Finding 961670 (2023-002)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2023
Accepted
2024-03-27

AI Summary

  • Core Issue: The School Corporation lacked a proper system of internal controls, leading to errors in federal reporting.
  • Impacted Requirements: Compliance with 2 CFR 200.303 and 200.302(b) regarding accurate financial reporting and internal controls.
  • Recommended Follow-Up: Management should implement a robust internal control system and develop clear policies and procedures for report preparation and review.

Finding Text

FINDING 2023-002 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, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education 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. INDIANA STATE BOARD OF ACCOUNTS 18 NORTH PUTNAM COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 annual data reports were compiled, prepared, and submitted by one employee without a documented oversight, review, or approval process in place to prevent, or detect and correct, errors. Additionally, two of the six reports tested contained errors. The errors were as follows:  For the ESSER I, Year 3 report, the School Corporation could not provide supporting documentation for the key line items "Total Mandatory Subgrant Amount Expended in Current Reporting Period" and "Amount Expended on Operational Continuity and Other Allowed Uses."  For the ESSER III, Year 2 report, it was determined that the report was incomplete. The report indicated no expenditures during the applicable reporting period, July 1, 2021 to June 30, 2022; however, expenditures per the School Corporation's records totaled $568,459. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the ESSER I, Year 3 and ESSER III, Year 2 reports. 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. . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." INDIANA STATE BOARD OF ACCOUNTS 19 NORTH PUTNAM COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . ." 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 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, two reports had errors and were not supported by the School Corporation's records. 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 supported by the ledgers. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

Subrecipient Monitoring Internal Control / Segregation of Duties Matching / Level of Effort / Earmarking Special Tests & Provisions Material Weakness Reporting

Other Findings in this Audit

  • 385228 2023-002
    Material Weakness
  • 385229 2023-002
    Material Weakness
  • 385230 2023-002
    Material Weakness
  • 385231 2023-002
    Material Weakness
  • 385232 2023-002
    Material Weakness
  • 385233 2023-002
    Material Weakness
  • 385234 2023-003
    Material Weakness
  • 385235 2023-003
    Material Weakness
  • 385236 2023-003
    Material Weakness
  • 385237 2023-003
    Material Weakness
  • 385238 2023-003
    Material Weakness
  • 385239 2023-003
    Material Weakness
  • 961671 2023-002
    Material Weakness
  • 961672 2023-002
    Material Weakness
  • 961673 2023-002
    Material Weakness
  • 961674 2023-002
    Material Weakness
  • 961675 2023-002
    Material Weakness
  • 961676 2023-003
    Material Weakness
  • 961677 2023-003
    Material Weakness
  • 961678 2023-003
    Material Weakness
  • 961679 2023-003
    Material Weakness
  • 961680 2023-003
    Material Weakness
  • 961681 2023-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program 2022 $696,728
84.425 Education Stabilization Fund 2022 $517,343
10.555 National School Lunch Program 2023 $465,242
84.010 Title I Grants to Local Educational Agencies 2022 $218,829
84.010 Title I Grants to Local Educational Agencies 2023 $184,216
10.553 School Breakfast Program 2022 $130,587
10.553 School Breakfast Program 2023 $119,131
93.778 Medical Assistance Program 2023 $53,557
84.367 Improving Teacher Quality State Grants 2022 $47,026
93.778 Medical Assistance Program 2022 $36,012
84.367 Improving Teacher Quality State Grants 2023 $31,953
84.424 Student Support and Academic Enrichment Program 2022 $22,783
84.173 Special Education_preschool Grants 2022 $15,701
84.424 Student Support and Academic Enrichment Program 2023 $13,906
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) 2022 $13,619
84.173 Special Education_preschool Grants 2023 $5,293
84.027 Special Education_grants to States 2022 $5,083
84.027 Special Education_grants to States 2023 $4,593
10.559 Summer Food Service Program for Children 2022 $3,075
10.649 Pandemic Ebt Administrative Costs 2023 $628
10.649 Pandemic Ebt Administrative Costs 2022 $614
84.425 Education Stabilization Fund 2023 $485