Peru Community SchoolsHigher Education

Information on the federal program: Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: 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). . . ." 29 CFR 5.5 states in part: (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” 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 Special Tests and Provisions – Wage Rate 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 design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had one project for HVAC installation and improvements at various buildings which was funded with American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) (84.425U) grant awards. The School Corporation properly included Davis-Bacon wage rate requirements in the vendor contract, however, the School Corporation did not obtain the weekly payroll report certifications from the construction vendor to monitor compliance with the Davis-Bacon wage rate requirements. Therefore, no review was performed to ensure that pay rates complied with the federal wage rate requirements. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a formal process to ensure the required weekly payroll reports certifications are collected and reviewed for projects requiring labor installation and funded by federal grants subject to Davis-Bacon wage rate requirements to ensure compliance with federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Subject: Child Nutrition Cluster – Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program AL Numbers: 10.533, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must 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 terms and conditions of the Federal award. 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 allowable costs/cost principles compliance requirements. Cause: After June 30, 2024, the School Corporation changed systems used to track time worked for the food service department and is unable to obtain archived records or time sheets to support the hours worked by the food service department personnel. A system of internal controls was not in place to ensure there were appropriate records or audit trails to support time charged to the federal program. 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 segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were $19,714 of questioned costs identified. Context: During the testing of internal controls over allowable costs/cost principles, the School Corporation had a system conversion for time entry during the audit period and did not retain copies of the adequate documentation to corroborate the hours worked for food service employees tested. The School Corporation was unable to provide timesheets or records supporting the number of hours charged by each employee for 35 of 35 selections related to hourly employees. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to ensure that detailed records are maintained and an audit trail is evident to comply with federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-003 Information on the federal program: Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch, Summer Food Service Program Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness 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 210.8(a) states in part: "Internal controls. The school food authority shall establish internal controls which ensure the accuracy of meal counts prior to the submission of the monthly Claim for Reimbursement. At a minimum, these internal controls shall include: an on-site review of the meal counting and claiming system employed by each school within the jurisdiction of the school food authority; comparisons of daily free, reduced price and paid meal counts against data which will assist in the identification of meal counts in excess of the number of free, reduced price and paid meals served each day to children eligible for such meals; and a system for following up on those meal counts which suggest the likelihood of meal counting problems. . . ." 7 CFR 210.7(c) states in part: "Reimbursement limitations. To be entitled to reimbursement under this part, each school food authority shall ensure that Claims for Reimbursement are limited to the number of free, reduced price and paid lunches and meal supplements that are served to children eligible for free, reduced price and paid lunches and meal supplements, respectively, for each day of operation. . . ." 7 CFR 220.11(d) states in part: "The school food authority shall establish internal controls which ensure the accuracy of breakfast counts prior to the submission of the monthly Claim for Reimbursement. At a minimum, these internal controls shall include: an on-site review of the breakfast counting and claiming system employed by each school within the jurisdiction of the school food authority; comparisons of daily free, reduced price and paid breakfast counts against data which will assist in the identification of breakfast counts in excess of the number of free, reduced price and paid breakfasts served each day to children eligible for such breakfasts; and a system for following up on those breakfast counts which suggest the likelihood of breakfast counting problems. . . ." 7 CFR 225.15(c) states in part: "Records and claims. 1. Sponsors shall maintain accurate records justifying all meals claimed . . ." 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: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education (IDOE) based upon meals served for the month. The Claims were prepared by the Food Service Director without an oversight or review process in place to prevent, or detect and correct, errors. For three of the four Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and Reporting compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-004 Information on the federal program: Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A170014; S010A190014; S010A200014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility Audit Finding: Material Weakness 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 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 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 Eligibility compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Eligibility compliance requirement. Effect: The failure to establish an effective internal control system could have enabled noncompliance with the grant agreement and the Eligibility compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not designed or implemented a system of internal control to ensure the poverty status of each student was accurate. The free and reduced applications were completed by parents online and the poverty status was then calculated based on the guidelines input into the system. The income guidelines were updated by the software vendor without an oversight or review process by the School Corporation to ensure the accuracy of the information. Additionally, one employee uploaded the Direct Certification reports from the state into the software system without a documented oversight or review process to ensure direct certified students were properly processed. The lack of controls was a systematic issue throughout the audit period. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure compliance with the grant agreement and the Eligibility compliance Requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-005 Information on the federal program: Subject: Title I Grants to Local Educational Agencies - Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014; S010A20014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Significant Deficiency 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 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)...." 20 USC 6318(a)(3) states in part: "(A) In general. Each local educational agency shall reserve at least 1 percent of its allocation under subpart 2 to assist schools to carry out the activities described in this section, except that this subparagraph shall not apply if 1 percent of such agency's allocation under subpart 2 for the fiscal year for which the determination is made is $5,000 or less. Nothing in this subparagraph shall be construed to limit local educational agencies from reserving more than 1 percent of its allocation under subpart 2 to assist schools to carry out activities described in this section. . . . 