Finding Text
Information on the federal program: Subject: Education Stabilization Fund (ESF) Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425W Federal Award Numbers and Years (Or Other Identifying Numbers): S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR section 200.313 states in part: (a) Title. Subject to the requirements and conditions set forth in this section, title to equipment acquired under a Federal award will vest upon acquisition in the non-Federal entity. Unless a statute specifically authorizes the Federal agency to vest title in the non-Federal entity without further responsibility to the Federal Government, and the Federal agency elects to do so, the title must be a conditional title. Title must vest in the non-Federal entity subject to the following conditions: (1) Use the equipment for the authorized purposes of the project during the period of performance, or until the property is no longer needed for the purposes of the project. (2) Not encumber the property without approval of the Federal awarding agency or pass-through entity. (3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section. (d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Condition: 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 Equipment and Real Property Management compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: There were nine equipment purchases made during the audit period and charged to the ESF grants which totaled $564,248 in the aggregate. During testing of equipment purchases, the following items were noted: • The School Corporation provided a capital asset listing that had not been updated since 2020. As a result, none of the equipment items selected for testing that were purchased with ESF funds were included on the listing. Additionally, the listing did not include required elements under 2 CFR §200.313(d), including documentation of the federal funding source and the condition of the property. • The School Corporation did not perform a physical inventory of equipment at least once every two years as required by 2 CFR §200.313(d)(2). As such, management was unable to demonstrate that federally funded equipment was being periodically verified and reconciled to property records. Identification as a repeat finding, if applicable: No. Recommendation: We recommend the School Corporation implement and enforce procedures to ensure federally funded equipment is properly recorded, maintained, and inventoried in accordance with 2 CFR §200.313, including updating the capital asset listing to include all required elements and performing physical inventories at least once every two years. Views of Responsible Officials and Planned Corrective Actions: For the views of the responsible officials, refer to the Corrective Action Plan that is part of this report.