Norwell Community Schools

Information on the federal program: Subject: Education Stabilization Fund – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D Federal Award Numbers: S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: 1. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. 2. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. 3. (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. 4. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of an internal control system to ensure assets purchased with federal funds are added to the capital asset listing could have allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds, specifically with capital assets purchased with those funds. Questioned Costs: There were no questioned costs identified. Context: For the one sample item tested in a population of two, we noted the School Corporation expended $175,000 on baseball bleacher renovations which was charged to the ESSER II (84.425D) grant award. The bleachers were not reported on the capital asset listing for the School Corporation as of June 30, 2024. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a control system to ensure that capital assets are added to the capital asset listing at the time they are placed in service. An inventory of capital assets should be taken at least once every two years and reviewed for potential capital asset dispositions. The capital asset listing should include all required information to track capital asset acquisitions, including the federal funding source if applicable. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-001 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, After School Snacks, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure accurate information was presented in order to be in compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Questioned Costs: There were $39 of known questioned costs identified. The known questioned costs were calculated taking the number of meals (breakfast, lunch, and snack) overclaimed or underclaimed times the IDOE reimbursement rates for breakfast, lunch and snack for the month tested. The net overclaimed reimbursement amount for the four months tested was $39. Context: We noted that for four claims in a sample of four, the meal counts were over/under claimed for the month. We noted that in October 2020, the School Corporation had underclaimed lunches by 212 meals and overclaimed breakfast by 42 meals. In April 2021, the School Corporation had overclaimed breakfast by 397 meals. In October 2021, the School Corporation had underclaimed lunches by 48 meals and snacks by 36 meals. In April 2022, the School Corporation had overclaimed lunches by two meals, snacks by 45 meals, and underclaimed breakfast by 2 meals. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation establish an effective review control to verify the sponsor claim reimbursement summaries are correct. This review should be performed by someone other than the individual submitting the claims and we recommend this review be formally documented. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-002 Information on the federal program: Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Number: 20611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed..." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range Condition: The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the school corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as to adequately document federal award costs, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for the 20611-001-PN01 grant award could not be verified for the individual member schools. Total non-public expenditures were posted as expended. The member school proportionate share expenditures were then determined by applying a budgeted percentage to the total non-public expenditures. These were the amounts reported to IDOE. As such, we were unable to identify if the minimum amount per member school was expended and properly reported to IDOE as required. The School Corporation?s Non-Public Proportionate Share for the 20611-001-PN01 grant application was $9,319. Identification as a repeat finding, if applicable: Yes. Identified as finding 2020-002 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2020-001 Subject: Child Nutrition Cluster - Program Income Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program CFDA Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY2020 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Program Income Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 NORTHERN WELLS COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Program Income compliance requirement. Transfers from the School Lunch Clearing Account (8400), a subsidiary account of the Clearing fund (9000), to the School Lunch fund were determined at the end of the month by the Food Service Director. She compared the month end balance of account 8400 to the Customer List with Accounts from WebSMARTT, the School Corporation's point of sales software. The difference was transferred by issuing a negative receipt. Classifications of program income, posted to the School Lunch fund, were determined by generating a monthly Sales Report from WebSMARTT and determining the amounts earned for each classification. One individual verified that the monthly Sales Reports matched the amount transferred as program income, but it was ineffective. The Sales Report documentation did not match the amounts transferred during the audit period. The lack of effective internal controls and noncompliance were systemic issues during fiscal year 2019-2020. 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). . . ." 7 CFR 210.14(c) states: "Financial assurances. The school food authority shall meet the requirements of the State agency for compliance with ? 210.19(a) including any separation of records of nonprofit school food service from records of any other food service which may be operated by the school food authority as provided in paragraph (a) of this section." 7 CFR 210.14(f)(3) states: "All revenue from the sale of nonprogram foods shall accrue to the nonprofit school food service account of a participating school food authority." 7 CFR 220.7(e) states in part: "Each school food authority approved to participate in the program shall enter into a written agreement with the State agency or the Department through the FNSRO, as applicable, that may be amended as necessary. . . . Such agreements shall provide that the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (12) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable; . . ." 2 CFR 200.302(b)(3) states: "Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by documentation." Cause Management had not developed an effective system of internal controls over the transfer of program income to the School Lunch fund. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Program Income compliance requirement could have resulted in the loss of funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Program Income compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-002 Subject: Special Education Grants to States - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States CFDA Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 14217-001-PN01, 18611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2018-001. Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation was a member of the Adam-Wells Special Services Cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation is ultimately responsible for compliance with the grant agreement and the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met. They also did not have internal controls in place to ensure that documentation to support the calculation of the reported expenditures was maintained and available for audit. The Non-Public Proportionate Share expenditures reported on the Proportionate Share Quarterly Monitoring Reports for the 14217-001-PN01 and 18611-001-PN01 grant awards could not be verified due to the lack of supporting documentation. Per inquiry, the reported expenditures were calculated by multiplying the applicable monthly reimbursed expenditures by the non-public school usage percentage, which was calculated based on a time study conducted by the prior Director of the Cooperative. The time studies for these grants were not available for audit. The lack of internal controls and supporting documentation was isolated to the 14217-001-PN01 and 18611-011-PN01 grant awards. 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). . . ." 2 CFR 200.333 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.207(a) states in part: "The Federal awarding agency or pass-through entity may impose additional specific award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements. Effect The failure to retain and provide supporting documentation prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Additionally, we recommended that management of the School Corporation establish internal controls to ensure supporting documentation will be maintained and available for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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