Finding Text
FINDING 2024-010
Subject: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles
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, 84.027X, 84.173, 84.173X
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-027-PN01, 22611-027-ARP,
22619-027-ARP, 23611-027-PN01,
23619-027-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not established an effective internal control system related to the grant
agreement and the Allowable Costs/Cost Principles compliance requirement.
INDIANA STATE BOARD OF ACCOUNTS
32
HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
During our testing, there were two employees being paid a higher rate per hour for training from
the Special Education grant funds. The rate was higher than the normal hourly rate. The rate for the
training hours was a stipend rate set by the school for paraprofessional training. There was no authorization
by the School Corporation Officials for the rate change between the regular rate and a professional
development training rate. The Indiana Department of Education did not approve the separate rate.
Other noncompliance involved three employees tested. The School Corporation used accounting
software to process payroll. The software calculated payroll tax based on the employee year-to-date salary
rather than calculating tax on gross pay per period.
The lack of internal controls and noncompliance were isolated to the transactions as described
above.
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:
(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. . . ."
34 CFR 76.700 states: "A State and a subgrantee shall comply with § 76.500, the State plan,
applicable statutes, regulations, and approved applications, and shall use Federal funds in accordance with
those statutes, regulations, plan, and applications."
Cause
The internal control system over the Allowable Costs/Cost Principles compliance requirement was
not effective in preventing or detecting the overpayment of employees.
INDIANA STATE BOARD OF ACCOUNTS
33
HUNTINGTON COUNTY 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 overpayment of employees was not caught by another employee at 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 payroll applicable to the grant agreement
complies with the Allowable Costs/Cost Principles compliance requirement.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.