Finding Text
FINDING 2023-002
Information on the federal program:
Subject: Education Stabilization Fund (ESSER) – Internal Controls
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425C, 84.425D & 84.425U & 84.425W
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ."
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 Activities Allowed or Unallowed, Allowable Costs- Cost Principles 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. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: During testing payroll disbursements charged to ESF grants, we noted:
• One selection in a sample of 40 for which a time & effort report/semi-annual certification could not be provided.
• One selection in a sample of 40 for which the time & effort report was not signed by a supervisory official.
• Three selections in a sample of 40 for which the time & effort reports allocation to ESF varied from what was actually paid out of the ESF fund.
• Three selections in a sample of 40 for which the time & effort reports did not explicitly state that the employee be charged 100% to ESF. Additionally, it was not clear the Teacher's tutor hours had been approved to be charged to the ESF grants.
Additionally, we noted all of the nineteen vendor sample disbursements selected had no documented, secondary review of the voucher.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the School Corporation's management establish a system of controls to retain and track employe time and effort reports/certifications. We also recommend management make it explicitly clear as to who and how much stipends are to be paid.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.