Finding Text
FINDING 2024-003
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 Number): 700S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-001.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance. The School Corporation had not designed an internal control
system and procedures to ensure all assets purchased with federal awards were added to the property
records or capital asset listing.
A property record or capital asset listing would include the following for each asset: a description
of the property, a serial number or other identification number, the source of funding for the property
(including the federal award identification number (FAIN)), who holds title, the acquisition date, 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. The property record or capital asset listing
should be maintained for assets purchased that exceed the School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include all assets purchased with the COVID-19 - Education Stabilization Fund
award. An ironworker for the shop class was purchased from the ESSER 3E award for $6,499, but was
not reflected on the School Corporation's capital asset ledger.
The lack of internal controls and noncompliance were systemic issued throughout the audit period.
INDIANA STATE BOARD OF ACCOUNTS 18
METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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:
"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. . . ."
Cause
The School Corporation hired a third-party to take a physical inventory of the School Corporation's
capital assets every two years. The last inventory was taken as of June 30, 2023. Between inventories,
the School Corporation maintains records of all assets purchased above $5,000 and reports them to the
third-party before the next physical inventory is performed. The School Corporation did not provide
documentation of the assets purchased to be provided to the third-party responsible for taking the physical
inventory.
Effect
The failure to establish an effective internal control system places the School Corporation at risk of
noncompliance with the Equipment and Real Property Management compliance requirement. The lack of
adequate capital asset records, which include purchased from federal funds, could allow for the misuse and
mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over
the activities of the program.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation maintain documentation of all capital assets
purchased over the $5,000 in between physical inventories taken by the third-party to ensure all assets are
properly accounted for and safe guarded.
INDIANA STATE BOARD OF ACCOUNTS
19
METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.