Finding Text
FINDING 2024-003
Subject: Special Education Cluster (IDEA) - Earmarking
Federal Agency: Department of Education
Federal Program: Special Education Grants to States
Assistance Listings Number: 84.027
Federal Award Number and Year (or Other Identifying Number): 22611-053-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Significant Deficiency, Other Matters
INDIANA STATE BOARD OF ACCOUNTS
21
LA PORTE COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-005.
Condition and Context
The School Corporation is a member of the South La Porte County Special Education
(Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and
spent the federal money on behalf of all its members. As the grant agreement was between the Indiana
Department of Education (IDOE) and each member school, the School Corporation was responsible for
ensuring and providing oversight of the Cooperative.
The School Corporation did not have internal controls in place to ensure that the Cooperative
complied with the earmarking requirements. The Cooperative did not have adequate procedures in place
to ensure that the required level of expenditures for nonpublic school students with disabilities was met for
each member school. The Cooperative did not have effective internal controls to ensure nonpublic school
expenditures were appropriately identified and reported.
Due to the timing of the Cooperative's corrective action, the nonpublic expenditures spent did not
meet the earmarking requirements for grant award number 22611-053-PN01. From the beginning of the
grant awards until March 2023, total grant expenditures were posted as expended. The nonpublic
proportionate share expenditures were determined by applying a percentage to the nonpublic school
budgeted expenditures. Beginning in March 2023, the Cooperative began tracking expenditures by
member school for the nonpublic services. As such, we were unable to identify if the minimum amount per
the grant award was expended and properly reported to the IDOE from the beginning of the grant awards
through March 2023, as required.
The lack of internal controls and noncompliance was isolated to 22611-053-PN01 grant award.
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 200.403 states in part:
"Except where otherwise authorized by statute, costs must meet the following general criteria
in order to be allowable under Federal awards: . . .
(g) Be adequately documented. . . ."
INDIANA STATE BOARD OF ACCOUNTS
22
LA PORTE COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
511 IAC 7-34-7(b) states:
"The public agency, in providing special education and related services to students in nonpublic
schools must expend at least an amount that is the same proportion of the public agency total
subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities,
who are enrolled by their parents in nonpublic schools within its boundaries, is to the total
number of students with disabilities of the same age range."
Cause
Through management inquiry, they were unaware of the requirements to track nonpublic
proportionate share expenditures directly for each member school. While the Cooperative did implement
new processes and procedures to ensure expenditures were tracked by member school starting in March
2023, most of the grant award had been allocated to the member schools based on a percentage of the
budget.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently,
the amounts requested for reimbursement were not supported by actual expenditures, but rather
a percentage based on the budget per member school. Because of this, expenditures were not accurately
reported to the oversight agency.
Questioned Costs
There were no questioned costs identified.
Recommendation
Management of the Cooperative should develop written policies and procedures which would
require tracking of actual nonpublic proportionate share expenditures by member school. Documentation
should be maintained to show how these expenditures are being tracked to ensure compliance with the
Earmarking requirements.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.