Finding Text
FINDING 2023-005
Subject: Special Education Cluster (IDEA) - Earmarking
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.173
Federal Award Numbers and Years (or Other Identifying Numbers): 20611-009-PN01, 21611-009-PN01,
21619-009-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation is a member of the Exceptional Children's Co-op (Cooperative). During
fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal
money on behalf of all its member schools. As the grant agreements were between the Indiana Department
of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and
providing oversight of the Cooperative. There was inadequate oversight performed by the School
Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance
requirement.
The School Corporation did not have internal controls in place to ensure that the Cooperative
complied with the earmarking requirements. The Cooperative did not have adequate procedures in place
to ensure that the required level of expenditure for non-public school students with disabilities was met for
each member school. The Cooperative did not have effective internal controls to ensure non-public school
expenditures were appropriately identified and reported.
The Non-Public Proportionate Share expenditures for the 20611-009-PN01, 21611-009-PN01, and
21619-009-PN01 grant awards could not be verified for the individual member schools. Total grant
expenditures were posted as expended. The Non-Public Proportionate Share expenditures were
determined by applying a percentage to the non-public school budgeted expenditures. These were the
amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per grant
awards was expended and properly reported to the IDOE as required.
The lack of internal controls and noncompliance were isolated to the 20611-009-PN01,
21611-009-PN01, and 21619-009-PN01 grant awards.
INDIANA STATE BOARD OF ACCOUNTS
26
GREATER JASPER CONSOLIDATED SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 200.403 states in part:
"Except where otherwise authorized by statute, costs must meet the following general criteria
in order to be allowable under Federal awards: . . .
(g) Be adequately documented. . . ."
2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust
specific Federal award conditions as needed . . ."
511 IAC 7-34-7(b) states:
"The public agency, in providing special education and related services to students in nonpublic
schools must expend at least an amount that is the same proportion of the public agency total
subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities,
who are enrolled by their parents in nonpublic schools within its boundaries, is to the total
number of students with disabilities of the same age range."
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 such, non-public proportionate share expenditures per member school could not be
determined.
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.
INDIANA STATE BOARD OF ACCOUNTS
27
GREATER JASPER CONSOLIDATED SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure non-public proportionate share funds are
appropriately allocated to the member school based on expenses charged directly on behalf of the member
school. Supporting documentation for these expenses should be retained for audit.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.