Finding Text
FINDING 2024-003
Subject: Special Education Cluster (IDEA) - Matching, Level of Effort, 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): H027A200084, H027A210084,
H027A220084, H027A230084,
H027X210084, H173A200104,
H173A210104, H173A220104,
H173A230104, H173X210104
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
Condition and Context
Earmarking
A portion of the School Corporation's Special Education allocation was required to be set aside
for the mandatory Coordinated Early Intervening Services (CEIS) reservation as well as the
nonproportionate share reservation. The required amount to be set aside was indicated in the
Special Education grant application. The School Corporation is responsible for monitoring
each required set aside throughout the life of the grant to ensure the obligation is met.
The School Corporation did not separate the earmarking for the mandatory CEIS reservation
from the nonpublic proportionate share. The same expenditures in the amount of $2,647 were
earmarked in both earmarking categories.
In addition, the School Corporation did not have actual expenditure amounts to account for the
fiscal year 2021 preschool grant nonproportionate share amount. The expenditures used were
a percentage of total expenditures.
The School Corporation did have internal controls in place; however, they were not effective in
preventing these errors.
INDIANA STATE BOARD OF ACCOUNTS
20
MT. VERNON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Level of Effort - Individual Transactions (Vendor)
The Form 9 (financial) data was submitted by the School Corporation to the Indiana Department
of Education (IDOE) semiannually. The data reported included the School Corporation's
expenditures recorded during that period. The IDOE calculated Maintenance of Effort based
on the expenditure information submitted on the Form 9 for that fiscal year. To verify amounts
used by the IDOE in their computation were derived from the ledger of the School Corporation,
costs were reviewed to ensure they were recorded properly as to account and object code and
reported correctly on the Form 9.
In fiscal year 2021, Form 9 testing, 5 out of 25 expenditure codes were not properly supported
by the School Corporation's records. In 2022, Form 9 testing, 6 out of 25 expenditures were
not properly supported by the School Corporation's records.
The School Corporation did have internal controls in place; however, they were not effective in
preventing these errors.
The lack of 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 200.403 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."
INDIANA STATE BOARD OF ACCOUNTS
21
MT. VERNON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
The School Corporation did not have policies and procedures in place to properly maintain
documentation of expenses allocated to earmarking requirements and to verify that expenditures were
reported accurately on the Form 9.
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, the proper allocation of the earmarking requirement could not be determined,
and the reported Form 9 expenditures were not properly supported by financial records.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended the School Corporation's management establish a proper system of internal
controls and develop policies and procedures to ensure Form 9 reporting is accurate and earmarking
requirements are met.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.