Finding Text
FINDING 2023-006
Subject: Title I Grants to Local Educational Agencies - Special Tests and
Provisions - Annual Report Card, High School Graduation Rate
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listings Number: 84.010
Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014,
S010A210014, S010A220014
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Special Tests and Provisions - Annual Report
Card, High School Graduation Rate
Audit Findings: Material Weakness, Other Matters
Repeat Finding
This is a repeat finding from the prior audit report. The prior audit finding number was 2021-006.
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 to ensure that documentation regarding the reason for a student
being removed from the high school graduation cohort for mobility reasons was prepared, reviewed, and
retained.
The Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance
requirement necessitated that for students removed from the high school graduation cohort for mobility
reasons there be proper written documentation to support the identified mobility code. There were 14
students selected for testing. Of the 14 students tested, 2 students did not have the required supporting
documentation to substantiate removal from the cohort for mobility reasons, and 2 students did not have
any supporting documentation.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
31
SCHOOL CITY OF EAST CHICAGO
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
20 USC 7801(23)(B) states:
"To remove a student from a cohort, a school or local educational agency shall require
documentation, or obtain documentation from the State educational agency, to confirm that the
student has transferred out, emigrated to another country, or transferred to a prison or juvenile
facility, or is deceased."
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 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, proper documentation was not maintained for students that were removed
from the cohort for mobility reasons.
Noncompliance with the grant agreement and the compliance requirement could result in the loss
of future federal funds to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish a proper system of internal
controls and develop policies and procedures to ensure proper documentation is maintained for students
that are removed from the cohort.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.