Finding Text
FINDING 2023-006
Subject: Special Education Cluster (IDEA) - Activities Allowed or Unallowed,
Allowable Costs/Cost Principles, Period of Performance
Federal Agency: Department of Education
Federal Program: Special Education Grants to States, COVID-19 - Special Education Grants to States
Assistance Listings Numbers: 84.027, 84.027X
Federal Award Numbers and Years (or Other Identifying Numbers): 20611-054-PN01, 21611-054-PN01,
22611-054-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost
Principles, Period of Performance
Audit Finding: Material Weakness
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the School Corporation in order to ensure payroll paid from the special education grant was allowable, in
conformance with the cost principles, and within the period of performance.
INDIANA STATE BOARD OF ACCOUNTS
26
WABASH CITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The School Corporation did not have any policies or procedures related to payroll disbursements
from the special education grant funds. A detailed report of payroll disbursements was paid from the grant
funds without evidence of review or approval by a knowledgeable person to ensure allowability, conformance
with cost principles and payment within the grant award beginning and ending dates.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) stablish 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). . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include appropriate segregation of duties. 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.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management 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.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.