Finding Text
FINDING 2025-001 Subject: Title I Grants to Local Educational Agencies - Eligibility 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: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the enrollment and poverty data as reported by the Indiana Department of Education (IDOE) and the School Corporation in the Title I application. Public School (Local Educational Agency) Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and poverty numbers for the public school district are automatically pulled from the IDOE's Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts are based upon the School Corporation's records as of October of the prior fiscal year. The School Corporation had not established a process of review of the Eligibility Summary in the Title I application for the student enrollment and poverty counts. There was no documentation of the School Corporation verifying the enrollment and poverty counts in the Title I application. Nonpublic Schools Enrollment and poverty numbers for any nonpublic schools are manually entered into the application by the School Corporation. The School Corporation established a process to receive and review the listing of students from the nonpublic schools for enrollment and poverty counts to be entered into the Title I application. However, the internal controls were ineffective as the School Corporation requested to receive a listing of poverty student counts only; the list of enrolled nonpublic students was not reported into the Tile I application. Therefore, we were unable to determine if the enrolled student count in the application was accurate. 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 14 SCHOOL TOWN OF SPEEDWAY 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). . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. 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. As a result, documentation was not available to determine if the enrollment and poverty counts for the public or nonpublic data in the Title I application was accurate. 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 documentation is retained to support information in the Title I application for the public and nonpublic enrollment and poverty counts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.