FAC Explorer

Finding 1176281 (2025-001)

Material Weakness Repeat Finding
Requirement
F
Questioned Costs
-
Year
2025
Accepted
2026-03-03
Audit: 390129
Organization: Herron High School, Inc. (IN)
Auditor: DONOVAN PC

AI Summary

  • Core Issue: The Organization failed to maintain complete records for equipment acquired with federal funds, including essential details like the federal award ID and asset condition.
  • Impacted Requirements: This finding violates 2 CFR 200.313(d), which mandates proper equipment management and documentation.
  • Recommended Follow-Up: Implement a system of internal controls to ensure accurate tracking of equipment and proper documentation of physical inventories.

Finding Text

FINDING 2025-001 – EQUIPMENT AND REAL PROPERTY MANAGEMENT Significant Deficiency Federal Programs: Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Criteria 2 CFR 200.313(d) contains equipment management requirements which dictate property records entities must maintain and the need for procedures to adequately safeguard and maintain assets acquired with federal funding. Condition The Organization did not retain in their accounting records all the required information. Specifically, the federal award identification number, holder of the title, use, and condition were not listed. The federal participation was assumed based on allocations between fund codes in the general ledger. Additionally, sufficient and appropriate documentation did not exist to support a physical inventory had been completed for all assets once in the last two years. Cause and Effect Individuals responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. As a result, adequate documentation was not maintained for equipment acquired with federal funds or to support the performance of a physical inventory occurring within the required time period. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 37 to 38.

Corrective Action Plan

U.S. DEPARTMENT OF EDUCATION AND INDIANA DEPARTMENT OF EDUCATION Charter Schools – AL #84.282 Education Stabilization Fund – AL #84.425C, 84.425D & 84.425U U.S. Department of Education Herron High School, Inc. d/b/a Herron Classical Schools and its Wholly-Owned Subsidiaries (the Organization) respectively submits the following corrective action plan for the year ended June 30, 2025. Name and address of independent public accounting firm: Donovan CPAs 9292 N. Meridian Street, Suite 150 Indianapolis, IN 46260 Audit period: Year ended June 30, 2025 The findings from the schedule of findings and questioned costs for the year ended June 30, 2025, are discussed below. The findings are numbered consistently with the numbers assigned in the Schedule. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS U.S. DEPARTMENT OF EDUCATION AND INDIANA DEPARTMENT OF EDUCATION Education Stabilization Fund – AL #84.425C, 84.425D & 84.425U 2025-001 Equipment and Real Property Management (Repeat Finding 2024-002) Significant Deficiency Recommendation: The Auditor recommended the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Planned Corrective Action: The Organization has begun to notate and identify equipment and property purchased with federal funds in accounting records by using appropriate coding methods. These items will be visible on the fixed asset register. Regular annual inventory measures will be conducted for compliance and reporting. Michelle Krauter, VP, Chief Financial Officer, will oversee the ongoing implementation of this process to ensure adherence to all compliance requirements and this process has already begun as of the finalization of this audit. Will be completed within fiscal year.

Categories

Equipment & Real Property Management

Other Findings in this Audit

  • 1176279 2025-002
    Material Weakness Repeat
  • 1176280 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
10.555 NATIONAL SCHOOL LUNCH PROGRAM $639,707
84.425 EDUCATION STABILIZATION FUND $594,742
10.553 SCHOOL BREAKFAST PROGRAM $225,134
84.282 CHARTER SCHOOLS $101,200
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES $72,347
10.559 SUMMER FOOD SERVICE PROGRAM FOR CHILDREN $54,271
84.027 SPECIAL EDUCATION_GRANTS TO STATES $23,975
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM $3,899
84.367 IMPROVING TEACHER QUALITY STATE GRANTS $209