Finding Text
FINDING 2025-004 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 Assistance Listings Numbers: 84.027; 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 23611-004-PN01, 22611-004-ARP, 23619-004-PN01 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 from the Special Education Cluster (IDEA) grant funds occurred within the appropriate period of performance. Claims for the special education programs were paid without a documented 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 by the Director of Exceptional Needs and approved by the Assistant Superintendent of Finance and Operations, expenditures continued to be charged to grant funds outside the period of performance. Funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. The 23611-004-PN01, 22611-004-ARP, and 23619-004-PN01 grant awards still had expenditures charged to those grant funds after the ending date of the award's time frame. The lack of internal controls was isolated to 23611-004-PN01, 22611-004-ARP, and 23619-004-PN01 grant awards. 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). . . ." 34 CFR 76.709 states: "(a) If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year. INDIANA STATE BOARD OF ACCOUNTS 22 COMMUNITY SCHOOLS OF FRANKFORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The State shall return to the Federal Government any carryover funds not obligated by the end of the carryover period by the State and its subgrantees." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place and are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.