Finding Text
FINDING 2024-003
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): 21611-054-PN01, 22611-054PN01,
22619-054-PN01, 22611-054-ARP,
22619-054-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation is a member of the Wabash-Miami Area Programs for Exceptional Children
(Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special
education programs and spent the federal money on behalf of all its members. As the grant agreements
were between the Indiana Department of Education 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.
The nonpublic expenditures spent did not meet the earmarking requirements for grant award
numbers 21611-054-PN01, 22611-054-PN01, 22619-054-PN01, 22611-054-ARP, and 22619-054-ARP.
Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures for
each member school were determined by applying a percentage based on the total grant award to the
nonpublic school total expenditures.
The lack of internal controls and noncompliance were isolated to the 21611-054-PN01,
22611-054-PN01, 22619-054-PN01, 22611-054-ARP, and 22619-054-ARP grant awards.
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
Through inquiry of management, they were unaware of the requirements to track nonpublic
proportionate share expenditures directly for each member school. The Cooperative did implement new
processes and procedures to ensure expenditures were tracked by each member school starting with the
2024 grants, and these grants were still ongoing during the audit period.
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.