FINDING 2023-005
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listing Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Other Matters
Condition and Context
A property record or capital asset listing which would include the source of funding for the property
(including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the
property, percentage of federal participation in the project costs for the federal award under which the
property was acquired, the location, and use and condition of the property is to be maintained for assets
purchased that exceed the School Corporation's capitalization threshold.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not reflect all additions of equipment paid for with the School Corporation's
COVID-19 - Education Stabilization Fund award. Twenty-three pieces of equipment, totaling $248,202,
were purchased during the audit period, all of which were selected for testing. Sixteen of the pieces of
equipment, totaling $133,353, were not added to the listing of capital assets. In addition, the seven pieces
of equipment added to the listing did not include all the required information. The missing information
included the source of funding for the property (including the federal award identification number), who
holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs
for the federal award under which the property was acquired, and the use and condition of the property.
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 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement
equipment), whether acquired in whole or in part under a Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
INDIANA STATE BOARD OF ACCOUNTS
23
SOUTH CENTRAL COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(1) Property records must be maintained that include a description of the property, a serial
number or other identification number, the source of funding for the property (including
the FAIN), who holds title, the acquisition date, and cost of the property, percentage of
Federal participation in the project costs for the Federal award under which the
property was acquired, the location, use and condition of the property, and any ultimate
disposition data including the date of disposal and sale price of the property. . . ."
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, not all assets purchased in whole or in part with federal dollars were added to
the capital asset listing. In addition, the assets added to the capital asset listing did not include all required
information.
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 asset records include all the necessary information
and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.