West Noble School CorporationLocal Government

FINDING 2024-004 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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, 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. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Annually, the School Corporation obtained a Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software without a documented oversight or review process in place to ensure directly certified students were properly processed. The lack of internal controls over directly certified students was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 21 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 A proper system of internal controls, which would include segregation of key functions, was not implemented by management of the School Corporation over directly certified students. 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 controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the Eligibility 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 2024-005 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 22 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2022-2023, the Cooperative had one vendor, with disbursements totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2022-2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000 but exceeded the $50,000 micro-purchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023-2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors, and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 23 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions totaling $803,836 were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic 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). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . INDIANA STATE BOARD OF ACCOUNTS 24 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which 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 bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person as the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Cooperative noted that the ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using Special Education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 25 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder and excel files. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted one ESSER I Annual Data Report, two ESSER II Annual Data Reports, and two ESSER III Annual Data Reports, for a total of five reports. There was no documented evidence provided for audit that supported an oversight or review process was in place to prevent, and detect and correct, errors on the five reports. Of the five reports tested, two contained the following errors: ESSER II, Year 3 Annual Data Report  Key line items "Addressing Physical Health and Safety Uses: Personnel Services - Benefits" and "Addressing Physical Health and Safety Uses: Supplies" were understated by $19,243 and $664,540, respectively. INDIANA STATE BOARD OF ACCOUNTS 26 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  Expenses for the report, which covered the period of July 1, 2022 to June 30, 2023, totaled $1,002,932; however, the ledger had total expenses for the award, for that period, of $817,390. ESSER III, Year 3 Annual Data Report  Key line items "Mandatory Subgrant Funds - Exclusive of Learning Loss Set-Aside - Mental Health Supports for Students and Staff Uses: Personnel Services - Salaries" and "Mandatory Subgrant Funds - Learning Loss Set-Aside - Mental Health Supports for Students and Staff Uses: Personnel Services - Benefits" were overstated by $46,500 and $3,500, respectively.  Expenses for the report, which covered the period of July 1, 2022 to June 30, 2023, totaled $2,072,695; however, the ledger had total expenses for the award, for that period, of $2,074,793. The lack in internal controls was systemic throughout the audit period. The noncompliance was isolated to fiscal year 2023-2024. 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 200.302(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 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." 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." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 27 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Due to staffing changes, the documentation for an oversight and review process was not identified and presented for audit. 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 implementation of an effectively designed system of internal controls, errors on reports remained undetected and uncorrected. Noncompliance with the grant agreement and the compliance requirement could result 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 effective internal controls to ensure compliance and comply with the grant agreement and the Reporting 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 2022-003 Subject: Child Nutrition Cluster - Procurement 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 Assistance Listings 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: Procurement and Suspension and Debarment Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 17 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The School Corporation could not provide documented evidence that quotes received by the Maintenance department were reviewed and approved by a person knowledgeable of the procedures for small purchases. 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 designed nor implemented a system of internal controls 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 placed the School Corporation at risk of noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to 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 2022-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness; Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. 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. However, 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 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. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, 21619-042-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). . . ." INDIANA STATE BOARD OF ACCOUNTS 19 WEST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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." Cause Management had not developed an effective 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, as well as adequately document costs of federal awards, 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 a 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 For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-001Subject: Child Nutrition Cluster - Eligibility, Special Tests and Provisions -Verification of Free and Reduced Price Applications (NSLP)Federal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program,National School Lunch Program, COVID-19 - National SchoolLunch Program, Summer Food Service Program for Children,COVID-19 - Summer Food Service Program for ChildrenCFDA Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY 2019, FY 2020Pass-Through Entity: Indiana Department of EducationCompliance Requirements: Eligibility, Special Tests and Provisions - Verificationof Free and Reduced Price Applications (NSLP)Audit Finding: Material WeaknessRepeat FindingThis is a repeat finding from the immediately prior audit report. The prior audit finding number was2018-003.Condition and ContextThe School Corporation did not properly design and implement a system of internal controls toensure compliance with requirements related to the grant agreement and the Eligibility and Special Testsand Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements.EligibilityOne employee processed the applications and made determinations for free and reduced pricemeals without a proper system of oversight or review.The lack of internal controls over Eligibility was a systemic issue throughout the audit period.Special Tests and Provisions - Verification of Freeand Reduced Price Applications (NSLP)For fiscal year 2018-2019, one employee performed the required verification of free andreduced price applications, including determination changes, without a proper system of oversightor review.The lack of internal controls over Special Tests and Provisions - Verification of Free andReduced Price Applications (NSLP) was isolated to 2018-2019.