Finding Text
Information on the federal program:
Subject: Education Stabilization Fund – Equipment and Real Property Management
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D, 84.425U
Federal Award Numbers: S425D200013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness
Criteria: 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, 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.
(2) A physical inventory of the property must be taken and the results reconciled with the property
records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss, damage,
or theft of the property. Any loss, damage, or theft must be investigated.
(4) Adequate maintenance procedures must be developed to keep the property in good condition. Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the Equipment and Real Property
Management Requirements compliance requirements.
Cause: The School Corporation's management had not developed a system of internal controls to ensure
compliance with the compliance requirements listed above.
Effect: The failure to establish an effective internal control system placed the School Corporation 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: There were no questioned costs identified.
Context: The School Corporation expended $419,545 on equipment acquisitions during the period under
audit which was charged to the ESSER II (84.425D) and ESSER III (84.425U) grant awards. The School
Corporation did not maintain a capital asset listing for the audit period to properly track federal equipment
acquisitions. The School Corporation had also not performed a complete physical inventory of capital
assets during the audit period as required by federal and state regulations.
Identification as a repeat finding: No.
Recommendation: We recommend the School Corporation maintain and update the capital asset listing
at least annually to include all equipment and real property acquisitions and review for potential capital
asset dispositions. The capital asset listing should include all required information to track capital asset
acquisitions purchased with federal funds. We also recommend the School Corporation conduct a physical
inventory of capital assets at least every two years and maintain documentation to support the process
undertaken to comply with federal and state regulations.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.