Finding Text
FINDING 2024-002
Information on the federal program:
Subject: COVID-19 – Education Stabilization Fund – Activities Allowed or Unallowed
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards
carried out through grants, cost reimbursement contracts, and other agreements with state and local
governments. To be allowable, under federal awards, cost must meet certain criteria:
a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under
these principles.
b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types
or amount of cost items.
c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other
activities of the non-Federal entity.
d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any
other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as
an indirect cost.
e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state
and local governments and Indian tribes only, as otherwise provided for in this part.
f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally
financed program in either the current or a prior period.
g) Be adequately documented.
h) Cost must be incurred during the approved budget period.
Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must 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
terms and conditions of the Federal award.
Condition: An effective internal control system was not in place at the School District to ensure compliance
with requirements related to the Education Stabilization Fund and Activities Allowed or Unallowed.
Cause: The School District's management had not developed a system of internal controls that would have
ensured compliance with the Activities Allowed or Unallowed compliance requirement.
Effect: The failure to establish an effective internal control system placed the School District at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: $730.43
Context: During the testing of payroll disbursements charged to the Education Stabilization Fund grant
awards during the audit period, the following exceptions were noted:
For 16 payroll disbursements, in a sample of 40, management was unable to provide an approved
employee contract or hourly rate ordinance to support the selected employees' bi-weekly pay rate.
For one transaction selection, an employee received a $730.43 one-time payment for a Teacher
Appreciation Grant (TAG) funded by the 84.425U award. The Teacher Appreciation Grant has its
own fund and is a state/local grant received to reward high-performing, eligible certified staff. The
selected employee is a non-certified employee and did not qualify for a TAG award. There was no
documentation provided to support work performed under this award to support allowability of the
cost incurred.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the School District maintain supporting documentation for
vendor and payroll disbursements to support costs charged to the federal grant awards. For payroll
disbursements charged to Federal awards, management should maintain time records to support payroll
costs allocated to Education Stabilization Grant funds to verify they are allowable and supported by
documentation for work performed under the award.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.