Finding Text
FINDING 2024-002
Subject: COVID-19 - Education Stabilization Fund - Activities Allowed
or Unallowed, Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Number: 84.425
Federal Award Number and Year (or Other Identifying Number): S424U200013
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Audit Finding: Significant Deficiency
Condition and Context
An effective internal control system was not designed at the School Corporation to ensure
compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and
Allowable Costs/Cost Principles compliance requirements.
The School Corporation had designed a system of internal controls to ensure payroll expenditures
charged to the grant fund were allowable. However, 2 of the 44 expenditures tested did not have documentation
that the internal control had been applied and operated effectively.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
INDIANA STATE BOARD OF ACCOUNTS
17
FRANKLIN COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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). . . ."
Cause
An effective system of internal controls had not been designed by management of the School
Corporation to ensure compliance with the federal award and the Activities Allowed or Unallowed and
Allowable Costs/Cost Principles compliance requirements. An internal control had been designed but was
not applied consistently to all payroll transactions.
Effect
Without an effective system of internal controls, noncompliance with the federal award and the
Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements could have
occurred.
Noncompliance with the conditions of the federal award could result in the loss of federal funding
to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish a system of internal
controls related to the federal award and the Activities Allowed or Unallowed and Allowable Costs/Cost
Principles compliance requirements and apply the controls consistently to all transactions.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.