Finding 947816 (2023-006)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
$1
Year
2023
Accepted
2024-03-01

AI Summary

  • Core Issue: The School Corporation failed to implement effective internal controls, leading to late submissions of Annual Data Reports and unsupported reimbursement requests.
  • Impacted Requirements: Noncompliance with federal reporting standards and financial management regulations, risking future federal funding.
  • Recommended Follow-Up: Management should establish a robust internal control system and develop clear policies and procedures to ensure compliance.

Finding Text

FINDING 2023-006 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): S425D200013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding related to Annual Data Reports from the immediately prior audit report. The prior audit finding number was 2021-004. Condition and Context Annual Data Report 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, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. The annual data reports were prepared by the Treasurer and reviewed by a second knowledgeable individual; however, this process did not allow for the prevention, or detection and correction of errors. The School Corporation was required to submit six Annual Data Reports during the audit period. The three Annual Data Reports for the period of July 1, 2020 to June 30, 2021, were not submitted in a timely manner. The reports were to be submitted to the IDOE by May 13, 2022, but the School Corporation did not submit the reports until March 16, 2023. Reimbursement Requests The School Corporation completes reimbursement requests on a periodic basis. The reimbursement requests are prepared by the Treasurer utilizing various ledger reports and are reviewed by a second knowledgeable employee; however, this process did not allow for the prevention, or detection and correction, of errors. INDIANA STATE BOARD OF ACCOUNTS 26 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) While gaining an understanding of how the School Corporation spent its COVID-19 - Education Stabilization Fund award, various issues with reimbursement requests were noted. The issues identified at that time revealed that the School Corporation submitted reimbursement requests for and received reimbursements for four invoices, twice which resulted an extra $50,000 in grant funds being claimed. Additionally, three reimbursement requests tested did not agree with supporting documentation which resulted in $6,071 being reimbursed that was not supported by the School Corporation's records. The $56,071 is considered a questioned cost. As a result of these errors, we determined that reimbursement requests should be tested. Therefore, a sample of 8 reimbursement requests were selected from the population of 49 for testing. No additional errors were noted in the 8 reimbursement requests tested. The lack of internal controls was a systemic issue that occurred throughout the audit period; the noncompliance was limited to the reports noted above. 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 200.302(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." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation. 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. INDIANA STATE BOARD OF ACCOUNTS 27 CULVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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, reports were not timely submitted to the IDOE, and reimbursement requests were not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned of $56,071 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure reports are submitted timely and supporting documentation is used and retained for reimbursement requests. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

Questioned Costs Reporting Internal Control / Segregation of Duties Subrecipient Monitoring Cash Management Material Weakness Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 371355 2023-002
    Material Weakness
  • 371356 2023-002
    Material Weakness
  • 371357 2023-002
    Material Weakness
  • 371358 2023-002
    Material Weakness
  • 371359 2023-002
    Material Weakness
  • 371360 2023-002
    Material Weakness
  • 371361 2023-002
    Material Weakness
  • 371362 2023-003
    Material Weakness
  • 371363 2023-003
    Material Weakness
  • 371364 2023-003
    Material Weakness
  • 371365 2023-003
    Material Weakness
  • 371366 2023-003
    Material Weakness
  • 371367 2023-004
    Material Weakness
  • 371368 2023-004
    Material Weakness
  • 371369 2023-004
    Material Weakness
  • 371370 2023-005
    Material Weakness
  • 371371 2023-005
    Material Weakness
  • 371372 2023-005
    Material Weakness
  • 371373 2023-006
    Material Weakness Repeat
  • 371374 2023-006
    Material Weakness Repeat
  • 371375 2023-006
    Material Weakness Repeat
  • 371376 2023-006
    Material Weakness Repeat
  • 371377 2023-006
    Material Weakness Repeat
  • 371378 2023-006
    Material Weakness Repeat
  • 371379 2023-007
    Material Weakness
  • 371380 2023-007
    Material Weakness
  • 371381 2023-007
    Material Weakness
  • 947797 2023-002
    Material Weakness
  • 947798 2023-002
    Material Weakness
  • 947799 2023-002
    Material Weakness
  • 947800 2023-002
    Material Weakness
  • 947801 2023-002
    Material Weakness
  • 947802 2023-002
    Material Weakness
  • 947803 2023-002
    Material Weakness
  • 947804 2023-003
    Material Weakness
  • 947805 2023-003
    Material Weakness
  • 947806 2023-003
    Material Weakness
  • 947807 2023-003
    Material Weakness
  • 947808 2023-003
    Material Weakness
  • 947809 2023-004
    Material Weakness
  • 947810 2023-004
    Material Weakness
  • 947811 2023-004
    Material Weakness
  • 947812 2023-005
    Material Weakness
  • 947813 2023-005
    Material Weakness
  • 947814 2023-005
    Material Weakness
  • 947815 2023-006
    Material Weakness Repeat
  • 947817 2023-006
    Material Weakness Repeat
  • 947818 2023-006
    Material Weakness Repeat
  • 947819 2023-006
    Material Weakness Repeat
  • 947820 2023-006
    Material Weakness Repeat
  • 947821 2023-007
    Material Weakness
  • 947822 2023-007
    Material Weakness
  • 947823 2023-007
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund Fy2023 $1.25M
10.555 National School Lunch Program Fy2023 $439,523
10.555 National School Lunch Program Fy2022 $428,372
84.425 Education Stabilization Fund Fy2022 $325,779
84.010 Title I Grants to Local Educational Agencies Fy2022 $231,897
84.010 Title I Grants to Local Educational Agencies Fy2023 $217,677
10.553 School Breakfast Program Fy2022 $117,131
10.553 School Breakfast Program Fy2023 $89,327
84.027 Special Education_grants to States Fy2022 $71,834
93.778 Medical Assistance Program Fy2023 $64,052
84.367 Improving Teacher Quality State Grants Fy2022 $60,278
10.559 Summer Food Service Program for Children Fy2022 $51,397
84.367 Improving Teacher Quality State Grants Fy2023 $39,006
93.778 Medical Assistance Program Fy2022 $33,924
10.579 Child Nutrition Discretionary Grants Limited Availability Fy2022 $30,000
84.424 Student Support and Academic Enrichment Program Fy2022 $23,567
10.582 Fresh Fruit and Vegetable Program Fy2023 $18,892
10.559 Summer Food Service Program for Children Fy2023 $14,786
84.027 Special Education_grants to States Fy2023 $9,646
10.649 Pandemic Ebt Administrative Costs Fy2023 $628
10.649 Pandemic Ebt Administrative Costs Fy2022 $614