Finding Text
2025 – 002: Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425 Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: 7000S425U210013 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: • Material Weakness in Internal Control Over Compliance • Material Noncompliance Criteria or specific requirement: Schools are required to maintain complete and accurate records for all transactions included in the population subject to audit. Documentation should be retained for the applicable record retention period and must be sufficient to support the allowability, accuracy, and completeness of reported transactions, including items from prior periods when they are included in the population under review. Condition: The population provided by the School for testing included items from both the current and prior fiscal years. However, the School did not provide the requested prior-year items included in the population. In addition, for two items selected from the current-year population, the School was unable to locate or provide sufficient supporting documentation to substantiate the transaction. Questioned costs: $936,724 Context: The School could not provide the supporting expenditure detail for previous years’ expenses claimed during the audit period or documentation for two the current year sample selections. Cause: Due to change in management and turnover in office, the School did not have adequate processes in place to ensure that prior-year documentation remains accessible when prior-year items are included in the audit population. Additionally, internal controls over documentation retention and retrieval for current-year transactions were not operating effectively. Effect: Because prior-year items included in the population were not provided, and two current-year items lacked supporting documentation, auditors were unable to fully verify the completeness and accuracy of the population. This limits assurance that all transactions included in the population were properly supported and compliant with applicable requirements. Repeat finding: No. Recommendation: We recommend the School strengthen its documentation retention and record management procedures to ensure that all transactions included in audit populations—regardless of fiscal year—are readily available and adequately supported. Management should also implement controls to verify that supporting documentation is complete and accessible prior to submission for audit. Views of responsible officials: There is no disagreement with the audit finding.