Finding 960858 (2023-005)

Material Weakness
Requirement
I
Questioned Costs
-
Year
2023
Accepted
2024-03-26
Audit: 297571
Organization: Rush County Schools (IN)

AI Summary

  • Core Issue: The School Corporation failed to verify that vendors were not suspended or debarred before entering into contracts exceeding $25,000.
  • Impacted Requirements: Noncompliance with federal regulations (2 CFR 200.303 and 2 CFR 180.300) regarding procurement and suspension/debarment verification.
  • Recommended Follow-Up: Establish a robust system of internal controls and develop clear policies to ensure compliance with verification requirements for all covered transactions.

Finding Text

FINDING 2023-005 Subject: Special Education Cluster (IDEA) - Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027A, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 19611-117-PN01, 20611-117-PN01, 21611-117-PN01, 22611-117-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to entering into subawards and covered transactions with program funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusion, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. INDIANA STATE BOARD OF ACCOUNTS 21 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a person with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were not sufficient procedures in place. Three covered transactions, totaling $241,059, that equaled or exceeded $25,000 were identified. All three transactions were selected for testing. For the three transactions, the School Corporation did not verify the vendor's suspension and debarment status prior to payment. The lack of effective 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 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. 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. INDIANA STATE BOARD OF ACCOUNTS 22 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring

Other Findings in this Audit

  • 384412 2023-003
    Material Weakness Repeat
  • 384413 2023-003
    Material Weakness Repeat
  • 384414 2023-004
    Material Weakness Repeat
  • 384415 2023-004
    Material Weakness Repeat
  • 384416 2023-005
    Material Weakness
  • 384417 2023-005
    Material Weakness
  • 384418 2023-005
    Material Weakness
  • 384419 2023-006
    Material Weakness
  • 384420 2023-006
    Material Weakness
  • 384421 2023-007
    Material Weakness Repeat
  • 384422 2023-007
    Material Weakness Repeat
  • 384423 2023-007
    Material Weakness Repeat
  • 384424 2023-007
    Material Weakness Repeat
  • 384425 2023-007
    Material Weakness Repeat
  • 384426 2023-007
    Material Weakness Repeat
  • 384427 2023-007
    Material Weakness Repeat
  • 384428 2023-008
    Material Weakness Repeat
  • 384429 2023-009
    Material Weakness Repeat
  • 384430 2023-009
    Material Weakness Repeat
  • 960854 2023-003
    Material Weakness Repeat
  • 960855 2023-003
    Material Weakness Repeat
  • 960856 2023-004
    Material Weakness Repeat
  • 960857 2023-004
    Material Weakness Repeat
  • 960859 2023-005
    Material Weakness
  • 960860 2023-005
    Material Weakness
  • 960861 2023-006
    Material Weakness
  • 960862 2023-006
    Material Weakness
  • 960863 2023-007
    Material Weakness Repeat
  • 960864 2023-007
    Material Weakness Repeat
  • 960865 2023-007
    Material Weakness Repeat
  • 960866 2023-007
    Material Weakness Repeat
  • 960867 2023-007
    Material Weakness Repeat
  • 960868 2023-007
    Material Weakness Repeat
  • 960869 2023-007
    Material Weakness Repeat
  • 960870 2023-008
    Material Weakness Repeat
  • 960871 2023-009
    Material Weakness Repeat
  • 960872 2023-009
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program 2022 $1.28M
84.027 Special Education_grants to States 2022 $1.22M
84.425 Education Stabilization Fund 2023 $1.20M
10.555 National School Lunch Program 2023 $1.05M
84.010 Title I Grants to Local Educational Agencies 2022 $470,033
84.010 Title I Grants to Local Educational Agencies 2023 $393,650
84.425 Education Stabilization Fund 2022 $321,585
10.553 School Breakfast Program 2022 $274,432
10.553 School Breakfast Program 2023 $248,457
84.367 Improving Teacher Quality State Grants 2022 $145,801
84.027 Special Education_grants to States 2023 $117,465
84.173 Special Education_preschool Grants 2022 $52,756
84.367 Improving Teacher Quality State Grants 2023 $46,523
10.559 Summer Food Service Program for Children 2022 $30,254
84.424 Student Support and Academic Enrichment Program 2022 $18,947
10.559 Summer Food Service Program for Children 2023 $15,289
84.173 Special Education_preschool Grants 2023 $8,833
10.649 Pandemic Ebt Administrative Costs 2023 $3,135
10.649 Pandemic Ebt Administrative Costs 2022 $3,063
10.556 Special Milk Program for Children 2023 $994