Finding Text
FINDING 2022-013 Subject: Title I Grants to Local Educational Agencies - Eligibility 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: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation submits the October Real Time report each year to the Indiana Department of Education (IDOE). This data is used to report the School's enrollment and poverty (socioeconomic) status of the students enrolled in each school. The School had not properly designed or implemented a system of internal controls to ensure a proper review and approval of the October Real Time report took place before submission to the IDOE. Enrollment and poverty numbers for any non-public schools are manually entered into the Title I Application by the School. Summary data of non-public enrollment and poverty status was provided to the School by the participating non-public school. The enrollment counts and the poverty counts included in the summary data should have been supported by non-public school records, such as a list of students and their poverty status. The School did not retain the supporting documentation for fiscal year 2020-2021 for the nonpublic school. The lack of internal controls was systemic throughout the audit period. The failure to retain supporting documentation for non-public enrollment and poverty counts was isolated to the 2020-2021 school year. 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 Federal awards that are renewed quarterly or annually, from the date of the 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. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under ? 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause Management had not established 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 Eligibility compliance requirement. Effect The failure to establish an effective system of internal controls and retain and provide appropriate supporting documentation for 2020-2021 enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Eligibility compliance requirement could result in the loss of future federal funds to the School Corporation. The failure to establish an effective system of internal controls in 2021-2022 could have enabled noncompliance with the grant agreement and the Eligibility compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure documentation be maintained and made available for audit and comply with the grant agreement and the Eligibility compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.