FINDING 2023-007
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
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): S425U210013, S425D200013,
S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
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.
The School Corporation maintained a detailed listing of capital assets; however, the asset records
provided for audit did not include three of the six assets paid for with federal funds. The School Corporation
utilized COVID-19 - Education Stabilization Fund awards, totaling $153,484, to purchase an air handler
unit, a generator, planter equipment, auto pilot software, a carpet cleaner, and a floor cleaner. The software,
carpet cleaner, and floor cleaner were not included in the capital asset records. Additionally, the capital
asset listing provided did not identify which assets were purchased with federal dollars, a serial number or
other identification number, who holds title, the location of the asset, nor the 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:
(1) Property records must be maintained that include a description of the property
(including the 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, use and condition of the property, and
any ultimate disposition data including the date of disposal and sales price of the
property. . . ."
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, assets purchased in whole or in part with federal dollars were not properly
added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether
federal funds were used to acquire the asset and did not include a serial number or other identification
number, who holds title, the location of the asset, nor the use and condition of the property.
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 necessary
information and new assets are added.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.