Finding Text
FINDING 2022-011 Subject: Title I Grants to Local Educational Agencies - Level of Effort-Maintenance of Effort, Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A190014SIG Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place at the School Corporation in order to ensure compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Level of Effort-Maintenance of Effort Maintenance of Effort is a district-level test that determines whether the School Corporation is providing a consistent level of financial support to public schools from year-to-year. This rule ensures that the School does not use Title I funds to shore up reductions in state and local support for public education. The Indiana Department of Education (IDOE) performs the Maintenance of Effort calculation utilizing Form 9 information provided by the School. As such, the amounts submitted to the IDOE to be used in the computation are tested to ensure they were recorded properly in the School's records as to the account and object code. In the fiscal years 2020-2021 and 2021-2022, 60 transactions were sampled each year to ensure the disbursements were posted to the proper account and object code. For 16 of the 60 transactions selected in 2020-2021, as well as 21 of the 60 transactions selected in 2021- 2022, appropriate supporting documentation was not provided for audit. As a result, the 37 disbursements could not be verified as to whether they were posted to the proper accounts and object codes. Earmarking The School Corporation did not expend the required minimum amount from grant S010A190014 for parent involvement activities. The School also did not have policies or procedures in place to properly monitor the expenses for the Parent Involvement set-aside to ensure the mandatory amounts were spent for both the S010A190014 and the S010A200014 grants. In addition, the Homeless set-asides for grants S010A190014 and S010A200014 were not monitored to ensure expenditures were tracked for those students designated as homeless. The lack of internal controls and noncompliance were systemic 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 200.400 states in part: "(a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. . . ." 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 Management had not developed a system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, related to the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective system of internal controls and retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.