Finding Text
FINDING 2022-001Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost PrinciplesFederal Agency: Department of EducationFederal Program: COVID-19 - Education Stabilization FundAssistance Listings Number: 84.425DFederal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Significant Deficiency, Other MattersCondition 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 Allowable Costs/Cost Principles compliancerequirement.Charges to Federal awards for salaries and wages must be based on records that accurately reflectthe work performed. One employee was paid from ESSER I and ESSER II grant awards and also fromother funding sources. Adequate time records were not maintained for the employee to determine if theproper amount was charged to the federal award. The total amount charged to the federal award of $28,599was considered a questioned cost.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 200.430(i) states in part:"Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salariesand wages must be based on records that accurately reflect the work performed. Theserecords must:(i) Be supported by a system of internal control which provides reasonable assurance thatthe charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;INDIANA STATE BOARD OF ACCOUNTS16SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)(iii) Reasonably reflect the total activity for which the employee is compensated by thenon-Federal entity, not exceeding 100% of compensated activities (for IHE, this perthe IHE's definition of IBS); . . .(vii) Support the distribution of the employee's salary or wages among specific activitiesor cost objectives if the employee works on more than one Federal award; a Federalaward and non-Federal award; an indirect cost activity and a direct cost activity; twoor more indirect activities which allocated using different allocation bases; or anunallowable activity and a direct or indirect costs activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsQuestioned costs of $28,599 were identified as detailed in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.