FINDING 2023-005
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): S425D200013, S425D210013,
S425U210013
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 via JotForm, a form/report builder. Data to be submitted
included, but was not limited to, current period expenditures, prior period expenditures, and key line items
such as "Number of Specific Positions Supported with Esser Funds," "Allocation of ESSER funds,"
"Expenditures per Activity," and "Full-Time Equivalency Positions."
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. There was no evidence of an oversight or
review process in place to prevent, or detect and correct, errors.
All six reports were selected for testing. For four of the six annual data reports the report 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 $260,064. However, the School Corporation's ledger for
the same period had total expenses of $264,832. Of the reported expenditures, $219,703
could not be determined to be properly categorized. In addition, the School Corporation
was unable to provide supporting documentation for the identified Key Line Items.
INDIANA STATE BOARD OF ACCOUNTS
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WASHINGTON COMMUNITY SCHOOLS, INC.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The ESSER I, Year 3 report, which covered the period of July 1, 2021 to June 30, 2022,
reported total expenses of $86,521. However, the School Corporation's ledger for the
same period had total expenses of $78,230. In addition, the School Corporation was
unable to provide supporting documentation for the identified Key Line Items.
The ESSER II, Year 1 and Year 2 reports, which covered the periods of July 1, 2020 to
June 30, 2021, and July 1, 2021 to June 30, 2022, respectively, Key Line Items were not
able to be traced to supporting documentation. The Expenditures by Subgrant Fund,
expenditure category, and object code were supported by the School Corporation's
records; however, the School Corporation did not provide supporting documentation for the
nonfinancial data required to be submitted with the reports.
The ESSER III, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021,
reported total expenses of $41,340. However, the School Corporation's ledger for the
same period had total expenses of $20,670. In addition, the School Corporation was
unable to provide supporting documentation for the identified Key Line Items.
The ESSER III, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022,
reported total expenses of $1,407,299, which agreed to the School Corporation's ledger.
However, $644,730 of the reported expenditures could not be determined to be properly
categorized. In addition, the School Corporation was unable to provide supporting
documentation for the identified Key Line Items.
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 200.302(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."
INDIANA STATE BOARD OF ACCOUNTS
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WASHINGTON COMMUNITY SCHOOLS, INC.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 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, the reports 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.
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
COVID-19 - Education Stabilization Fund program funds are supported by the School Corporation's
underlying accounting records.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.