Union-North United School CorporationLocal Government

Information on the federal program: Subject: Education Stabilization Fund – Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers: S425U210013 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) 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 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 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 no questioned costs identified. Context: In our testing of four equipment selections, we noted the School Corporation did not add the capital asset to the capital asset listing. During the testing of equipment acquisitions, it was noted the School Corporation had not updated the capital asset ledger as of June 30, 2025 for equipment acquisitions made during the period under audit. Additionally, the capital asset ledger does not include required information, such as designation of federal funding, date acquired, capital asset categorization and useful life. Identification as a repeat finding: Yes, Finding 2023-004 Recommendation: We recommend that the School Corporation's management establish a system of internal controls related to the grant agreement and Equipment and Real Property Management compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

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: 84.425U, 84.425D Federal Award Numbers: S425U210013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness Criteria: 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 in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: The School Corporation did not have a review control in place to ensure the annual data report was reviewed by someone other than the preparer. In addition, original documents and related support were not maintained by the School Corporation. Cause: There were not sufficient internal controls in place to ensure the Annual Data Report agreed to the underlying fund ledger detail. Effect: The Annual Data Reports could be submitted with incorrect information. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have a formal review process in place to review the Annual Data Reports that were required to be submitted during the audit period. Original copies of the reports and submission receipts were not maintained and therefore, we were unable to verify the reports were submitted by the required due dates. The Annual Data Report for the period of July 1, 2022 through June 30, 2023 was overstated by $36,297. Management could not provide support for Cross Act total employees reported at 147. Also, management here was a variance of 16 positions for Cross Act positions paid by ESSER. The amount reported was 135 while management’s support detail was 151 positions. Identification as a repeat finding, if applicable: Yes, Finding 2023-005. Recommendation: We recommend management review internal controls around the preparation, review, and submission of the Annual Data Reports to verify accuracy and that support detail is maintained. We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted and that the School Corporation maintain records to validate the reports were submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Information on the federal program: Subject: Education Stabilization Fund – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers: S425C200018, S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Qualified Opinion 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: The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles compliance requirements. Cause: A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect: Without the proper design or implementation of the components of a system of internal control, including policies and procedures that provide segregation of duties and additional oversight as needed, the control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs: There were $82,276 of questioned costs identified. There were $78,462 of ESSER II funds that were drawn down in advance of the disbursement taking place, $3,013 of GEER funds drawn down in advance of the disbursement taking place, and $801 of questioned costs pertaining to payroll charges to the grant that were not supported by contracts and/or timecards. Context: In our testing of disbursements charged to the Education Stabilization Fund grants, we noted the ESSER II grant award, tracked in Fund 7931 has a positive cash balance at June 30, 2023. We were able to tie out the disbursements reported on the Annual Financial Report to underlying detail. We noted the School Corporation had drawn down $78,462 of ESSER II funds in advance of the expenditures taking place. The GEER grant award, which is tracked in Fund 7940, had a positive cash balance of $36,013 at June 30, 2023. This was a result of $33,000 of expenditures pertaining to the GEER fund being incorrectly recorded in the Operating fund during the year, rather than the applicable GEER fund. The remaining $3,013 is due to drawing down funds in advance of the expenditures taking place. During our testing payroll disbursements, we noted three selections in a sample of 60 payroll disbursements for which management was unable to provide adequate documentation to support the amounts disbursed to the employees. The employee in question went on medical leave during the school year, but continued to receive payments over the remaining months. Management was unable to provide an adjusted contract that agreed to the amounts being paid to the employee. These issues resulted in questioned costs of $801. Identification as a repeat finding: No Recommendation: We recommended that management of the School Corporation design and implement a proper system of internal control, including policies and procedures, that are documented that would provide segregation of duties to ensure appropriate reviews, approvals and oversight are taking place to support disbursements that are charged to the respective grants as well as amounts being requested for draw downs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-004 Information on the federal program: Subject: Education Stabilization Fund – Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers: S425C200018, S425D200013, 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) 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 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 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 no questioned costs identified. Context: In our testing of one equipment selection, we noted the School Corporation did not add the capital asset to the capital asset listing. Identification as a repeat finding: No. Recommendation: We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and Equipment and Real Property Management compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan

