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FINDING 2022-003Subject: 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, Other MattersINDIANA STATE BOARD OF ACCOUNTS19MONROE COUNTY COMMUNITY SCHOOL CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation in order 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 purchased one capital asset, a boiler/chiller, with the Elementary andSecondary School Emergency Relief (ESSER II) Fund award. The boiler/chiller was included in the SchoolCorporation's capital assets listing; however, the capital asset listing did not identify the source of funding.In addition, a physical inventory had not been taken in the past two years and assets were not properlymaintained and safeguarded.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:"Management requirements. Procedures for managing equipment (including replacementequipment), whether acquired in whole or in part under a Federal award, until disposition takesplace will, as a minimum, meet the following requirements:(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 theproperty was acquired, the location, use and condition of the property, and any ultimatedisposition data including the date of disposal and sale 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.. . ."INDIANA STATE BOARD OF ACCOUNTS20MONROE COUNTY COMMUNITY SCHOOL CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)CauseManagement had not designed nor implemented a system of internal controls that would haveensured compliance with the grant agreement and the Equipment and Real Property Managementcompliance 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 federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.