Finding 366754 (2022-005)

FINDING 2022-005 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card/High School Graduation Rate 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) S010A190014 FY2021, S010A200014 FY2021 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card/High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation reports graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. The Indiana Department of Education has outlined the acceptable documentation required when a student exists in a cohort. The School Corporation has a total of five high schools plus the juvenile detention center for which graduation rate data is submitted. A withdrawal form is utilized by each high school and the juvenile detention center to document the reason for a withdrawal. The withdrawal form and supporting documentation is then approved by an official at that student's high school prior to the student being removed from the cohort. Of the 15 students selected for testing, the following errors were noted:  One student's mobility was not properly coded.  One student's documentation did not clearly state the city and country the student was moving to.  One student's documentation was lacking a court order or other documentation from the juvenile detention center to evidence that the student was detained more than 20 days.  One student's documentation did not include the required transcript request or enrollment verification.  Two students did not have any documentation to support the student's withdrawal. The lack of internal controls and noncompliance were systemic issues throughout the 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). . . ." 29 INDIANA STATE BOARD OF ACCOUNTS SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." 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. As a result, adequate documentation to support the reason for a student's removal from the high school graduation cohort for mobility reasons was not retained. 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 questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure appropriate documentation is retained to support the removal of students from the graduation cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.