FINDING 2024-006
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 Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Other Matters
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. A property record or capital asset listing, which would include 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, and use and condition of the property, is to be maintained
for assets purchased that exceed the School Corporation's capitalization threshold. In addition, a physical
inventory of all assets should be completed at least every two years.
There were two assets purchased with grant funds selected for testing, totaling $100,847. The
assets were included on the capital asset records but did not have a serial number or other identification
number, the source of funding for the property (including the FAIN), or percentage of federal participation
in the project costs for the federal award under which the property was acquired.
The lack of internal controls and noncompliance were systemic issues 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). . . ."
2 CFR 200.313(d) states in part:
". . . (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.
INDIANA STATE BOARD OF ACCOUNTS
26
LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(2) A physical inventory of the property must be taken and the results reconciled with the
property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss,
damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. The School
Corporation has policies to establish internal controls and procedures but did not establish proper internal
controls.
Effect
Without the proper design or implementation of the components of a system of internal controls,
including policies and procedures that provide segregation of duties and additional oversight as needed,
the internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, asset records did not include all of the required information. 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 funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure asset records include all the required
information.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.