Finding Text
FINDING 2022-002
Subject: Title I Grants to Local Educational Agencies - Internal Controls
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 FY2021,
S010A200014 FY2021
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Eligibility; Matching, Level of Effort, Earmarking
Audit Finding: Material Weakness
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, material noncompliance related to the grant agreement and the Eligibility and
Matching, Level of Effort, Earmarking compliance requirements.
Eligibility
Data from the School Corporation's student software system is uploaded to the Indiana
Department of Education's (IDOE) Data Exchange System. Enrollment and poverty information
for the School Corporation is then abstracted by the IDOE from the Data Exchange System.
The School Corporation's Research and Evaluation team compared the lunch status eligibility
used to determine student poverty in the student software system to the information in Data
Exchange System at regular intervals. However, this process was not documented and,
therefore, could not be verified.
INDIANA STATE BOARD OF ACCOUNTS 22
Level of Effort
Form 9 data is submitted to the IDOE semi-annually. The data reported includes the School
Corporation's expenditures recorded during that period. The IDOE calculates Maintenance of
Effort based on the expenditure information submitted on the Form 9 for that fiscal year. To
verify amounts used by the IDOE in their computation were derived from the books and records
of the School Corporation, costs were reviewed to ensure they are recorded properly as to
account and object code and reported correctly on the Form 9.
SOUTH BEND COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
For payroll amounts, summary level payroll reports were provided to a knowledgeable
employee for review; however, the reports lacked sufficient detail to effectively review and verify
the proper employees were paid from the correct fund, account, and object codes.
Earmarking
A portion of the School Corporation's Title I allocation is required to be set aside for parental
involvement and homeless reservation. The required amount to be set aside is indicated in the
Title I grant application. The School Corporation is responsible for monitoring each required
set aside throughout the life of the grant to ensure the obligation is met.
Monitoring of each set aside was completed on the reimbursement requests; however, reimbursement
requests, although reviewed by a knowledgeable employee, were supported by
summary level payroll data. The summary level payroll did not provide sufficient detail to
effectively review and verify the proper employees were paid from or should have been paid
from earmarked Title I funds.
The lack of internal controls was a systemic issue 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). . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. Policies reflect
the School Corporation's management statements of what should be done to effect internal controls, and
procedures should consist of actions that would implement these policies.
Effect
Without the proper design or implementation of the components of a system of internal controls,
including policies and procedures that provide segregation of duties and additional oversight as needed,
the internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance.
Questioned Costs
There were no questioned costs identified.
INDIANA STATE BOARD OF ACCOUNTS
23
SOUTH BEND COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the School Corporation design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.