Finding Text
FINDING 2023-006
Subject: Special Education Cluster (IDEA) - Activities Allowed or Unallowed, Period of Performance
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): 20611-019-PN01, 21611-019-PN01,
22611-019-PN01, 23611-019-PN01,
22611-019-ARP, 21619-019-PN01,
23619-019-PN01, 22619-019-ARP
Compliance Requirements: Activities Allowed or Unallowed, Period of Performance
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. The IDEA's Special Education - Preschool Grants program provides grants to states, and
through them to the 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.
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.
Activities Allowed or Unallowed
The School Corporation did not have internal controls in place over payroll disbursements
charged to the special education grants. Payroll disbursements were paid without evidence
that the detailed report of payroll disbursements was reviewed and approved by another person
not involved in the original payroll process.
INDIANA STATE BOARD OF ACCOUNTS 25
MADISON-GRANT UNITED SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Period of Performance
A payroll journal report was generated by the Payroll/Benefits Coordinator and reviewed and
approved by the Chief Financial Officer or the Deputy Treasurer to ensure costs charged to the
special education grants were within the period of performance. However, there was no
documented evidence of the review.
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.