FINDING 2024-006
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425U, 84.425D
Federal Award Numbers and Years (or Other Identifying Numbers): 7000S425U210013, S425D200013,
S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-003.
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the School Corporation in order to ensure compliance with requirements related to the grant agreement
and the following compliance requirements: Reporting.
The School Corporation was required to submit an annual data report to the Indiana Department
of Education via JotForm. Data to be submitted includes, but not limited to, current period expenditures,
prior period expenditures, and expenditures per activity. Additionally, the School Corporation was required
to submit an annual data report to the Indiana Department of Education via the 3E LEA ESSER III American
Rescue Plan Annual Performance Report (Annual Performance Reports). Data to be submitted includes,
but is not limited to, current period expenditures and expenditures per activity.
During the audit period, the School Corporation submitted the 2021-2022 data report for
ESSER I - Year 3, ESSER II - Year 2, ESSER III - Year 2, and 2022-2023 data report for ESSER II - Year
3 and ESSER III - Year 3. The reports were prepared by one employee and reviewed by another employee;
however, the established internal control did not allow for the prevention, or detection and correction, of
errors prior to submission.
The ESSER III - Year 3 report which should have covered the period of July 1, 2022 to June 30,
2023, covered the prior year (July 1, 2021 to June 30, 2022) data information. Also, the expenditures
reported in the ESSER I - Year 3 and ESSER III - Year 2 submissions did not agree to underlying supporting
documentation.
Additionally, an internal control was not designed or implemented over submission of the Annual
Performance Reports. The Annual Performance Reports were prepared by one employee without a
documented oversight and review process to allow for the prevention, or detection and correction, of errors
prior to submission.
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
Management did not develop a system of internal controls that ensured that reports submitted were
for the correct activity period and supported by underlying accounting records.
Effect
Reports submitted to the Federal Grantor Agency did not accurately reflect the expenditure
activity of the School Corporation for the reporting periods as noted in the Condition and Context above.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish a system of internal
controls, including segregation of duties, related to the grant agreement and compliance requirements listed
above. An internal control system, including segregation of duties, should be designed and operate
effectively to provide reasonable assurance that material noncompliance with the grant agreement or a
compliance requirement of a federal program will be prevented, or detected and corrected, on a timely
basis. In order to have an effective internal control system, it is important to have proper segregation of
duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to
have a separation of functions over certain activities related to the program. The fundamental premise of
segregation of duties is that an individual or small group of individuals should not be in a position to initiate,
approve, undertake, and review the same activity. The internal controls should also have documentation
to evidence that the control was in place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.