FINDING 2023-005 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: 84.425C, 84.425D, 84.425U Federal Award Numbers: S425C200018, S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness Criteria: 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 in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: The School Corporation did not have a review control in place to ensure the annual data report was reviewed by someone other than the preparer and that the report was submitted timely. Original documents and related support were not maintained by the School Corporation. Cause: There were not sufficient internal controls in place to ensure the Annual Data Report was submitted by the Indiana Department of Education’s deadline and that the Annual Data Report agreed to the underlying fund ledger detail. Effect: The Annual Data Reports may not be submitted on time and could be submitted with incorrect information. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have a formal review process in place to review the Annual Data Reports that were required to be submitted during the audit period. Original copies of the reports and submission receipts were not maintained and therefore, we were unable to verify the reports were submitted by the required due dates. The Annual Data Report for the period of October 1, 2020 through June 30, 2021 was overstated by $30,211 and the report for the period of July 1, 2021 through June 30, 2022, was understated by $549,488. Identification as a repeat finding, if applicable: No. Recommendation: We recommend management review internal controls around the preparation, review, and submission of the Annual Data Reports to verify reports are submitted timely. We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted and that the School Corporation maintain records to validate the reports were submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Section III ? Federal Award Findings and Questioned Costs FINDING 2021-001 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 Assistance Listing Number: 10.553, 10.555 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility 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 Eligibility 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 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 no questioned costs identified. Context: During testing of 40 students for eligibility, we noted 19 instances where there was no documented review by someone other than the individual making the eligibility determination. Identification as a repeat finding: Yes, Finding 2019-003. Recommendation: We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and Eligibility compliance requirements. This should include a documented review and approval of the eligibility data enter into the software by someone other than the preparer to verify the accuracy and completeness of the eligibility determinations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a Corrective Action Plan.

FINDING 2019-002 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children CFDA Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 17-18, FY 18-19 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2017-005. INDIANA STATE BOARD OF ACCOUNTS 15 UNION-NORTH UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context 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 procurement requirements for small purchases and micro-purchases. The School Corporation did not comply with the procurement requirements for small purchases. The School Corporation purchased goods without the appropriate procurement procedures in place. Small Purchases The School Corporation did not obtain price or rate quotes from an adequate number of sources for purchases of goods or services exceeding $3,500, which fell under the small purchase procedures. The School Corporation did not document the rationale for the method of procurement, especially when a noncompetitive proposal method was used. Micro-Purchases The School Corporation did not have controls in place to ensure that micro-purchases were distributed equitably among qualified suppliers for purchases less than $3,500. The lack of controls was a systemic issue throughout the audit period. The noncompliance was isolated to Small Purchases during fiscal year 2017-2018. The noncompliance accounted for 25 percent of the total procurement disbursements in the audit period. 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 200.320 states in part: "The non-Federal entity must use one of the following methods of procurement. . . . (a) Procurement by micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micropurchase threshold (? 200.67 Micro-purchase). To the extent practicable, the non-Federal entity must distribute Micro-purchases equitably among qualified suppliers. Micropurchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable. INDIANA STATE BOARD OF ACCOUNTS 16 UNION-NORTH UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. (c) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c) (1) of this section apply. . . ." Cause The School Corporation's management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to remain undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal 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 Procurement and Suspension and Debarment 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 2019-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children CFDA Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 17-18, FY 18-19 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), Special Tests and Provisions - Paid Lunch Equity Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 17 UNION-NORTH UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit. The prior audit finding number was 2017-003. Condition and Context 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 following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), and Special Tests and Provisions - Paid Lunch Equity. Activities Allowed or Unallowed During fiscal year 2017-2018, the School Corporation did not have an effective internal control system in place to ensure that vendor disbursements were for allowable activities. Vendor disbursements were prepared by the Treasurer without a documented review or oversight process. Allowable Costs/Cost Principles During 2017-2018, the School Corporation did not have an effective internal control system in place to ensure that vendor disbursements were for allowable costs. Vendor disbursements were prepared by the Treasurer without a documented review or oversight process. Cash Management (School Breakfast Program and National School Lunch Program only) The School Corporation had not designed or implemented adequate internal controls to ensure that the School Lunch fund monthly cash balances (net cash resources) were limited to three months average expenditures in compliance with cash management requirements. There was no oversight or review of the calculations or monitoring of the cash balances. Eligibility (School Breakfast Program and National School Lunch Program only) The School Corporation used a food service software, which automatically made the eligibility determinations dependent upon the information entered into the software by school personnel. During 2017-2018, the School Corporation did not have a proper system of oversight or review documented to ensure that the federal income guidelines entered into the software program were accurate. Furthermore, there was not a proper system of oversight or review to ensure that the students' family information entered into the food service software was accurate. One person entered the information without a review. Special Tests and Provisions - Verification of Free and Reduced Meal Applications (NSLP) (School Breakfast Program and National School Lunch Program only) During 2017-2018, the School Corporation had not designed or implemented adequate controls to ensure that the verification of free and reduced price applications and any necessary changes to students' eligibility statuses were accurate. School personnel performed the verification of applications and made the determination of whether or not a change in eligibility was necessary without a proper system of oversight or review. INDIANA STATE BOARD OF ACCOUNTS 18 UNION-NORTH UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Paid Lunch Equity (National School Lunch Program only) The School Corporation had not designed or implemented adequate policies and procedures to ensure the accuracy of the paid lunch equity calculations. The Food Service Director completed the calculations without a documented oversight or review process. The lack of controls over Cash Management, Eligibility, and Special Tests and Provisions - Paid Lunch Equity were systemic issues throughout the audit period. The lack of controls over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) were isolated to 2017-2018. 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). . . ." Cause The School Corporation's management had not developed a system of internal controls to ensure compliance with the grant agreement and 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 listed above. A lack of segregation of duties within an internal control system could also have 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 no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), and Special Tests and Provisions - Paid Lunch Equity 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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