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FINDING 2022-006Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property ManagementFederal Agency: Department of EducationFederal Program: COVID-19 - Education Stabilization FundAssistance Listings Number: 84.425DFederal Award Number and Year (or Other Identifying Number): S425D200013Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Equipment and Real Property ManagementAudit Findings: Material Weakness, Modified OpinionCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Equipment and Real Property Managementcompliance requirement.The School Corporation purchased $72,425 of various equipment with Elementary and SecondarySchool Emergency Relief (ESSER) funds. The equipment was not added to the property record whichwould include a description of the property, a serial number or other identification number, the source offunding for the property (including the federal award identification number (FAIN)), who holds title, theacquisition date, cost of the property, percentage of federal participation in the project costs for the federalaward under which the property was acquired, the location, and the use and condition of the property.Additionally, the School Corporation did not adequately safeguard the equipment purchased and had notcompleted a physical inventory of equipment within the last two years.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.313(d) states in part:"(1) Property records must be maintained that include a description of the property, a serialnumber or other identification number, the source of funding for the property (includingthe FAIN), who holds title, the acquisition date, and cost of the property, percentage offederal participation in the project costs for the federal award under which the propertywas acquired, the location, use and condition of the property, and any ultimate dispositiondata including the date of disposal and sales price of the property(2) A physical inventory of the property must be taken and the results reconciled with theproperty records at least once every two years.(3) A control system must be developed to ensure adequate safeguards to prevent loss,damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the grant agreement and the Equipment and Real Property compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Equipment and Real Property Managementcompliance requirement could have resulted in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Equipment and Real PropertyManagement compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.