Finding Text
FINDING 2023-005
Information on the federal program:
Subject: Special Education Cluster (IDEA) – Internal Controls
Federal Agency: Department of Education
Federal Program: Special Education Grants to States
Assistance Listings Number: 84.027X
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-020-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Procurement
Audit Findings: Significant Deficiency
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 200.318 states:
"(i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price."
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 suspension and debarment compliance requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the suspension and debarment 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 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: For the one procurements sample, the School Corporation did not have any formal procurement documentation to support the decision to choose the vendor. Management stated the vendor selected was the only provider available in the area, however there was no supporting documentation to support the claim. The contact was for master level mental health professional services and the total contract amount was not to exceed $179,360. $59,824 was paid to the vendor in the audit period.
Management did properly check that the vendor was not suspended or debarred. The finding is isolated to the 22611-020-ARP award.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and cash management compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.