Finding Text
FINDING 2024-004
Subject: Special Education Cluster (IDEA) - Level of Effort
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.173
Federal Award Numbers and Years (or Other Identifying Numbers): 21611-054-PN01, 22611-054-PN01,
22619-054-PN01, 22611-054-ARP,
22619-054-ARP, 23611-054-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation was required to submit a Local Educational Agency (LEA) Maintenance of
Effort (MOE) Calculator workbook to the Indiana Department of Education (IDOE) each year beginning with
the fiscal year 2021-2022 grant. The MOE was based on the expenditure information submitted on the
Form 9 for the prior fiscal year. The Form 9 (financial) data was submitted by the School Corporation to
the IDOE semiannually. The data reported included the School Corporation's expenditures recorded during
that period. To verify amounts used in their computation were derived from the books and records of the
School Corporation, costs were reviewed to ensure they were properly classified as to fund, account, and
object code and reported correctly on the Form 9.
In 2020-2021 and 2021-2022, 25 transactions were sampled each year to ensure the disbursements
were posted to the proper fund, account, and object code. For 5 of the 25 transactions selected in
2020-2021, as well as 4 of the 25 transactions selected in 2021-2022, appropriate supporting documentation
was not provided for audit. As a result, the 9 disbursements could not be verified as to whether
they were posted to the proper fund, account, and object code.
The School Corporation was unable to provide documentation to support the calculation for Level
of Effort included within the grant applications. In addition, the expenditure categories were not consistent
with the prior grant application, and several of the expenditure categories reported did not agree to the
financial records.
The School Corporation did not have an oversight process in place to ensure that expenditures
were classified properly to the correct fund, account, and object codes.
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). . . ."
34 CFR 300.203 states in part:
"(a) Eligibility Standard.
(1) For purposes of establishing the LEA's eligibility for an award for a fiscal year, the SEA
must determine that the LEA budgets, for the education of children with disabilities, at
least the same amount, from at least one of the following sources, as the LEA spent
for that purpose from the same source for the most recent fiscal year for which
information is available:
(i) Local funds only;
(ii) The combination of State and local funds;
(iii) Local funds only on a per capita basis; or
(iv) The combination of State and local funds on a per capita basis. . . .
(b) Compliance Standard.
(1) Except as provided in §§ 300.204 and 300.205, funds provided to an LEA under Part
B of the Act must not be used to reduce the level of expenditures for the education of
children with disabilities made by the LEA from local funds below the level of those
expenditures for the preceding fiscal year.
(2) An LEA meets this standard if it does not reduce the level of expenditures for the
education of children with disabilities made by the LEA from at least one of the following
sources below the level of those expenditures from the same source for the preceding
fiscal year, except as provided in §§ 300.204 and 300.205:
(i) Local funds only;
(ii) The combination of State and local funds;
(iii) Local funds only on a per capita basis; or
(iv) The combination of State and local funds on a per capita basis. . . ."
Cause
The school has updated its financial system and can't produce reports from the time period tested
to verify the expenditures were properly classified.
Effect
The School Corporation could have classified expenditures improperly and the MOE calculation
could be incorrect.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.