Finding 1174140 (2025-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2025
Accepted
2026-02-18

AI Summary

  • Core Issue: The School Corporation lacks effective internal controls to ensure compliance with federal grant requirements regarding high school graduation rate reporting.
  • Impacted Requirements: Failure to maintain proper documentation for student removals from the graduation cohort violates federal regulations and could jeopardize future funding.
  • Recommended Follow-Up: Management should implement a robust internal control system and establish clear policies to ensure all necessary documentation is retained for student cohort removals.

Finding Text

FINDING 2025-001 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate 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): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Annual Report, High School Graduation Rate compliance requirement. The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for the removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. Of the 25 students selected for testing, 10 students did not have supporting documentation to substantiate removal of the student from the cohort. 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 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." INDIANA STATE BOARD OF ACCOUNTS 16 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Documentation explaining why the students were removed from the cohort was not retained in the student files. Effect Noncompliance with the grant agreement and the 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 proper system of internal controls and develop policies and procedures to ensure proper documentation is maintained for students that are removed from the cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Corrective Action Plan

FINDING 2025-001 Finding Subject: Title I Grants to Local Educational Agencies – Special Tests and Provisions – Annual Report Card/High School Graduation Rate Contact Person Responsible for Corrective Action: Mike Krutz Contact Phone Number and Email Address: 219-650-5300 x5370, mkrutz@mvsc.k12.in.us Views of Responsible Officials: We concur with the finding. We have taken the audit finding, conclusions and recommendations and created a corrective action plan to correct our processes for the future. Description of Corrective Action Plan: The High School Staff implemented procedures to ensure adequate documentation is received to support a student’s removal/withdrawal from a cohort. The Student Withdrawal Report Form has been updated to include the most current State Withdrawal Codes as well as a high school administrator’s signature for approval. The procedures for removal/withdrawal from a cohort are as follows: 1. The student and/or parent complete the Withdrawal Report Form with the assistance of the attendance secretary. The Withdrawal Checklist Form is started and initialed by the attendance secretary. 2. The student and/or parent meet with an administrator or designee to review the Withdrawal Report Form and complete the Exit Interview Form. The Checklist Form is initialed by administrator or designee signifying completion of this step. 3. The attendance secretary scans the forms into the current student management system. The Checklist Form is initialed by the attendance secretary signifying completion of this step. 4. The original forms are hand delivered to the Registrar who then completes transfer requests and verifications to receiving schools. The Checklist Form is initialed by the Registrar signifying completion of this step. 5. The Registrar upon receiving the original documents hand delivers the Checklist Form to an administrator who reviews and signs the form approving the withdrawal. 6. The original documents are filed in the student’s permanent record folder. 7. Cohorts are reviewed after each trimester by grade level administration and cross referenced with the student management system to check for anomalies. Grade level administration will report their findings to the head principal or designee. Dexter Suggs, Ph.D. Superintendent of Schools "Once a Pirate, Always a Pirate" BOARD OF SCHOOL TRUSTEES Judy C. Dunlap James Donohue DeLena N. Thomas Alex Dunlap III Robert J. Krause President Vice-President Secretary Member Member INDIANA STATE BOARD OF ACCOUNTS 28 MERRILLVILLE COMMUNITY SCHOOL CORPORATION 6701 Delaware Street, Merrillville, IN 46410 (219) 650-5300 FAX (219) 650-5320 www.mvsc.k12.in.us If a student stops attending school and the student/parent does not come in to complete the process, the following procedures are followed: 1. The guidance office secretary attempts (and documents attempts) to contact the parent via phone calls, emails (with read receipt), and certified letters. All paperwork is printed and put in the student file. 2. The guidance office secretary searches the Education ID Portal site to determine if the student is attending another high school. 3. Continual effort is made to contact the parents by the guidance secretary or grade level dean. 4. Once the parent is reached, the above procedures are followed (see step1-7 above). 5. After 3 methods of contact are made (call, email, certified letter), the Student Withdrawal Report is completed and signed by an administrator and withdrawal codes 14 (Unknown/No Show 18+) or 15 (Truancy-Underage No Show) are used. 6. When the school is unable to get in contact with the parent, reports are made to DCS, Merrillville Truancy Court, and the updated procedures for Missing Students/Unknown Location are to be initiated immediately. Additional Step to Corrective Action Plan: We are establishing an annual internal audit, to be completed by central office staff, to ensure that all procedures related to the removal or withdrawal of individuals from a cohort are consistently and properly followed. The internal audit will consist of 10-15 randomly selected withdrawn student’s records. This audit will review documentation, decision-making processes, and compliance with established guidelines to confirm alignment with policy and regulatory requirements. The goal is to promote accountability, maintain program integrity, and identify any areas for improvement or need for additional training. Anticipated Completion Date: June 15, 2026

Categories

Special Tests & Provisions Subrecipient Monitoring Material Weakness Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1174139 2025-001
    Material Weakness Repeat
  • 1174141 2025-002
    Material Weakness Repeat
  • 1174142 2025-002
    Material Weakness Repeat
  • 1174143 2025-003
    Material Weakness Repeat
  • 1174144 2025-003
    Material Weakness Repeat
  • 1174145 2025-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
10.555 NATIONAL SCHOOL LUNCH PROGRAM 2025 $3.42M
10.555 NATIONAL SCHOOL LUNCH PROGRAM 2024 $3.33M
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES 2024 $2.67M
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES 2025 $2.20M
10.553 SCHOOL BREAKFAST PROGRAM 2025 $1.24M
10.553 SCHOOL BREAKFAST PROGRAM 2024 $1.20M
93.600 HEAD START 2025 $1.01M
93.600 HEAD START 2024 $875,061
84.367 SUPPORTING EFFECTIVE INSTRUCTION STATE GRANTS (FORMERLY IMPROVING TEACHER QUALITY STATE GRANTS) 2024 $330,199
84.027 SPECIAL EDUCATION GRANTS TO STATES 2025 $242,025
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM 2025 $194,596
84.048 CAREER AND TECHNICAL EDUCATION -- BASIC GRANTS TO STATES 2024 $187,849
84.048 CAREER AND TECHNICAL EDUCATION -- BASIC GRANTS TO STATES 2025 $186,792
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM 2024 $185,883
84.367 SUPPORTING EFFECTIVE INSTRUCTION STATE GRANTS (FORMERLY IMPROVING TEACHER QUALITY STATE GRANTS) 2025 $170,111
93.778 MEDICAL ASSISTANCE PROGRAM 2024 $142,863
10.559 SUMMER FOOD SERVICE PROGRAM FOR CHILDREN 2025 $104,011
10.559 SUMMER FOOD SERVICE PROGRAM FOR CHILDREN 2024 $84,700
84.027 SPECIAL EDUCATION GRANTS TO STATES 2024 $59,343
93.778 MEDICAL ASSISTANCE PROGRAM 2025 $57,550
84.365 ENGLISH LANGUAGE ACQUISITION STATE GRANTS 2024 $57,027
84.425 EDUCATION STABILIZATION FUND 2024 $27,801
84.425 EDUCATION STABILIZATION FUND 2025 $27,657
10.579 CHILD NUTRITION DISCRETIONARY GRANTS LIMITED AVAILABILITY 2025 $23,000
84.365 ENGLISH LANGUAGE ACQUISITION STATE GRANTS 2025 $13,908
84.173 SPECIAL EDUCATION PRESCHOOL GRANTS 2025 $9,664
10.558 CHILD AND ADULT CARE FOOD PROGRAM 2024 $2,762
84.173 SPECIAL EDUCATION PRESCHOOL GRANTS 2024 $1,034