Finding Text
FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-076-PN01, 22611-076-ARP, 23619-076-PN01 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 did not have an effective internal control system in place to ensure compliance with the earmarking requirements and to ensure that the required level of expenditures for nonpublic school students with disabilities was met. The 22611-076-PN01, 23611-076-PN01, 22611-076-ARP, 22619-076-ARP, and 23619-076-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that it fully spent the required nonpublic proportionate share amounts by the end of the grant award for three of the five grant awards tested. The following schedule shows the total nonpublic proportionate share approved by the Indiana Department of Education (IDOE) for the School Corporation for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The School Corporation had not spent $25,100 of proportionate share funds by the end of the grant award for all awards ending during the audit period. Total Nonpublic Proportionate Grant Award/ IDOE Approved Nonpublic Share Spent by School Project No. Proportionate Share Corporation Difference 22611-076-PN01 $ 61,782 $ 45,609 $ 16,173 22611-076-ARP 14,833 6,553 8,280 23619-076-PN01 2,359 1,712 647 Totals $ 78,974 $ 53,874 $ 25,100 INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the 22611-076-PN01, 22611-076-ARP, and 23619-076-PN01 grant awards. 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation had not developed or implemented an effective system of internal controls, including oversight and review procedures, to ensure that expenditures for the nonpublic proportionate share were monitored and fully utilized within the grant period. Management was aware of the ability to request a waiver for unspent funds but chose not to pursue that option, resulting in the funds remaining unspent. Effect The failure to establish and maintain an effective internal control system prevented the School Corporation from identifying and correcting the unspent balance of required earmarking funds in a timely manner. This resulted in noncompliance with the earmarking requirements for three of the five grant awards tested as the School Corporation failed to expend $25,100 of the required nonpublic proportionate share by the end of the grant awards. Noncompliance with federal program requirements and the lack of internal controls could jeopardize future federal funding and may require the School Corporation to repay the unspent portion to the pass-through agency. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 track total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.