FINDING 2023-001
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): S425D210013, S425D200013,
S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
15
SOUTH SPENCER COUNTY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current
period expenditures, prior period expenditures, expenditures per activity, and full-time equivalency
positions.
During the audit period the School Corporation submitted two ESSER I reports and two ESSER II
reports for a total of four reports. A single employee prepared and submitted each annual data report
without a review or oversight process in place to prevent, or detect and correct, errors.
All four reports were selected for testing. For two of the annual data reports, the reported amounts
could not be traced to the records, nor could the accuracy and completeness of the reports be verified. The
errors identified were as follows:
The ESSER I, Year 2 report, which covered the period of October 1, 2020 to June 30,
2021, reported total expenses of $140,700. However, the School Corporation's ledger for
the same period had total expenses of $83,866.
The ESSER II, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022,
reported total expenses of $157,701. However, the School Corporation's ledger for the
same period had total expenses of $218,117.
The School Corporation failed to file the ESSER III, Year 2 report for the period of July 1, 2021 to
June 30, 2022. The School Corporation's ledger for this period had total expenses of $565,028.
In addition, the key line items of "Number of FTE positions;" "Number of Specific Positions
Supported with ESSER Funds;" and "Allocation of ESSER funds to Schools and Criteria Used" could not
be verified on any of the four reports as the School Corporation could not provide supporting documentation
for non-financial 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:
(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
16
SOUTH SPENCER COUNTY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. . . ."
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 or implemented 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, the reports were not supported by the School Corporation's underlying
accounting records and one report was not submitted.
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
Education Stabilization Fund program funds are supported by the School Corporation's underlying
accounting records and that required reports are submitted.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.