Finding Text
FINDING 2024-002
Subject: Special Education Cluster (IDEA) - Equipment
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States
Assistance Listings Numbers: 84.027, 84.027X
Federal Award Numbers and Years (or Other Identifying Numbers): H027A190084, 22611-093-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Equipment and Real Property Management
Audit Findings: Material Weakness, Other Matters
INDIANA STATE BOARD OF ACCOUNTS
17
KOKOMO SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
The same finding also appeared in prior Report B60713 as Finding 2022-001.
Condition and Context
Per federal requirements property records must contain the following information about the
equipment: description (including serial number or other identification number), source of funding for the
property (including the federal award identification number), who holds title, the acquisition date, cost of the
property, percentage of federal participation in the project costs for the federal award under which the
property was acquired, location, use and condition of the property, and any ultimate disposition data
including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)).
An effective internal control system was not in place at the School Corporation to ensure
compliance with requirements related to the grant agreement and the Equipment and Real Property
Management compliance requirement.
The School Corporation purchased $243,903 of equipment with Special Education funds.
Equipment, totaling $78,874, was not added to the School Corporation's capital asset record. The School
Corporation's capital asset record did not include an allocation or designation of what items were purchased
with federal funds. The School Corporation had another system, called Destiny, in place to track special
education equipment purchases. This system did include the required federal parameters to satisfy the
property record requirements; however, equipment, totaling $220,149, was not added to this record.
Additionally, one equipment item added to the Destiny system for a stander had discrepancies. It
was listed at a purchase price of $3,059 and an acquisition date of June 23, 2023. The School Corporation's
capital asset listed it at $7,430 with an acquisition date of January 30, 2024.
The lack of effective internal controls and noncompliance were systemic issues 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 200.313(d)(1) states:
"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 sales price of the property."
INDIANA STATE BOARD OF ACCOUNTS
18
KOKOMO SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
A proper system of internal controls was not designed and implemented by the management of the
School Corporation. The School Corporation's policies and procedures for tracking equipment purchased
with federal funds was not sufficient and/or properly implemented to ensure all equipment was properly
recorded.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, equipment purchased with federal funds for the Special Education program
was not accurately recorded. Noncompliance with the grant agreement and the Equipment and Real
Property Management compliance requirement could result in the loss of future federal funds to the School
Corporation.
Questioned Costs
There were no questioned cost identified.
Recommendation
We recommended that the School Corporation's management establish and properly implement a
system of internal controls to ensure compliance with the grant agreement and the Equipment and Real
Property Management compliance requirement.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.