FINDING 2023-010
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Number: 84.425D
Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
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. 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.
INDIANA STATE BOARD OF ACCOUNTS
32
SILVER CREEK SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 annual data reports were compiled,
prepared, and submitted by one person without oversight or review process in place to prevent, or detect
and correct, errors.
Additionally, all six reports were selected for testing. Of the six reports, five had errors as noted
below:
1. The ESSER I, Year 2 report overstated expenditures for the reporting period, October 1,
2020 to June 30, 2021, by $163,492. In addition, the key line item "Meeting Students'
Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) -
Property" chosen for review was incorrectly reported.
2. The ESSER I, Year 3 report did not report any expenditures for the reporting period, July
1, 2021 to June 30, 2022; however, the ledger detail had expenditures of $120,855. As
such, the key line items "Meeting Students' Academic, Social, Emotional, and Other Needs
(Excluding Mental Health Supports - Personnel Services - Salaries" and "Meeting Students'
Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports -
Personnel Services - Benefits" chosen for review could not be verified.
3. The ESSER II, Year 1 report overstated expenditures for the reporting period, July 1, 2020
to June 30, 2021, by $227,740. In addition, the key line items "Addressing Physical Health
and Safety - Personnel Services - Salaries" and "Operational Continuity and Other Allowed
Uses - Purchased Professional and Technical Services" chosen for review were incorrectly
reported.
4. The ESSER III, Year 1 report overstated expenditures for the reporting period, July 1, 2020
to June 30, 2021, by $30,643, as the report indicated expenditures of $30,643 but the
ledger did not have any expenditures from ESSER III during that time period. In addition,
the key line items "Addressing Physical Health and Safety (exclusive of amount expended
toward required set-aside to address learning loss) - Personnel services - Salaries" and
"Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental
Health Supports) (exclusive of amount expended toward required set-aside to address
learning loss) - Personnel Services - Benefits" chosen for review were incorrectly reported.
5. The ESSER III, Year 2 report understated expenditures for the reporting period, July 1,
2021 to June 30, 2022, by $61,705.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
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SILVER CREEK SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 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. . . .
(3) Records that identify adequately the source and application of funds for federally
funded activities. These records must contain information pertaining to Federal
awards, authorizations, obligations, unobligated balances, assets, expenditures,
income and interest and be supported by source documentation. . . ."
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."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. 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 design or implementation of the components of a system of internal controls,
including policies and procedures that provide segregation of duties and additional oversight as needed,
the internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, reports submitted to the IDOE were not supported by the School Corporation's
underlying accounting 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.
INDIANA STATE BOARD OF ACCOUNTS
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SILVER CREEK SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the School Corporation design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place prior to filing required reports.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.