid from Special Education funds during the audit period was identified. No
documentation was available to verify that the School Corporation performed the required checks.
The lack of effective 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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
16
KOKOMO SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
31 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed by the management of the School
Corporation. The School Corporation was unable to provide documentation to demonstrate it checked
SAM.gov or received certification from applicable vendors to verify that contractors and vendors were not
suspended or debarred.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. No documentation existed to ensure vendors to whom payments equal to or in excess of
$25,000 were verified to not be suspended, debarred, or otherwise excluded.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation strengthen its system of internal controls to ensure
that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or
debarred from participating in federal program before entering into any covered transactions and retain
documentation to support the performance of these procedures.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.