Finding Text
FINDING 2023-007
Subject: Special Education Cluster (IDEA) - Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Special Education Grants to States
Assistance Listings Number: 84.027X
Federal Award Number and Year (or Other Identifying Number): 22611-054-ARP
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 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, and use and condition of the property is to be maintained for assets purchased that exceed the
School Corporation's capitalization threshold.
Upon inquiry of the School Corporation in order to review the procedures in place to ensure
equipment is properly added to the asset listing, the School Corporation disclosed there were no policies
or procedures in place to ensure assets were added. One piece of equipment in the amount of $75,387
purchased with special education funds was identified. The piece of equipment was selected for testing.
Although the piece of equipment was properly added to the asset listing, the listing did not include all the
required information. The missing information was as follows: the source of funding for the property
(including the FAIN), who holds title, 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.
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
28
WABASH CITY SCHOOLS
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,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be controls consisting of policies and procedures. Policies reflect the School
Corporation's management statements of what should be done to effect internal control, 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, asset records did not include all of the 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 required
information.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.