FINDING 2023-002
Subject: COVID-19 - Education Stabilization Fund - Reporting
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Number: 84.425D
Federal Award Number and Year (or Other Identifying Number): S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
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.
The School Corporation was required to submit annual data reports to the Indiana Department of
Education 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 one ESSER I report, two ESSER II
reports, and two ESSER III reports, for a total of five reports. Although the Treasurer prepared the annual
data collection report, and the ESSER Program Director or Assistant Superintendent of Schools, both of
whom are knowledgeable about the program, reviewed and approved the report prior to submission, the
internal control was not effective and did not prevent, or detect and correct, errors prior to submission.
INDIANA STATE BOARD OF ACCOUNTS 16
SOUTH GIBSON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
All five reports were selected for testing. Neither of the ESSER II annual data reports were
accurately supported by the School Corporation's records. The errors identified were as follows:
The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021,
reported total expenses of $58,917; however, the School Corporation's ledger for the same
period had total expenses of $1,306.
The ESSER II, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022,
reported total expenses of $60,441; however, the School Corporation's ledger for the same
period had total expenses of $63,565.
The lack of effective internal controls and noncompliance were isolated to the S425D210013 grant
award.
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."
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 and implemented 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 controls, and procedures should consist of actions that would implement these policies.
INDIANA STATE BOARD OF ACCOUNTS
17
SOUTH GIBSON 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. As a result, the reports 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 all reports submitted on behalf of the
COVID-19 - Education Stabilization Fund program are supported by the School Corporation's underlying
accounting records.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.