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FINDING 2022-009Subject: 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): S425D210013Pass-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 designed properly at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Equipment and Real PropertyManagement compliance requirement.A property record or capital asset listing, which would include a description of the property, a serialnumber or other identification number, the source of funding for the property (including the federal awardidentification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage offederal participation in the project costs for the federal award under which the property was acquired, thelocation, and use and condition of the property, is to be maintained for assets purchased that exceed theSchool Corporation's capitalization threshold.The School Corporation does not have a current capital asset listing that includes new equipmentor real property that was purchased during the audit period. The capital asset listing is only updated everytwo years when the physical inventory takes place. An asset purchased during the audit period in theamount of $72,221, from the ESSER II award, was not included in the School Corporation's capital assetlisting or a property record.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 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). . . ."INDIANA STATE BOARD OF ACCOUNTS32BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.313(d)(1) states:"Property records must be maintained that include a description of the property, a serial numberor other identification number, the source of funding for the property (including the FAIN), whoholds title, the acquisition date, cost of the property, percentage of Federal participation in theproject costs for the Federal award under which the property was acquired, the location, useand condition of the property, and any ultimate disposition data including the date of disposaland sales price of the property."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Equipment and Real Property Management compliance requirement.EffectThe failure to design and implement an effective internal control system enabled noncompliance togo undetected. Noncompliance with the grant agreement and the Equipment and Real PropertyManagement compliance requirement could result in the loss of future federal funds to the SchoolCorporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internalcontrols to 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.