Finding Text
FINDING 2023-004
Subject: COVID-19 - Education Stabilization Fund - Earmarking
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Number: 84.425U
Federal Award Number and Year (or Other Identifying Number): S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
22
CULVER COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
Local educational agencies that receive funds under the American Rescue Plan - Elementary and
Secondary School Emergency Relief Fund (ESSER III) are to reserve not less than 20 percent of the funds
to address learning loss through the implementation of evidence-based interventions, such as summer
learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school
year programs, and ensure that such interventions respond to students' academic, social, and emotional
needs and address the disproportionate impact of the coronavirus on the student subgroups. This requirement
was set out in the enabling legislation for the funds and further implemented in the Education
Stabilization Relief Fund Application III, which the School Corporation was required to complete for its
award.
As the School Corporation fully expended its ESSER III award during the audit period, earmarking
was tested. The School Corporation, per its application, was required to set aside a total of $329,358 of
ESSER III grant funds to be used to provide additional opportunities to students including summer school,
career coach, and a social emotional academic learning liaison. Of the grant proceeds received by the
School Corporation, a total of $27,840 was expended towards the established set aside. Therefore, only 9
percent of the required 20 percent minimum earmarking requirement was spent. The remaining set aside
amount, $301,518, that was requested for reimbursement, was spent on activities that were not a part of
the earmarking requirement.
The lack of internal controls and noncompliance was isolated to the ESSER III grant noted above.
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). . . ."
2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust
specific Federal award conditions as needed. . . ."
Section 2001(e)(1) of the ARP Act states in part:
"A local educational agency that receives funds under this section—
(1) shall reserve not less than 20 percent of such funds to address learning loss through
the implementation of evidence-based interventions, such as summer learning or
summer enrichment, extended day, comprehensive afterschool programs, or extended
school year programs, and ensure that such interventions respond to students'
academic, social, and emotional needs and address the disproportionate impact of the
coronavirus on the student subgroups . . ."
INDIANA STATE BOARD OF ACCOUNTS
23
CULVER COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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, the required set-aside was not spent by the School Corporation.
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 required earmarking requirements are met.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.