FINDING 2023-002
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, 84.173
Federal Award Numbers and Years (or Other Identifying Numbers): 21611-058-PN01; 22611-058-PN01
21619-056-PN01; 22619-056-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation utilized separate funds to account for the financial activity of the special
education programs. The ledger activity for these funds was used as the basis for the expenditures claimed
for reimbursement on the reimbursement requests submitted to the Indiana Department of Education
(IDOE).
The School Corporation failed to properly review the reimbursement requests submitted to the
IDOE. Although the Assistant Accounting Manager prepared the reimbursement requests, and the
Accounting Manager reviewed the requests prior to submission through the IDOE information portal, the
internal control was not effective and did not prevent, or detect and correct, material noncompliance.
Testing of the reimbursement requests submitted during the audit period identified the following
issues:
Award 21611-058-PN01 - Seven reimbursement requests were filed during the audit
period; all of which were selected for testing. For five of the seven reimbursement requests
tested, the expenditures did not agree to the ledger. For four of the five reimbursement
requests in which the expenditures did not agree to the ledger, the errors were due to
timing issues as expenses were claimed for reimbursement prior to being incurred. As
such, the expenditures claimed for reimbursement on two of the requests exceeded the
amount per the ledger, with the amount per the ledger then exceeding the expenditures
requested for reimbursement by the same amount on the subsequent request. The
expenditures included in the fifth reimbursement request exceeded the ledger amount,
resulting in a $17 excess reimbursement over what the School Corporation was entitled to
receive.
Award 22611-058-PN01 - Three reimbursement requests were filed during the audit
period; all of which were selected for testing. For two of the three reimbursement requests
tested, the amount per the ledger exceeded the expenditures claimed by a total of
$416,468. Upon inquiry of the School Corporation to understand why this happened, the
officials indicated that total expenditures exceeded the budgeted allocations per the
awards. Therefore, the net difference was subtracted from the reimbursement request to
determine the amount to request. As such, there was no supporting documentation that
detailed the expenditures requested for or excluded from the reimbursement request.
Award 21619-056-PN01 - Two reimbursement requests were filed during the audit period;
all of which were selected for testing. For one of two reimbursement requests tested, the
expenditures included on the reimbursement request exceeded the ledger amount,
resulting in a $72 excess reimbursement.
Award 22619-056-PN01 - Four reimbursement requests were filed during the audit period;
all of which were selected for testing. For one of four reimbursement requests tested, the
amount per the ledger exceeded the expenditures claimed by a total of $7,538. Upon
inquiry of the School Corporation to understand why this happened, the officials indicated
that total expenditures exceeded the budgeted allocations per the awards. Therefore, the
net difference was subtracted from the reimbursement request to determine the amount
to request. As such, there was no supporting documentation that detailed the expenditures
requested for or excluded from the reimbursement request.
The lack of internal controls and noncompliance were isolated to the 21611-058-PN01,
22611-058-PN01, 21619-056-PN01, and 22619-056-PN01 grant awards.
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
Financial reporting. . . ."
2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust
specific Federal award conditions as needed, . . ."
2 CFR 200.328 states:
"Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved
governmentwide data elements for collection of financial information (at time of
publication the Federal Financial Report or such future, OMB-approved, governmentwide data
elements available from the OMB-designated standards lead. This information must be
collected with the frequency required by the terms and conditions of the Federal award, but no
less frequently than annually nor more frequently than quarterly except in unusual circumstances,
for example where more frequent reporting is necessary for the effective monitoring
of the Federal award or could significantly affect program outcomes, and preferably in coordination
with performance reporting. The Federal awarding agency must use OMB-approved
common information collections, as applicable, when providing financial and performance
reporting information."
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, requests for reimbursement were not supported by the ledgers.
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 requests for reimbursement are supported
by the ledgers.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.