Finding Text
FINDING 2025-005 Subject: Title I Grants to Local Educational Agencies - Internal Controls 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 Requirements: Eligibility, Matching, Level of Effort, Earmarking Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 23 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding for internal controls only from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-008. Condition and Context Eligibility Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment count for each school into the Eligible School Summary page of the Tile I application. The counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. There was no documented review by the School Corporation of the enrollment and poverty counts that were prepopulated into the School Corporation's Title I grant application. Level of Effort - Individual Transactions (Vendor) The Form 9 (financial) data was submitted by the School Corporation to the IDOE semiannually. The data reported included the School Corporation's expenditures recorded during that period. The IDOE calculated Maintenance of Effort based on the expenditure information submitted on the Form 9 for that fiscal year. To verify amounts used by the IDOE in their computation were derived from the books and records of the School Corporation, costs were reviewed to ensure they were recorded properly as to account and object code and reported correctly on the Form 9. The School Corporation did not have an oversight process in place to ensure that expenditures for vendors were posted to the correct fund, account, and object codes. During review of expenditures, it was determined that there was not a documented second review in place for all vendor payments being made. The lack of internal controls was a systemic issue 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Although the School Corporation stated that one person is verifying the enrollment and poverty counts that are prepopulated by the IDOE into the School Corporation's Title I grant application each year back to School Corporation records in the student information system and program eligibility files, documentation could not be presented for audit that this verification occurred. There was also not an additional person reviewing the verification for accuracy. One person entered and posted vendor expenditures in the accounting system without a review in place to ensure the expenditures were posted to the correct fund, account, and object codes. Although additional employees were involved in the claims process either by submitting paper accounts payable vouchers, signing invoices, or approving purchase orders for some claims we reviewed, there was no review by a second person after the expenditures were entered into the accounting system. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that the enrollment and poverty counts prepopulated into the School Corporation's Title I grant applications are accurate, nor can the School Corporation ensure that expenditures entered into the accounting system are coded correctly. Incorrect enrollment and poverty counts in the Title I application can lead to an incorrect amount of Title I funding being received by the School Corporation. Incorrect coding of expenditures in the accounting system can result in incorrect Maintenance of Effort calculations. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation strengthen its system of internal controls over the verification of enrollment and poverty counts prepopulated into the Title I grant application by having an additional person review the verification of the counts back to School Corporation records. We also recommended strengthening the School Corporation policies and procedures to ensure that appropriate supporting documentation of this verification and review is retained to be presented for audit. We further recommend that management of the School Corporation establish and implement an effective system of internal controls over vendor expenditures to ensure expenditures for vendors are posted to the correct fund, account, and object codes. For all vendor expenditures, we recommended they are reviewed by an individual other than the person entering them into the accounting system, along with the supporting documentation of the expenditure, and that this process is documented as to the preparer and reviewer. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.