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FINDING 2024-016 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-017. Condition and Context As part of sound management of the federal award, the School Corporation was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The School Corporation had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education via JotForm, a form/report builder. During the audit period, the School Corporation was required to submit four annual reports as follows: ESSER II Year 2, ESSER II Year 3, ESSER III (ARP) Year 2, and ESSER III (ARP) Year 3. The following issues were noted with those reports: • ESSER II Year 2 - No expenditures were reported. However, the School Corporation ledger had ESSER II expenditures of $1,510,007 for SY 21-22. • ESSER II Year 3 - No expenditures were reported under "Addressing Physical Health and Safety Issues," and only $424,490 was reported under "Total Mandatory Subgrant Amount Expended in the Current Reporting Period." However, the amount reported did not agree with the School Corporation ledger, which reported ESSER II expenditures of $1,421,841 during SY 22-23. • ESSER III (ARP) Year 2 - No expenditures were reported. However, the School Corporation ledger had ESSER III expenditures of $266,349 for SY 21-22. • ESSER III (ARP) Year 3 - No expenditures were reported. However, the School Corporation ledger had ESSER III expenditures of $3,222,641 for SY 22-23. 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: INDIANA STATE BOARD OF ACCOUNTS 51 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 designed nor implemented a system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and available for audit, related to the Reporting compliance requirement. Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Reporting compliance requirement. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Reporting compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.