FINDING 2023-004
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 was required to submit annual data reports 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 reports were prepared by one employee
without an oversight or review process in place to prevent, or detect and correct, errors.
Furthermore, the data reported for three of the six reports could not be traced back to underlying
records; therefore, the accuracy and completeness of the reports could not be verified. The following errors
were identified:
1. ESSER I, Year 2 Report
No activity was reported to the IDOE, per the report; however, the School Corporation's
records indicate expenditures for the period of $81,312.
The key line item, "Addressing Physical Health and Safety - Supplies," was
understated by $1,829. The key line item, "Meeting Students' Academic, Social,
Emotional, and Other Needs (Excluding Mental Health Supports) - Property," was
understated by $16,915.
2. ESSER II, Year 1 Report
No activity was reported to the IDOE, per the report; however, the School Corporation's
records indicated expenditures for the period of $275,399.
The key line item, "Addressing Physical Health and Safety - Purchased Professional
and Technical Services," was understated by $6,041. The key line item, "Meeting
Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health
Supports) - Supplies," was understated by $104,829.
3. ESSER II, Year 2 Report
Expenditures reported to the IDOE, per the report, were $361,627; however, the
School Corporation's records indicated expenditures for the period of $438,739.
INDIANA STATE BOARD OF ACCOUNTS
23
SALEM COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The key line item, "Meeting Students' Academic, Social, Emotional, and Other Needs
(Excluding Mental Health Supports) Uses - Supplies," was understated $77,112.
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 200.334 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. . . ."
2 CFR 200.302(b) states int 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."
34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with
program requirements."
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.
INDIANA STATE BOARD OF ACCOUNTS
24
SALEM COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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, some data could not be traced back to the underlying records.
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 all reports submitted on behalf of the
COVID-19 - Education Stabilization Fund program funds are accurate and complete.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.