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 earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement could result in the loss of further federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not implemented controls to ensure that the required level of expenditures for Parental Involvement were spent. Expenditures for Parental Involvement were $4,129 and $9,556 below the minimum required per the approved grant application for grants S010A190014 andSA010A200014, respectively. The lack of internal controls and noncompliance were isolated to the S010A190014 and S010A200014 grant awards. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the earmarking requirements of 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 2022-006 Information on the federal program: Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Assessment System Security Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A170014; S010A190014; S010A200014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Assessment System Security 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 the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award in compliancewith Federal statutes, regulations, and the terms and conditions of the Federal award. Theseinternal controls should be in compliance with guidance in 'Standards for Internal Control in theFederal Government' issued by the Comptroller General of the United States or the 'Internal ControlIntegrated Framework', issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). . . ." 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 5-5-5(b) states: "Any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity agreement to remain on file in the appropriate building-level office each year." 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 Special Tests and Provisions - Assessment System Security compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Special Tests and Provisions - Assessment System Security compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Assessment System Security compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had not established effective internal controls to ensure applicable employees received proper training over test and security administration. The School Corporation had implemented a policy in which all applicable employees were to be provided training annually. However, documentation of training for six of 40 employees could not be provided. The six employees were in a position and location that had contact with the testing materials and therefore should have received the training. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and Special Tests and Provisions - Assessment System Security compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-007 Information on the federal program: Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Federal Agency: Department of Education Federal Program: COVID19 - Education Stabilization Fund Assistance Listings Numbers: 84.425C, 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013, S425C200018 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness 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 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 200.313(d) states in part: ?(1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of dunking for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property" (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) 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) 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 compliance requirement. Cause: Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have an effective control in place to ensure property records were properly maintained and included all required information. The School Corporation's property record did not include the following required information: a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, percentage of federal participation in the project costs for the federal award under which the property was acquired, use and condition of the property. The School Corporation did not perform a physical inventory of equipment during the audit period and did not have an internal control system in place to ensure a physical inventory was performed. There was no internal control system in place to ensure equipment was appropriately safeguarded and maintained. There was no evidence to show all equipment included on the property records was being appropriately safeguarded and maintained during the audit period. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2022-008 Information on the federal program: Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID19 - Education Stabilization Fund Assistance Listings Numbers: 84.425C, 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425C200018 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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 the Federal award that provides reasonableassurance 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 incompliance with guidance in 'Standards for Internal Control in the Federal Government' issued by theComptroller General of the United States or the 'Internal Control Integrated Framework', issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2)Accurate, current, and complete disclosure of the financial results of each Federal award or program inaccordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." 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: Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have an effective system of internal controls to ensure that the annual Elementary and Secondary School Emergency Relief (ESSER) and the Governor?s Emergency Education Relief (GEER) annual Data Collection reports (Reports) were accurately submitted. The School Corporation had six annual data reports due during the audit period. The Full Time Equivalent (FTE) key line item on both the ESSER I, Fiscal Year 2021 and the GEER, Fiscal Year 2021 annual Data Collection reports were not accurately submitted. The lack of internal controls and noncompliance were isolated to the ESSER 1, Fiscal Year 2021 and GEER, Fiscal Year 2021 reports. Identification as a repeat finding, if applicable: No Recommendation: We recommend that the School Corporation's management establish effective internal controls to ensure compliance and comply with the grant agreement and the Reporting compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2020-002 Subject: Child Nutrition Cluster - Internal Controls 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, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children CFDA Numbers: 10.533, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2019, FY2020 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Cash Management Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report regarding Allowable Costs/Cost Principles. The prior audit finding number was 2018-003. 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 Allowable Costs/Cost Principles and Cash Management compliance requirements. Allowable Costs/Cost Principles The School Corporation established procedures to ensure timecards were properly reviewed and approved; however, the process was not properly implemented. During testing, 14 of the 40 time cards selected did not show documentation of a review or approval. Cash Management (School Breakfast Program and National School Lunch Program) The School had not designed or implemented adequate internal controls and policies or procedures to ensure that the School Lunch fund cash balance (net cash resources) did not exceed the three months average expenditures. The lack of internal controls was a systemic issue throughout the audit period. 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). . . ." Cause Management had not developed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles and Cash Management compliance 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. 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 grant agreement and the Allowable Costs/Cost Principals and Cash Management compliance requirements. 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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