Finding Text
FINDING 2023-005
Subject: Title I Grants to Local Educational Agencies - Matching, Level of Effort, Earmarking
Federal Agency: Department of Education
Federal Program: Title I Grants to Local Educational Agencies
Assistance Listings Number: 84.010
Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014,
S010A210014, S010A220014
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 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 Matching, Level of Effort, Earmarking compliance
requirement.
INDIANA STATE BOARD OF ACCOUNTS
21
CROTHERSVILLE COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Earmarking
A portion of the School Corporation's Title I allocation is required to be set aside for homeless
reservation. The required amount to be set aside is indicated in the Title I grant application.
The School Corporation is responsible for monitoring each required set aside throughout the
life of the grant to ensure the obligation is met.
There was no oversight or review process in place to ensure monitoring of each required set
aside. The School Corporation did not provide documentation to show that the obligation was
met or not met to service all the homeless students in the School Corporation and did not
transfer the unused funds to the next grant award.
The lack of internal controls and noncompliance were systemic issues throughout the audit
period.
Level of Effort - Individual Transactions (Vendor)
The financial information submitted by the School Corporation to the Indiana Department of
Education (IDOE) through the Form 9 report was used by the IDOE to calculate the School
Corporation's Level of Effort - Maintenance of Effort.
The Treasurer completed vendor claims and certified them; as such, there was not an oversight
or review process at the School Corporation level over vendor expenditures to ensure the data
used to complete the Form 9 was reported accurately in the correct fund, account, and object
code.
The lack of internal controls was a systemic issue throughout the audit period.
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). . . ."
20 USC 6313(c)(3)(A) states:
"A local educational agency shall reserve such funds as are necessary under this part,
determined in accordance with subparagraphs (B) and (C), to provide services comparable to
those provided to children in schools funded under this part to serve—
(i) homeless children and youths, including providing educationally related support
services to children in shelters and other locations where children may live;
(ii) children in local institutions for neglected children; and
INDIANA STATE BOARD OF ACCOUNTS
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CROTHERSVILLE COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(iii) if appropriate, children in local institutions for delinquent children, and neglected or
delinquent children in community day programs."
Cause
A proper system of internal controls was not designed by management of the School Corporation
which would include segregation of key functions. 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 homeless set aside was not spent or carried forward.
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 homeless set asides are spent as required.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.