Finding Text
FINDING 2024-005
Subject: Title I Grants to Local Educational Agencies - Level of Effort, Earmarking
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listings Number: 84.010
Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014,
S010A230014
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 had not designed or implemented an effective internal control system over
the Matching, Level of Effort, Earmarking compliance requirement.
Earmarking
A portion of the School Corporation's Title I allocation was required to be set aside for homeless
reservation. The required amount to be set aside was indicated in the Title I grant application.
The School Corporation is responsible for monitoring each required set aside throughout the
life of the grant to ensure the obligation is met.
The School Corporation did have a review process in place to ensure monitoring of each
required set aside; however, it was not effective in preventing or detecting noncompliance. The
School Corporation did not meet the obligation to service all the homeless students in the
School Corporation for fiscal year 2022-2023 and did not transfer the unused funds to the next
grant award.
Level of Effort - Individual Transactions (Vendor)
The Form 9 (financial) data was submitted by the School Corporation to the Indiana Department
of Education (IDOE) semiannually. The data reported included the School Corporation's
expenditures recorded during that period. The IDOE calculated Maintenance of Effort based
on the expenditure information submitted on the Form 9 for that fiscal year. To verify amounts
used by the IDOE in their computation were derived from the books and records of the School
Corporation, costs were reviewed to ensure they were recorded properly as to account and
object code and reported correctly on the Form 9.
The School Corporation did not have an oversight process in place to ensure that expenditures
were properly recorded on the Form 9.
INDIANA STATE BOARD OF ACCOUNTS
25
HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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). . . ."
20 USC 6313(c)(3)(A) states:
"A local educational agency shall reserve such funds as are necessary under this part,
determined in accordance with subparagraphs (B) and (C), to provide services comparable to
those provided to children in schools funded under this part to serve -
(i) homeless children and youths, including providing educationally related support
services to children in shelters and other locations where children may live;
(ii) children in local institutions for neglected children; and
(iii) if appropriate, children in local institutions for delinquent children, and neglected or
delinquent children in community day programs."
Cause
A proper system of internal controls was not designed by management of the School Corporation
to ensure earmarking was followed for the homeless reservation and expenditures were properly recorded
on the Form 9.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, the obligations for homeless reservation was not met and potential noncompliance
could have occurred with Form 9 reporting.
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.
INDIANA STATE BOARD OF ACCOUNTS
26
HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION
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.