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.