Finding Text
Finding 2023-003
Information on the federal program:
Subject: Education Stabilization Fund (ESF) – Allowable Costs/Cost Principles
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listing Number: 84.425D, 84.425U
Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Criteria: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries
and wages must be based on records that accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities . . .
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives
if the employee works on more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ."
Indiana Department of Education Onsite Fiscal Monitoring Document - Monitoring Topic 1-Compliance with
compensation for personnel services requirements, page 2 states:
"Show evidence that personnel in 'split-funded' positions maintain Program Activity Reports (PAR)/Time
and Effort logs and evidence that personnel paid 100% with federal funds complete accurate and timely
'Semi-Annual Certification' forms." Finding 2023-003 (Continued)
Condition: The School Corporation had not established an effective internal control system related to the
grant agreement and the Allowable Costs/Cost Principles compliance requirement.
The School Corporation failed to comply with the allowable costs/cost principle requirements that
employees who work 100 percent of their time on a federal award maintain semiannual certifications as
required by the pass-through agency, and that employees who work on a federal award and a non-federal
award have Program Activity Reports or equivalent documentation to support the distribution of their
salaries or wages.
Cause: The School Corporation's management had not developed an effective system of internal controls
that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles
compliance requirement.
Effect: The failure to establish an effective internal control system enabled material noncompliance to go
undetected. Noncompliance with the grant agreement or the compliance requirement could have resulted
in the loss of federal funds to the School Corporation.
Questioned Costs: There were no questioned costs identified.
Context: Six pay periods were selected for testing of payroll charges to the ESF grants during the audit
period in which employees were charged 100% to the ESF grant awards. There were no Semi-Annual
Certification or other supporting documentation (Personnel Activity Reports or equivalent documentation)
maintained to support payroll and benefits for employees who worked 100 percent of the time on the ESF
funded initiatives.
Identification as a repeat finding: No.
Recommendation: We recommended that the School Corporations' management establish controls to
ensure compliance and comply with the Allowable Costs/Cost Principles compliance requirement including
maintaining Personnel Activity Reports, Semi-Annual Certifications, or equivalent documentation to support
payroll charges allocated to federal grants.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.