Finding Text
FINDING 2023-006
Subject: BRIC: Building Resilient Infrastructure and Communities - Internal Controls
Federal Agency: Federal Emergency Management Agency
Federal Program: BRIC: Building Resilient Infrastructure and Communities
Assistance Listings Number: 97.047
Federal Award Numbers and Years (or Other Identifying Numbers): PDMC-PJ-05-IN-2018-003,
PDMC-PJ-05-IN-2018-007
Pass-Through Entity: Indiana Department of Homeland Security
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost
Principles, Cash Management, Reporting
Audit Finding: Material Weakness
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.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management
Building Resilient Infrastructure and Communities (BRIC) program expenditures were to be
used for costs associated with building "safe rooms" at the School Corporation's middle school
and high school. The School Corporation provided paid claims to a grant administrator, who
then prepared and filed reimbursement requests on behalf of the School Corporation. The
School Corporation relied on the Grant Administrator to determine if costs submitted on the
paid claims were allowable, in conformance with the cost principles, and adhered to the cash
management requirements of the grant. Once the claims were provided to the grant administrator
there was no oversight or review from the School Corporation.
Reporting
Quarterly performance reports were required to be filed electronically with the Indiana
Department of Homeland Security. The grant administrator prepared and submitted the
required quarterly reports without any oversight or review from the School Corporation.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
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SALEM COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 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.
INDIANA STATE BOARD OF ACCOUNTS
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