Finding Text
FINDING 2024-002
Subject: Special Education Cluster (IDEA) - Earmarking
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States,
Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.173
Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104,
H173A210104, H027A220084,
H027A230084
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
INDIANA STATE BOARD OF ACCOUNTS 17
ANDERSON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
The School Corporation did not have internal controls in place to ensure that the School
Corporation complied with the earmarking requirements. The School Corporation did not have adequate
procedures in place to ensure that the required level of expenditures for nonpublic school students with
disabilities was met and to ensure nonpublic school expenditures were appropriately identified and
reported. The Special Education Director allocated a portion of the salaries of the teachers that provided
services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation
of how the calculation was performed or that a review of that calculation by another individual
occurred.
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. . . ."
2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust
specific Federal award conditions as needed . . ."
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
The Special Education Director is responsible for reporting and tracking funds spent related to the
required proportionate share amounts for each grant. The Special Education Director had a procedure in
place to request nonpublic school expenditures related to each grant; however, the procedure was not
properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to
confirm a secondary review was in place over this procedure, other than the preparation and review by the
Special Education Director.
INDIANA STATE BOARD OF ACCOUNTS 18
ANDERSON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 such, the earmarking requirements could not be verified as having been met.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a proper system of
internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are
appropriately allocated to the member school based on expenses charged directly on behalf of the member
school and that the calculated expenditures are reviewed by another individual. Supporting documentation
for these expenses should be retained for audit.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.