Finding Text
FINDING 2023-004
Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Condition and Context
The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to
states and school districts to help safely reopen and sustain the safe operation of schools and to address
the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion
of their ARP ESSER allocation to Local Educational Agencies (LEA). Prior to the LEAs receiving their
respective subgrants, the LEAs were required to complete an application for ARP ESSER funding, which
was submitted to the Indiana Department of Education, the pass-through entity for approval. The
application included a district level budget identifying how the LEA intended to spend program funds.
To receive reimbursement for ESSER expenses paid, the 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.
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.
INDIANA STATE BOARD OF ACCOUNTS
21
RANDOLPH CENTRAL SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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.