FINDING 2023-007
Information on the federal program:
Subject: Special Education Cluster (IDEA) - Reporting
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X
Federal Award Numbers: 19611-022-PN01, 20611-022-PN01, 21611-022-PN01, 22611-022-PN01,
22611-022-ARP, 23611-022-PN01, 20619-022-PN01, 21619-022-PN01, 22619-022-PN01, 22619-022-
ARP, 23619-022-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Qualified Opinion
Criteria: 2 CFR 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)...."
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."
2 CFR 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity records
pertinent to a Federal award must be retained for a period of three years from the date of submission of
the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date
of the submission of the quarterly or annual financial report, respectively, as reported to the Federal
awarding agency or pass-through entity in the case of a subrecipient. . . ."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program
requirements."
Condition: The School Corporation did not have internal controls in place to ensure that the Cooperative
complied with the reporting requirements. The Cooperative had not designed or implemented adequate
policies or procedures to determine that requests for reimbursement were submitted accurately and agreed
to supporting documentation. There was a documented oversight, review, and approval process in place;
however, the Cooperative did not adequately ensure that proper procedures were followed.
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, amounts requested for reimbursement could not be traced to the Cooperative’s
ledgers for expenditures.
Noncompliance with the grant agreement and the compliance requirement could result in the loss of future
federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation is a member of the Greene-Sullivan Special Education Cooperative
(Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and
spent the federal money on behalf of all its members. 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. However, there was inadequate oversight performed
by the School Corporation in order to ensure compliance with the Reporting compliance requirement.
The School Corporation did not have internal controls in place to ensure that the Cooperative complied with
the reporting requirements. The Cooperative had not designed or implemented adequate policies or
procedures to determine that requests for reimbursement were submitted accurately and agreed to
supporting documentation. There was a documented oversight, review, and approval process in place;
however, the Cooperative did not adequately ensure that proper procedures were followed. For fiscal year
2022, 51 Reimbursement Reports were tested. 14 Reimbursement Reports could not be traced to unit
ledgers for expenditures, and 21 Reports did not have appropriate supporting documentation. For fiscal
year 2023, 23 Reimbursement Reports were tested. Three Reimbursements Report did not agree to
supporting documentation, and key line items could not be verified.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Identification as a repeat finding: No
Recommendation: We recommended that management of the School Corporation establish a proper
system of internal controls and develop policies and procedures to ensure supporting documentation is
used and retained for all reimbursement requests submitted.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.