Finding Text
FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22619-068-PN01, 23611-068-PN01, 23619-068-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with the earmarking requirement of the Special Education Cluster (IDEA) during the audit period. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met as indicated on the grant agreements during the audit period. The Non-Public Proportionate Share expenditures recorded for the 22619-068-PN01, 23611-068- PN01, and 23619-068-PN01 were less than the total amount required for each of these respective grants. The appropriations reports provided by the School Corporation indicated that the total expenditures paid for these grant funds was not sufficient for meeting the nonpublic proportionate share requirement. The lack of internal controls and noncompliance were isolated to the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards. The minimum earmarking requirement for the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards was $1,405, $68,728, and $982, respectively. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 FAYETTE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, 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 or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation is the fiscal agent of a Special Education Cooperative (Cooperative) that manages and operates the special education program and oversees the majority of the federal compliance requirements. The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. A method to track expenditures to ensure earmarking requirements were complied with had not been implemented. Additionally, the Cooperative did not obtain a waiver from the Indiana Department of Education for the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards. Effect The failure to establish an effective internal control system placed the School Corporation in noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the School Corporation. Questioned Costs There were no known questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to monitor the Matching, Level of Effort, Earmarking compliance requirement periodically to ensure compliance with the earmarking compliance requirements by the end of the grant period. This includes meeting with the Cooperative periodically to monitor and track progress towards meeting the required nonpublic proportionate share amounts. Views of Responsible Officials Management agrees with the finding and has prepared a corrective action plan.