FINDING 2023-003
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management
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: Equipment and Real Property Management
Audit Findings: Material Weakness, Other Matters
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. A property record or capital asset listing, which would include a
description of the property, a serial number or other identification number, the source of funding for the
property (including the federal award identification number (FAIN)), who holds title, the acquisition date,
cost of the property, percentage of federal participation in the project costs for the federal award under
which the property was acquired, the location, and use and condition of the property, is to be maintained
for assets purchased that exceed the School Corporation's capitalization threshold.
The School Corporation paid for various pieces of equipment with Education Stabilization Funds
that exceeded the capitalization threshold. Although these assets were added to a detailed listing of capital
assets, the assets were added as a lump sum amount, instead of by individual piece of equipment. Additionally,
the records did not include a serial number or other identification number, the source of funding for
the property (including the federal award identification number), who holds title, the acquisition date, cost
of the property, percentage of federal participation in the project costs for the federal award under which
the property was acquired, the location, and the use and condition of the property.
The lack of internal controls and noncompliance were systemic issued 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 200.313(d)(1) states:
"Property records must be maintained that include a description of the property, a serial number
or other identification number, the source of funding for the property (including the FAIN), who
holds title, the acquisition date, cost of the property, percentage of Federal participation in the
project costs for the Federal award under which the property was acquired, the location, use
and condition of the property, and any ultimate disposition data including the date of disposal
and sales price of the property."
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, assets purchased in whole or in part with federal dollars did not denote whether
federal funds were used to acquire the asset.
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 asset records include all the necessary information
and new assets are added individually.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.