Finding 1165862 (2025-002)

Material Weakness Repeat Finding
Requirement
G
Questioned Costs
-
Year
2025
Accepted
2025-12-20
Audit: 376759
Organization: Steel City Academy, Inc. (IN)
Auditor: DONOVAN PC

AI Summary

  • Core Issue: The School's Form 9 report is unreliable, leading to potential inaccuracies in the maintenance of effort calculations.
  • Impacted Requirements: Compliance with federal guidelines for fiscal effort per student under Title I, Part A may not be met due to incorrect expense reporting.
  • Recommended Follow-Up: The School should implement internal controls to ensure accurate reporting of expenses on the Form 9 report.

Finding Text

FINDING 2025-002 MAINTENANCE OF EFFORT SIGNIFICANT DEFICIENCY Federal Program: Title I, Part A (84.010) Criteria 2 CFR part 200, Appendix XI, Compliance Supplement 2020, Section 4-84.000-13, states “An LEA may receive funds under an applicable program only if the SEA finds that the combined fiscal effort per student or the aggregate expenditures of the LEA from state and local funds for free public education for the preceding year was not less than 90 percent of the combined fiscal effort or aggregate expenditures for the second preceding year, unless specifically waved.” Condition The Indiana Department of Education completes the maintenance of effort calculation using the Form 9 report issued by the School, which is a cash-basis report. Review of the School’s Form 9 found the report to be unreliable. Cash basis expenses per the Form 9 were materially different than those per the School’s financial records. Cause The School did not report expenses in line with the guidelines set by the Indiana Department of Education. Effect Maintenance of effort calculations prepared by the Indiana Department of Education could be impacted by incorrect reporting of expense transactions. Recommendation We recommend the School develop internal controls to ensure expenses are properly reported on the Form 9 report in line with guidelines. Views of Responsible Officials The School’s Corrective Action Plan is included on pages 24 to 25.

Corrective Action Plan

Finding 2025-002 – Maintenance of Effort Significant Deficiency | Federal Program: Title I, Part A (84.010) Response Steel City Academy recognizes that Maintenance of Effort (MOE) calculations rely on accurate cash-basis expense data reported on the Form 9 and that prior inaccuracies could impact IDOE’s calculations. 24 Beginning July 1, 2025, the School implemented comprehensive corrective actions to improve Form 9 reporting, fund balance accuracy, and expense classification by consolidating all financial activity into QuickBooks Online. All expenses are now recorded by the Finance Coordinator using fund, program, and object codes aligned with IDOE reporting guidelines, ensuring Form 9 expenses are fully supported by underlying financial records. To ensure accurate fund balances, audited reconciliation worksheets are used to validate beginning-of-year balances prior to Form 9 submission. Grant expenditures and remaining balances are reviewed monthly to ensure proper classification and alignment between expenses and recognized revenue. The School has also engaged directly with the IDOE Form 9 team for technical guidance. The Executive Director provides direct oversight and performs a final review of Form 9 submissions to ensure compliance with reporting guidelines. These corrective actions are designed to ensure accurate, reliable Form 9 reporting and to prevent recurrence of this deficiency in future reporting periods.

Categories

Reporting Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1165861 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM $314,287
10.555 NATIONAL SCHOOL LUNCH PROGRAM $164,248
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES $115,396
10.553 SCHOOL BREAKFAST PROGRAM $99,445
84.027 SPECIAL EDUCATION_GRANTS TO STATES $27,879
84.367 IMPROVING TEACHER QUALITY STATE GRANTS $25,633
10.582 FRESH FRUIT AND VEGETABLE PROGRAM $9,736