Finding 375768 (2023-005)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2023
Accepted
2024-03-13

AI Summary

  • Core Issue: The School Corporation lacked a proper system of internal controls, leading to inaccurate reporting of expenditures for federal funds.
  • Impacted Requirements: Noncompliance with federal reporting standards (2 CFR 200.303 and 200.302) resulted in material weaknesses and a modified audit opinion.
  • Recommended Follow-Up: Management should implement a robust internal control system and develop clear policies and procedures to ensure accurate and compliant reporting.

Finding Text

FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were to be prepared and submitted by the School Principal and reviewed by the Executive Business Director; however, no evidence of this review or oversight process could be provided. As such, the annual data reports were prepared and submitted to the IDOE without an oversight or review process to prevent, or detect and correct, errors. In addition, five of six reports submitted during the audit period were not supported by the School Corporation's records. The following errors were identified:  The ESSER I, Year 2 report, which had an applicable reporting period of October 1, 2020 through June 30, 2021, reported $534,761 in expenditures; however, actual expenditures for the applicable reporting period totaled $478,883.  The ESSER I, Year 3 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $243,814.67.  The ESSER II, Year 1 report, which had an applicable reporting period of July 1, 2020 to June 30, 2021, reported $733 in expenditures; however, actual expenditures for the applicable reporting period totaled $322,539.  The ESSER II, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $276,642.  The ESSER III, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $0 in expenditures; however, actual expenditures for the applicable reporting period totaled $1,315,208. 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). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 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, reports were not accurately submitted to the IDOE. 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 reports are submitted accurately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

Internal Control / Segregation of Duties Material Weakness Reporting Matching / Level of Effort / Earmarking Special Tests & Provisions Subrecipient Monitoring

Other Findings in this Audit

  • 375753 2023-003
    Material Weakness
  • 375754 2023-003
    Material Weakness
  • 375755 2023-003
    Material Weakness
  • 375756 2023-003
    Material Weakness
  • 375757 2023-003
    Material Weakness
  • 375758 2023-003
    Material Weakness
  • 375759 2023-003
    Material Weakness
  • 375760 2023-005
    Material Weakness
  • 375761 2023-004
    Material Weakness
  • 375762 2023-005
    Material Weakness
  • 375763 2023-004
    Material Weakness
  • 375764 2023-005
    Material Weakness
  • 375765 2023-004
    Material Weakness
  • 375766 2023-005
    Material Weakness
  • 375767 2023-004
    Material Weakness
  • 952195 2023-003
    Material Weakness
  • 952196 2023-003
    Material Weakness
  • 952197 2023-003
    Material Weakness
  • 952198 2023-003
    Material Weakness
  • 952199 2023-003
    Material Weakness
  • 952200 2023-003
    Material Weakness
  • 952201 2023-003
    Material Weakness
  • 952202 2023-005
    Material Weakness
  • 952203 2023-004
    Material Weakness
  • 952204 2023-005
    Material Weakness
  • 952205 2023-004
    Material Weakness
  • 952206 2023-005
    Material Weakness
  • 952207 2023-004
    Material Weakness
  • 952208 2023-005
    Material Weakness
  • 952209 2023-004
    Material Weakness
  • 952210 2023-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program 2022 $4.61M
10.555 National School Lunch Program 2023 $3.61M
84.027 Special Education_grants to States 2022 $2.94M
84.027 Special Education_grants to States 2023 $2.20M
84.425 Education Stabilization Fund 2023 $1.81M
84.425 Education Stabilization Fund 2022 $1.16M
10.553 School Breakfast Program 2022 $1.04M
84.010 Title I Grants to Local Educational Agencies 2023 $772,380
84.010 Title I Grants to Local Educational Agencies 2022 $736,807
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) 2023 $657,131
10.553 School Breakfast Program 2023 $651,302
32.009 Emergency Connectivity Fund Program 2022 $582,750
93.778 Medical Assistance Program 2023 $357,438
84.367 Improving Teacher Quality State Grants 2023 $237,118
84.367 Improving Teacher Quality State Grants 2022 $221,683
93.778 Medical Assistance Program 2022 $193,963
10.559 Summer Food Service Program for Children 2022 $187,008
10.559 Summer Food Service Program for Children 2023 $109,994
84.173 Special Education_preschool Grants 2022 $85,654
84.173 Special Education_preschool Grants 2023 $76,748
84.424 Student Support and Academic Enrichment Program 2022 $59,576
84.365 English Language Acquisition State Grants 2022 $31,113
10.582 Fresh Fruit and Vegetable Program 2023 $20,194
84.365 English Language Acquisition State Grants 2023 $20,041
84.424 Student Support and Academic Enrichment Program 2023 $15,267
10.649 Pandemic Ebt Administrative Costs 2023 $3,135
10.649 Pandemic Ebt Administrative Costs 2022 $3,063