FINDING 2023-004
Subject: COVID-19 - Education Stabilization Fund - Reporting
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: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation was required to submit annual data reports to the Indiana Department of
Education (IDOE) 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 two ESSER I reports, two ESSER II
reports, and two ESSER III reports, for a total of six reports. The reports were prepared by one employee
without an oversight or review process in place to prevent, or detect and correct, errors.
Due to the lack of internal controls, the ESSER III, Year 1 Report had the following errors:
The key line items "Meeting Students' Academic, Social, Emotional, and Other Needs
(Excluding Mental Health Supports)(exclusive of amount expended toward required setaside
to address learning loss) - Supplies" and "Meeting Students' Academic, Social,
Emotional, and Other Needs (Excluding Mental Health Supports)(amount expended
toward required set-aside to address learning loss) - Supplies" reported an expended
amount of $285,111; however, the amount was only encumbered in the ledger, not actually
expended.
INDIANA STATE BOARD OF ACCOUNTS 22
LINTON-STOCKTON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls was a systemic issue throughout the audit period. The lack of
noncompliance was isolated to the ESSER III, Year 1 report.
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 200.334 states in part:
"Financial records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from the date
of submission of the final expenditure report or, for Federal awards that are renewed quarterly
or annually, from the date of the submission of the quarterly or annual financial report,
respectively, as reported to the Federal awarding agency or pass-through entity in the case of
a subrecipient. . . ."
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, which would include segregation of key functions, 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.
INDIANA STATE BOARD OF ACCOUNTS 23
LINTON-STOCKTON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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, the amount expended for two key line items was not supported by the ledger.
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 funds are accurate and complete.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.