Finding Text
FINDING 2023-009
Subject: COVID-19 - Education Stabilization Fund - Cash Management
Federal Agency: Department of Education
Federal Program: COVID-19 - Education Stabilization Fund
Assistance Listings Number: 84.425D
Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Cash Management
Audit Findings: Material Weakness, Modified Opinion
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 related to the Cash Management compliance requirement.
INDIANA STATE BOARD OF ACCOUNTS
30
SILVER CREEK SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Reimbursement requests for the program were prepared by one employee and reviewed by
another employee; however, no supporting documentation was provided to the reviewer. As documentation
did not accompany the reimbursement request, and the reimbursement requests, as noted below, did not
agree to the ledger, the reviewer could not have ensured expenses were paid prior to requesting
reimbursement.
Five reimbursement requests were submitted during the audit period. All five reimbursement
requests were selected for testing. Of the five reimbursement requests tested, three were not traceable to
the School Corporation's fund ledger. For those three reimbursement requests, the expenditures in the
ledger exceeded the amount requested by $67,907, in total. However, as the expenditures could not be
determined for each reimbursement requested, it could not be determined if the School Corporation paid
for the expense prior to requesting reimbursement.
The lack of internal controls and noncompliance were systemic issues throughout the audit period
for ESSER I and ESSER II grant funds.
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 200.305(b) states in part:
"For non-Federal entities other than states, payments methods must minimize the time elapsing
between the transfer of funds from the United States Treasury or the pass-through entity and
the disbursement by the non-Federal entity whether the payment is made by electronic funds
transfer, or issuance or redemption of checks, warrants, or payment by other means. . . .
(3) Reimbursement is the preferred method when the requirements in paragraph (b)
cannot be met, when the Federal awarding agency sets a specific condition per
§ 200.208, or when the non-Federal entity requests payment by reimbursement. . . ."
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. . . ."
INDIANA STATE BOARD OF ACCOUNTS
31
SILVER CREEK SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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, it could not be determined if all expenditures were paid by the School
Corporation prior to requesting reimbursement.
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 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 prior to filing the reimbursement
requests.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.