Finding Text
FINDING 2025-007 Subject: Special Education Cluster (IDEA) - Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-117-PN01, 22611-117-ARP, 23611-117-PN01, 24611-117-PN01, 25611-117-PN01, 22619-117-PN01, 23619-117-PN01, 24619-117-PN01, 25619-117-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Suspension and Debarment An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Prior to entering into subawards and covered transactions with program funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusion, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Three covered transactions that equaled or exceeded $25,000 were identified. All three of these transactions were tested for compliance with suspension and debarment requirements for the Special Education Cluster (IDEA) grants during the 2024-2025 audit period. From testing, it was noted that the School Corporation had a process in place to verify on Sam.gov whether these vendors were suspended or debarred from receiving payment from federal funds. However, there was no documentation that a review of this verification had been performed. The lack of effective internal controls was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 26 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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). . . ." Cause The School Corporation had a process in place to check the suspension and debarment status of vendors being paid with special education grant funds. However, no documentation of a review to ensure the accuracy of determinations made with regards to the suspension and debarment status of potential vendors was provided for audit. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal or exceed $25,000 were verified to be not suspended, debarred, or otherwise excluded, but no internal control was in place to ensure that the determinations made in regards to vendor status for receiving federal funds was correct. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no known 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 expenditures made from federal awards are in compliance with the procurement and suspension and debarment compliance requirements. The School Corporation's system of internal controls should be designed to ensure that the appropriate procurement method is utilized and that documentation is retained to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Additionally, the system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction and that internal controls are in place to ensure that any determinations made for vendor status are correct. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.