Finding Text
Information on the federal program:
Subject: Education Stabilization Fund – Internal Controls
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D, 84.425U
Federal Award Numbers: S425D210013, 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 a total of $499,689 for HVAC replacement in the elementary
school gymnasium, which was funded with ESSER II (84.425D) and ESSER III (84.425U) grant awards. It
was noted these capital asset acquisitions were not reported on the capital asset listing for the School
Corporation as of June 30, 2024. Management noted the project had not yet been completed as of June 30,
2024, however the costs incurred up to that date should have been reported as construction in progress on
the capital asset listing.
Additionally, the School Corporation last performed a physical inventory in fall of 2021, which does not meet
the federal compliance requirement to take a physical inventory at least once every two years.
Identification as a repeat finding: No.
Recommendation: We recommend the School Corporation update the capital asset listing at least
annually to include all equipment and real property acquisitions, including construction in progress, and
review for potential capital asset dispositions. The capital asset listing should include all required
information to track capital asset acquisitions purchased with federal funding.
Additionally, we recommend the School Corporation conduct a physical inventory at least once every two
years to meet the federal compliance requirement.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.