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FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 16 MILL CREEK COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to reserve at least 20 percent of funds to address learning loss through the implementation of evidence-based interventions and ensure that those interventions address the disproportionate impact of COVID-19 on underrepresented student subgroups. No evidence of a review or oversight process could be provided to support that the School Corporation monitored the earmarking requirements during the performance of the grant nor verified they had met the earmarking requirement as of the conclusion of the grant. 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). . . ." Cause The School Corporation uploaded its required ESSER plan to its website, which they believed satisfied the earmarking grant requirement. As such, no internal control procedures were created in relation to the earmarking requirements of the grant. With the lack of internal controls, we could not verify the School Corporation was monitoring the earmarking requirement during the performance of the grant. 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. 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 required earmarking requirements are met. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.