Finding 1121122 (2024-002)

FINDING 2024-002 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles 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): 7000S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context The School Corporation did not have an effective internal control system in place to ensure that costs charged to the COVID-19 - Education Stabilization Fund (ESF) grant award were allowable and in conformance with compliance with requirements related to the Activities Allowable or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 15 WHITLEY COUNTY CONSOLIDATED SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Although the School Corporation designed and implemented a process throughout the audit period, costs charged to the Explore Engage Experience (3E CIESC) grant only had one employee review. The reimbursement form was completed by one employee with no evidence of the approval/review from another employee. Without the review/approval of another employee it could lead to improper activities allowed and/or allowable cost reimbursed. This was the only grant within the ESF grant award that did not have this internal control completed properly. The lack of internal controls was a systemic issue 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). . . ." Cause The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. One employee prepared the reimbursement request without any evidence of an approval or review from another employee. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. A review or approval of the reimbursements request will ensure that grant funds are used for allowable expenditures. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management strengthen its system of internal controls to ensure all reimbursement requests are prepared by one employee and reviewed and approved by another employee. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.