FINDING 2023-004
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Number: 84.425D
Federal Award Number and Year (or Other Identifying Number): S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance with the Equipment and Real Property Management compliance
requirement.
A property record or capital asset listing would include the following for each asset: a description
of the property, a serial number or other identification number, 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, use and condition of the property, and any ultimate disposition data
including the date of disposal and sale price of the property. The property record or capital asset listing
should be maintained for assets purchased that exceed the School Corporation's capitalization threshold.
The School Corporation utilized COVID-19 - Education Stabilization Fund (ESF) grant awards to
purchase equipment throughout the audit period, including, but not limited to, the following: full serving
lines with cashier stations, serving lines with flatware carts, milk coolers, dishwashers, and a double stack
convection oven. The total equipment purchased was $300,131. All equipment was properly added to the
capital asset listing; however, the following attributes were missing from the listing: the source of the funding
(including the federal award identification number), who holds the title, percentage of federal participation
in the project costs for federal awards under which the property was acquired, the condition of the property,
and, if applicable, the disposition data.
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:
INDIANA STATE BOARD OF ACCOUNTS 23
TELL CITY-TROY TOWNSHIP SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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)(1) states:
"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, 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 sales 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, assets purchased with federal dollars, Education Stabilization Funds, were not
properly added to the School Corporation's asset listing. In addition, assets on the listing did not denote
whether federal funds were used to acquire the asset, nor were any discrepancies in the records reconciled.
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.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.