Finding Text
FINDING 2023-005
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Numbers: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013,
S425U200013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls
that would likely be effective in preventing, or detecting and correcting, noncompliance. The School
Corporation was required to submit annual data reports 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.
During the audit period the School Corporation submitted two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled,
prepared, and submitted by the Assistant Superintendent of Schools and reviewed by the Treasurer prior
to submission. However, this review process was not effective and did not detect and allow correction of
errors prior to submission.
All six of the submitted reports were selected for testing. Four of the reports, ESSER I, Year 2;
ESSER II, Year 1; ESSER II, Year 2; and ESSER III, Year 2, were not supported by the School
Corporation's records. The financial information provided did not agree to the data submitted in the reports;
therefore, we could not determine the accuracy of the reports.
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INDIANA STATE BOARD OF ACCOUNTS
RANDOLPH CENTRAL SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was isolated to the four reports identified 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."
2 CFR 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for Federal awards that are renewed quarterly
or annually, from the date of the submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
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.
23
INDIANA STATE BOARD OF ACCOUNTS
RANDOLPH CENTRAL 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 submitted to the IDOE 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
There were no questioned costs identified.
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 supported by the ledgers or
reports used to complete the report.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.