Finding Text
FINDING 2024-006
Subject: Special Education Cluster (IDEA) - Period of Performance
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education
Grants to States, Special Education Preschool Grants
Assistance Listings Numbers: 84.027A, 84.027X, 84.173A
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-026-PN01, 22611-026-ARP,
22619-026-PN01, 23611-026-PN01,
23619-026-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Period of Performance
Audit Finding: Material Weakness
INDIANA STATE BOARD OF ACCOUNTS
27
SOUTH HARRISON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
The School Corporation is a member of the Harrison County Exceptional Learners Cooperative
(Cooperative). During both fiscal years under audit, the Cooperative operated the special education
programs and spent federal money on behalf of all its members. As the grant agreements were between
the Indiana Department of Education (IDOE) and each member school, the School Corporation was
responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate
oversight performed by the School Corporation in order to ensure compliance with the Period of
Performance compliance requirement.
The School Corporation served as the LEA and fiscal agent for the Cooperative which provided
special education services to the Cooperative's member schools. The Cooperative did not maintain a
separate accounting system, and, accordingly, the School Corporation was responsible for handling all
financial activity related to special education. The School Corporation created separate funds to account
for the various special education grants. Rather than posting special education expenses directly to these
funds, the School Corporation posted to the original transactions to other funds. The School Corporation
then initiated adjustments totaling over $1.8 million to record the expenses in the special education grant
funds during fiscal year 2023-2024. There was no evidence of an oversight, review, or approval process
to ensure that the original expenses were incurred within the grant's period of performance.
The lack of internal controls was isolated to the 22611-026-PN01, 22611-026-ARP, 22619-026-
PN01, 23611-026-PN01, and 23619-026-PN01 grant awards during 2023-2024.
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). . . ."
Cause
In its capacity as the fiscal agent for the Cooperative, the School Corporation posted multiple
adjustments to special education grant funds without a proper oversight, review, or approval process to
ensure that the original expenses were incurred during the period of performance.
Effect
Without a proper system of internal controls in place that operated effectively, the School
Corporation was unable to ensure that the original transactions for expenses posted to special education
grant funds via adjustments were incurred during the period of performance. The lack of internal controls
rendered the School Corporation incapable of ensuring compliance with the requirements of the federal
award. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funds to the School Corporation.
INDIANA STATE BOARD OF ACCOUNTS
28
SOUTH HARRISON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls to ensure that adjustments are properly reviewed to ensure that the original transactions
were for expenses incurred during the period of performance.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.