FINDING 2023-005
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, S425D210013,
S425U210013
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,
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.
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 to be prepared
and submitted by the School Principal and reviewed by the Executive Business Director; however, no
evidence of this review or oversight process could be provided. As such, the annual data reports were
prepared and submitted to the IDOE without an oversight or review process to prevent, or detect and
correct, errors.
In addition, five of six reports submitted during the audit period were not supported by the School
Corporation's records. The following errors were identified:
The ESSER I, Year 2 report, which had an applicable reporting period of October 1, 2020
through June 30, 2021, reported $534,761 in expenditures; however, actual expenditures
for the applicable reporting period totaled $478,883.
The ESSER I, Year 3 report, which had an applicable reporting period of July 1, 2021 to
June 30, 2022, reported $0 in expenditures; however, actual expenditures for the
applicable reporting period totaled $243,814.67.
The ESSER II, Year 1 report, which had an applicable reporting period of July 1, 2020 to
June 30, 2021, reported $733 in expenditures; however, actual expenditures for the
applicable reporting period totaled $322,539.
The ESSER II, Year 2 report, which had an applicable reporting period of July 1, 2021 to
June 30, 2022, reported $0 in expenditures; however, actual expenditures for the
applicable reporting period totaled $276,642.
The ESSER III, Year 2 report, which had an applicable reporting period of July 1, 2021 to
June 30, 2022, reported $0 in expenditures; however, actual expenditures for the
applicable reporting period totaled $1,315,208.
The lack of internal controls and noncompliance were systemic issues 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). . . ."
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."
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.
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 accurately submitted to the IDOE.
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 submitted accurately.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.