Finding 537423 (2024-005)

Material Weakness
Requirement
AB
Questioned Costs
$1
Year
2024
Accepted
2025-03-26

AI Summary

  • Core Issue: The School Corporation failed to maintain effective internal controls, leading to noncompliance with allowable costs and activities under the COVID-19 Education Stabilization Fund.
  • Impacted Requirements: Key compliance requirements from 2 CFR 200 regarding documentation and internal controls were not met, resulting in $173,841 in questioned costs.
  • Recommended Follow-Up: Management should implement a robust internal control system to ensure only allowable costs are charged and properly documented for grant reimbursements.

Finding Text

FINDING 2024-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Activities Allowed or Unallowed Federal Agency: Indiana 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): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Activities Allowed or Unallowed Audit Findings: Material Weakness, Modified Opinion Condition and Context The COVID-19 - Education Stabilization Fund (ESF), established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. A sample of 40 vendor and payroll disbursements that were charged to the ESF grant for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable allowable cost principles. Of the 40 disbursements tested, 4 payroll disbursements for accelerated learning were approved, but the School Corporation could not provide documentation to show where the governing board approved their rate of pay. In addition, there was a transfer from the ESSER II - Cares grant fund to the Education fund for $117,177 to reimburse that fund for expenses on June 20, 2024. The School Corporation was unable to provide documentation for the expenses that were reimbursed to ensure they were for allowable activities and allowable costs. The ineffective internal controls were a systemic issue 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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 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: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the Allowable Costs/Cost Principles and the Activities Allowed or Unallowed compliance requirements. Management was not aware that they should have only been reimbursed for expenditures made out of the ESF funds or should have moved the expenditures and retained proper documentation to support what expenditures tied to what was reimbursed. It was noted that the accelerated learning rate of pay was discussed at a School Board meeting, but the approved wage rates were not documented in the School Board minutes or on any sort of salary schedule approved by the School Board members. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Cost/Cost Principles and the Activities Allowed or Unallowed compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs There was a total of $173,841 of questioned costs as referenced under the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure only allowable activities and allowable costs are charged to grants funds and to ensure grant money is only requested for reimbursement for monies directly related to the grant program. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Corrective Action Plan

FINDING 2024-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Allowable Activities Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425C, 84.425U Federal Award Numbers and Year (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Person Responsible for Corrective Action: Chad Yencer - Superintendent Contact Phone Number: 765-348-7550 Views of Responsible Official: Agree Description of Corrective Action Plan: This was a singular occurrence where the rate for a remedial program was not approved by the BCS school board, and where the payments did not tie back to an allowable cost. This program and fund are no longer active. Anticipated Completion Date: Completed

Categories

Questioned Costs Allowable Costs / Cost Principles Subrecipient Monitoring

Other Findings in this Audit

  • 537414 2024-003
    Material Weakness Repeat
  • 537415 2024-004
    Material Weakness Repeat
  • 537416 2024-004
    Material Weakness Repeat
  • 537417 2024-003
    Material Weakness Repeat
  • 537418 2024-004
    Material Weakness Repeat
  • 537419 2024-004
    Material Weakness Repeat
  • 537420 2024-003
    Material Weakness Repeat
  • 537421 2024-004
    Material Weakness Repeat
  • 537422 2024-004
    Material Weakness Repeat
  • 537424 2024-006
    Material Weakness Repeat
  • 537425 2024-005
    Material Weakness
  • 537426 2024-006
    Material Weakness Repeat
  • 537427 2024-005
    Material Weakness
  • 537428 2024-006
    Material Weakness Repeat
  • 537429 2024-005
    Material Weakness
  • 537430 2024-006
    Material Weakness Repeat
  • 1113856 2024-003
    Material Weakness Repeat
  • 1113857 2024-004
    Material Weakness Repeat
  • 1113858 2024-004
    Material Weakness Repeat
  • 1113859 2024-003
    Material Weakness Repeat
  • 1113860 2024-004
    Material Weakness Repeat
  • 1113861 2024-004
    Material Weakness Repeat
  • 1113862 2024-003
    Material Weakness Repeat
  • 1113863 2024-004
    Material Weakness Repeat
  • 1113864 2024-004
    Material Weakness Repeat
  • 1113865 2024-005
    Material Weakness
  • 1113866 2024-006
    Material Weakness Repeat
  • 1113867 2024-005
    Material Weakness
  • 1113868 2024-006
    Material Weakness Repeat
  • 1113869 2024-005
    Material Weakness
  • 1113870 2024-006
    Material Weakness Repeat
  • 1113871 2024-005
    Material Weakness
  • 1113872 2024-006
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund 2023 $1.46M
84.425 Education Stabilization Fund 2024 $1.15M
10.555 National School Lunch Program 2023 $1.01M
10.555 National School Lunch Program 2024 $883,505
84.010 Title I Grants to Local Educational Agencies 2023 $481,421
84.010 Title I Grants to Local Educational Agencies 2024 $466,099
10.553 School Breakfast Program 2023 $261,914
10.553 School Breakfast Program 2024 $212,703
93.778 Medical Assistance Program 2024 $138,363
93.778 Medical Assistance Program 2023 $114,206
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) 2024 $101,614
12.357 Rotc Language and Culture Training Grants 2024 $72,578
12.357 Rotc Language and Culture Training Grants 2023 $69,151
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) 2023 $58,033
84.027 Special Education Grants to States 2024 $55,509
84.424 Student Support and Academic Enrichment Program 2024 $39,188
84.424 Student Support and Academic Enrichment Program 2023 $31,707
84.027 Special Education Grants to States 2023 $23,577
84.173 Special Education Preschool Grants 2023 $4,766
10.559 Summer Food Service Program for Children 2023 $1,676
84.173 Special Education Preschool Grants 2024 $1,150
10.559 Summer Food Service Program for Children 2024 $957
10.649 Pandemic Ebt Administrative Costs 2023 $628