Finding Text
FINDING 2023-003
Subject: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education
Grants to States, Special Education Preschool Grants, COVID-19 -
Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X
Federal Award Numbers and Years (or Other Identifying Numbers): 21611-062-PN01, 22611-062-PN01,
23611-062-PN01, 22611-062-ARP,
22619-062-PN01, 22619-062-ARP
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Condition and Context
The Individuals with Disabilities Act (IDEA) Special Education - Grants to States program provides
grant to states, and through them to Local Educational Agencies (i.e., the School Corporation), to assist
them in providing special education and related services to eligible children with disabilities ages three to
twenty-one. IDEA's Special Education - Preschool Grants program provides grants to states, and through
them to Local Educational Agencies to assist them in providing special education and related services to
children with disabilities ages three to five and, at the state's discretion, to two-year-old children with
disabilities who will turn three during the school year.
To receive reimbursement for special education expenses paid, the School Corporation's Treasurer
completed a reimbursement request, and the Assistant Superintendent of Schools reviewed it. The
documentation attached to the reimbursement request; however, did not have adequate detail to determine
the payroll paid was in conformance with the applicable cost principes. Furthermore, payroll disbursements
were posted by the Treasurer without a review to ensure the payee, amount, fund, and disbursement
classification was accurate prior to disbursement.
INDIANA STATE BOARD OF ACCOUNTS
19
RANDOLPH CENTRAL SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 control, 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.
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.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.