Finding 529904 (2024-001)

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 Federal Award Numbers: S425D210013 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. (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. (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. (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 an internal control system to ensure assets purchased with federal funds are added to the capital asset listing could have allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds, specifically with capital assets purchased with those funds. Questioned Costs: There were no questioned costs identified. Context: For the one sample item tested in a population of two, we noted the School Corporation expended $175,000 on baseball bleacher renovations which was charged to the ESSER II (84.425D) grant award. The bleachers were not reported on the capital asset listing for the School Corporation as of June 30, 2024. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a control system to ensure that capital assets are added to the capital asset listing at the time they are placed in service. An inventory of capital assets should be taken at least once every two years and reviewed for potential capital asset dispositions. The capital asset listing should include all required information to track capital asset acquisitions, including the federal funding source if applicable. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.