Finding Text
FINDING 2023-003
Subject: Special Education Cluster (IDEA) - Earmarking
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, Special Education Preschool Grants
Assistance Listings Numbers: 84.027, 84.173
Federal Award Numbers and Years (or Other Identifying Numbers): 20611-158-PN01, 20619-158-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Matching, Level of Effort, Earmarking
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation was a member of the Clark County Joint Services Program (Cooperative).
During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the
federal money on behalf of all its member school corporations. As the grant agreements were between the
Indiana Department of Education (IDOE) and each member school corporation, the School Corporation
was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate
oversight performed by the School Corporation to ensure compliance with the Matching, Level of Effort,
Earmarking compliance requirement.
The School Corporation did not have internal controls in place to ensure that the Cooperative
complied with the earmarking requirements. The Cooperative did not have adequate procedures in place
to ensure that the required level of expenditures for nonpublic school students with disabilities was met for
each member school corporation. The Cooperative did not have effective internal controls to ensure
nonpublic school expenditures were appropriately identified and reported.
The Non-Public Proportionate Share expenditures for all grant awards were not expended as
required by the IDOE for the individual member school corporation. The Cooperative categorized each
expenditure by location, and the total amount did not meet or exceed the required proportionate share as
outlined on the award letter. The Cooperative was required to spend a total of $59,633 for
20611-158-PN01 and $35,470 for 20619-158-PN01. $32,798 was identified as being spent for
20611-158-PN01, which was less than the required proportionate share. The Cooperative was unable to
provide documentation to identify the expenditures spent for 20619-158-PN01.
The lack of internal controls and noncompliance were isolated to fiscal year 2021-2022 and the
20611-158-PN01 and the 20619-158-PN01 grant awards.
INDIANA STATE BOARD OF ACCOUNTS 18
SILVER CREEK 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 200.403 states in part:
"Except where otherwise authorized by statute, costs must meet the following general criteria
in order to be allowable under Federal awards: . . .
(g) Be adequately document. . . ."
2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust
specific Federal award conditions as needed, . . ."
511 IAC 7-34-7(b) states:
"The public agency, in providing special education and related services to students in nonpublic
schools must expend at least an amount that is the same proportion of the public agency total
subgrant under 20 U.S.C. 1411(f) as the number of the nonpublic school students with
disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to
the total number of students with disabilities of the same age range."
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, the total required Non-Public Proportionate Share was not spent for one grant
and the expenditures for another grant could not be determined.
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.
INDIANA STATE BOARD OF ACCOUNTS 19
SILVER CREEK SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 Non-Public Proportionate Share amounts
are spent as identified within the application and all documentation is retained to determine so that
expenditures can be appropriately identified.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.