Finding Text
FINDING 2024-002
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): S425D200013, S425U200013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-007.
Condition and Context
The School Corporation had not properly designed a system of internal controls to ensure
compliance with requirements related to the grant agreement and the Equipment and Real Property
Management compliance requirement.
INDIANA STATE BOARD OF ACCOUNTS 17
SCHOOL TOWN OF MUNSTER
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
A property record or capital asset listing is required to be maintained for all equipment and building
improvements purchased with the Education Stabilization Fund grant awards to ensure adequate
safeguards are in place to prevent loss or damage of items. Equipment to be included in the listing is that
which exceeds the School Corporation's capital asset threshold of $5,000.
The School Corporation purchased $1,134,226 of equipment and building improvements with the
Education Stabilization Funds which should have been recorded as capital assets purchased with federal
grant funds as these items individually exceeded the capitalization threshold. However, none of the
equipment or building improvements were detailed in the capital asset listing, which also could have
documented if the items were properly maintained and safeguarded as required.
In addition, the capital asset listing provided did not include all required information, 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), 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.
Lastly, the School Corporation did not complete a physical inventory of the property at least once
every two years as required.
The lack of internal controls and noncompliance were systemic 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:
". . . (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. . . ."
INDIANA STATE BOARD OF ACCOUNTS 18
SCHOOL TOWN OF MUNSTER
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
Management did not develop a system of internal controls to ensure that all items over the capital
asset threshold were added to the listing, the capital asset listing included all required information, items
purchased were properly maintained and safeguarded, and that a physical inventory was completed at
least every two years as required.
Effect
The failure to establish an effective internal controls system enabled noncompliance to go
undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management
compliance requirement could have resulted in the loss of future federal funds to the School Corporation or
the repayment of federal funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls that would ensure compliance with the Equipment and Real Property management
requirements.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.