Finding Text
Finding 2022-003 Information on the federal program: Subject: Special Education Cluster ? Internal Controls Federal Agency: Department of Education Federal Program: Special Education Cluster Assistance Listing Number: 84.027 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash Management Audit Finding: Material Weakness, Modified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." For grants and cooperative agreements to non-federal entities that are paid on a reimbursement basis, supporting documentation shows that the costs for which reimbursement was requested were paid prior to the date of the reimbursement request. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with cash management for reimbursement grants. The School Corporation did not have a design control in place to ensure that service provider invoices were paid prior to the submitting reimbursements to the Indiana Department of Education (IDOE). Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The School Corporation pays one hundred percent of its Special Education Cluster funding to one service provider, which totaled $1,109,356 for the audit period. For all invoices during the audit period, the School Corporation submitted and received reimbursement from the IDOE prior to paying the service provider, and then the School Corporation remitted payment to the service provider. In addition, the School Corporation only remitted 95% of the invoice to the service provider and held back 5% of the invoice, which management acknowledged was in error. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement procedures to ensure the invoices are paid before submitting draw requests and receiving funds from IDOE. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.