Finding Text
FINDING 2023-003
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): S425D210013, S425U210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Annual Data Report
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. The School Corporation was
required to submit an annual data report 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.
The School Corporation was required to submit six annual data reports during the audit period.
None of the annual data reports were submitted. Upon inquiry of the School Corporation to
determine why the reports were not submitted, the School Corporation explained they had
interpreted the reports to be final reports submitted upon completion of the grant not annual
reports of expenditures.
The lack of internal controls and noncompliance were systemic issues throughout the audit
period.
Reimbursement Requests
To gain an understanding of how the School Corporation spent the COVID-19 - Education
Stabilization Fund award, all reimbursement requests submitted to the IDOE were requested.
Five of the ten reimbursement requests submitted to the IDOE could not be located. As such,
we determined reimbursement requests for the audit period should be further tested.
The School Corporation's process was to complete reimbursement requests on a periodic basis
to obtain reimbursement for expenditures paid. Although the reimbursement requests were
prepared by the Treasurer utilizing various ledger reports and were reviewed by a second
knowledgeable employee, the process did not prevent, or detect and correct, errors.
Of the ten reimbursement requests received, as noted above, five could not be provided for
audit. Therefore, we were unable to substantiate the expenses reimbursed by those requests
or if the requests were mathematically accurate or fairly presented. The remaining five
reimbursement requests were tested without issue.
The lack of internal controls was a systemic issue throughout the audit period. The lack of
documentation was isolated to the five reimbursement requests that could not be provided for
audit.
INDIANA STATE BOARD OF ACCOUNTS 18
SOUTH CENTRAL COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 200.302(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."
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. . . ."
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, annual data reports were noted submitted to the IDOE, and reimbursement
requests were not retained for audit.
INDIANA STATE BOARD OF ACCOUNTS 19
SOUTH CENTRAL COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 reports are submitted and supporting documentation
is retained for reimbursement requests.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.