Finding Text
FINDING 2022-002 Subject: Title I Grants to Local Educational Agencies - Internal Controls Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-001-PN01, 20611-001-PN01, 21611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility; Reporting; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with the grant agreement and the Eligibility; the Reporting; the Matching, Level of Effort, Earmarking; and the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirements. Eligibility The October 1st Real Time Report of Public Enrollment (PE) was used by the Indiana Department of Education to populate the enrollment and poverty status data in the Title I applications. These numbers were then used to calculate Percent Poverty, which was used to rank schools for Title I eligibility. One person was primarily responsible for compiling and uploading student data, including poverty status, for Real Time reports. There were no documented controls in place, such as an oversight, review, or approval process to ensure eligibility was properly determined. Reporting The Indiana Department of Education used the Form 9 financial reports submitted by the School Corporation in the state's submission of the average State Per Pupil Expenditure data submitted to the National Center for Education Statistics. The Treasurer was responsible for preparing and submitting the Form 9. There were no documented controls in place such as an oversight, review, or approval process to ensure expenditures were correctly reported. Matching, Level of Effort, Earmarking The Indiana Department of Education calculates the Maintenance of Effort - Level of Effort based on expenditure information submitted on the Form 9 for that fiscal year. The Treasurer was responsible for the preparation and submission of the Form 9. There were no documented internal controls in place such as an oversight, review, or approval process to ensure expenditures were correctly reported. Special Tests and Provisions - Annual Report Card, High School Graduation Rate One person was primarily responsible for removing students from a cohort and receiving required documentation to support their removal. There were no documented controls in place to ensure the proper exit code was entered and that the required documentation was obtained. The lack of internal controls was a systemic issue throughout the entire audit period. 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 Management had not designed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Eligibility; the Reporting; the Matching, Level of Effort, Earmarking; and the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirements. Effect The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Eligibility; the Reporting; the Matching, Level of Effort, Earmarking; and the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control related to the grant agreement and the Eligibility; the Reporting; the Matching, Level of Effort, Earmarking; and the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.