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FINDING 2025-006 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-148-PN01, 22611-148-ARP, 22619-148-PN01, 22619-148-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls to ensure transactions made with the special education grant funding occurred within the appropriate period of performance. Claims for the special education programs were paid without an appropriate level of review or oversight to ensure the expenditures charged to each grant were within the allowed time frame. Although the reimbursement requests submitted to the Indiana Department of Education were prepared and approved by two different employees, the School Corporation was unable to provide evidence of this review and approval process, which may have included a review of the costs included on each request to verify they were within the correct period of performance. Reimbursement requests lacked supporting documentation of the disbursements for the Special Education Grant. Detailed reports were not retained by the School Corporation to verify the vendor, payroll, and payroll benefits occurred during the period of performance. Due to comingling of funds, a total of $176,037 of disbursements charged to the 5200 IDEA Special Education Grant fund could not be directly tied to grant awards (22611-148-PN01, 22611-148-ARP, 22619-148-PN01, and 22619-148-ARP) to determine if these disbursements were in the allowed period of performance of each grant award. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 32 GRIFFITH PUBLIC SCHOOLS 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). . . ." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. . . . Period of performance means the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. . . . Unliquidated financial obligations means, for financial reports prepared on a cash basis, financial obligations incurred by the non-Federal entity that have not been paid (liquidated). . . ." 2 CFR 200.309 states: "If a Federal awarding agency or pass-through entity approves an extension, or if a recipient extends under § 200.308(e)(2), the Period of Performance will be amended to end at the completion of the extension. If termination occurs, the Period of Performance will be amended to end upon the effective date of termination. If a renewal award is issued, a distinct Period of Performance will begin." Cause Due to turnover of staffing in both the Special Education personnel and the School Corporation's administrative office, the School Corporation's management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreements and the Period of Performance compliance requirement. The School Corporation had not filed reimbursement requests in a timely manner. Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Period of Performance compliance requirement. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs We identified $176,037 in known questioned costs as noted above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 33 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls, which includes ensuring grant expenditures are obligated and liquidated timely to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.