Finding Text
FINDING 2024-002
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
An effective internal control system was not designed or implemented at the School Corporation to
ensure compliance with requirements related to the grant agreement and the Reporting compliance
requirement.
The School Corporation had not designed, nor implemented, a system of internal controls to ensure
that the annual Elementary and Secondary School Emergency Relief (ESSER) Data Collection reports
(Reports) were complete and accurately submitted. The Reports were prepared and submitted by one
employee without a documented oversight, review, or approval process in place to prevent, or detect and
correct, errors.
Due to the lack of effective internal controls, one of the four reports submitted during the audit
period was not supported by the School Corporation's records. The following error was noted:
For the ESSER III, Year 3 Report, which covered the period July 1, 2022 to June 30, 2023,
total expenses reported for Property: Addressing Physical Health and Safety - Mandatory
Subgrant funds was $236,023. Total expenses reported for Personnel Services: Meeting
Student's Academic, Social, Emotional, and Other Needs was $66,387, for a total of
$302,410. This was an overstatement of $271,004.
The lack of internal controls was a systemic issue throughout the audit period. Noncompliance was
isolated to the ESSER III, Year 3 Report.
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 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for the Federal awards that are renewed
quarterly or annual, from the date of submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
2 CFR 200.302(b) states in part:
"The financial management system of each non-Federal entity must provide for the following
. . .
(2) Accurate, current, and complete disclosure of the financial results of each Federal
award or program in accordance with the reporting requirements set forth in §§ 200.328
and 200.329. . . ."
34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format
that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other
responsibilities under the program."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Two employees collaborated on the preparation of the reports, but there was no documented review of the
completed reports by someone other than the preparers to detect errors prior to submission.
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 ESSER III, Year 3 Report was not supported by the School Corporation's
records.
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 that all reports are supported by the School
Corporation's records.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.