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 in compliancewith Federal statutes, regulations, and the terms and conditions of the Federal award.These internal controls should be in compliance with guidance in 'Standards for InternalControl in the Federal Government' issued by the Comptroller General of the United Statesor the 'Internal Control Integrated Framework', issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Eligibility and Special Tests and Provisions - Verification of Free and Reduced Price Applications(NSLP) compliance requirements.EffectThe failure to properly design and implement an internal control system placed the SchoolCorporation at risk of noncompliance with the grant agreement and the compliance requirements.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls related tothe grant agreement and the Eligibility and Special Tests and Provisions - Verification of Free and ReducedPrice Applications (NLSP) compliance requirements.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-002Subject: Child Nutrition Cluster - Program IncomeFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program,National School Lunch Program, COVID-19 - National SchoolLunch Program, Summer Food Service Program for Children,COVID-19 - Summer Food Service Program for ChildrenCFDA Numbers: 10.553, 10.555, 10.559Federal Award Number and Year (or Other Identifying Number): FY 2020Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Program IncomeAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith the grant agreement and the Program Income compliance requirement.The School Corporation implemented adequate policies and procedures to ensure that programincome was properly recorded; however, these policies and procedures were not followed in fiscal year2019-2020. Daily food service sales analysis reports, to be used to determine that meals served wereproperly accounted for as cash sales or prepaid meals applied, did not agree with the transfers made fromthe Prepaid School Lunch fund to the School Lunch fund. The School Corporation was not able to providedetail to explain the variances between the sales analysis reports and the transfers.The lack of effective internal controls and noncompliance were isolated to 2019-2020.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 in compliancewith Federal statutes, regulations, and the terms and conditions of the Federal award.These internal controls should be in compliance with guidance in 'Standards for InternalControl in the Federal Government' issued by the Comptroller General of the United Statesor the 'Internal Control Integrated Framework', issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). . . ."7 CFR 220.7(e) states in part:"Each school food authority approved to participate in the program shall enter into a writtenagreement with the State agency or the Department through the FNSRO, as applicable, thatmay be amended as necessary. . . . Such agreements shall provide that the School FoodAuthority shall, with respect to participating schools under its jurisdiction: . . .(12) Maintain a financial management system as prescribed by the State agency, orFNSRO where applicable; . . ."7 CFR 210.14(c) states:"Financial assurances. The school food authority shall meet the requirements of the Stateagency for compliance with ? 210.19(a) including any separation of records of nonprofit schoolfood service from records of any other food service which may be operated by the school foodauthority 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 thenonprofit school food service account of a participating school food authority."7 CFR 225.6(e) states in part:"State-Sponsor Agreement. A sponsor approved for participation in the Program must enterinto a permanent written agreement with the State agency. All sponsors must agree in writingto: . . .(12) Maintain a financial management system as prescribed by the State agency; . . ."CauseManagement had not established an effective system of internal controls that would have ensuredcompliance with the grant agreement and the Program Income compliance requirement.EffectThe failure to establish an effective internal control system enabled noncompliance to go undetected.Noncompliance with the grant agreement and the compliance requirement could have resulted inthe loss of federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish effective internal controlsto ensure compliance and comply with the Program Income compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-003Subject: Child Nutrition Cluster - Special Tests and Provisions - Paid Lunch EquityFederal Agency: Department of AgricultureFederal Programs: National School Lunch Program, COVID-19 - National School Lunch ProgramCFDA Number: 10.555Federal Award Number and Year (or Other Identifying Number): FY 2020Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Special Tests and Provisions - Paid Lunch EquityAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Special Tests and Provisions - Paid LunchEquity compliance requirement.The paid lunch equity calculations for fiscal year 2019-2020 were prepared by the Food ServiceDirector without a system of oversight, review, or approval before submission to the Indiana Department ofEducation. Calculations for paid lunch equity were not completed in accordance with the instructions provided.The lack of an effective internal control system resulted in school lunch prices being increasedabove the maximum price adjustment allowed. The increase in weighted average lunch prices for2019-2020 was fifteen cents.The lack of internal controls and noncompliance were isolated to 2019-2020.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 in compliancewith Federal statutes, regulations, and the terms and conditions of the Federal award.These internal controls should be in compliance with guidance in 'Standards for InternalControl in the Federal Government' issued by the Comptroller General of the United Statesor the 'Internal Control Integrated Framework', issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). . . ."7 CFR 210.14(e) states in part:"Pricing paid lunches. For each school year beginning July 1, 2011, school food authoritiesshall establish prices for paid lunches in accordance with this paragraph.(1) Calculation procedures. Each school food authority shall:(i) Determine the average price of paid lunches. The average shall be determinedbased on the total number of paid lunches claimed for the month of October in theprevious school year, at each different price charged by the school food authority.(ii) Calculate the difference between the per meal Federal reimbursement for paid andfree lunches received by the school food authority in the previous school year (i.e., thereimbursement difference);(iii) Compare the average price of a paid lunch under paragraph (e)(1)(i) of this sectionto the difference between reimbursement rates under paragraph (e)(1)(ii) of thissection. . . .(4) Price adjustments. (i) Maximum required price increase. The maximum annual averageprice increase required under this paragraph shall not exceed ten cents.(ii) Rounding of paid lunch prices. Any school food authority may round the adjustedprice of the paid lunches down to the nearest five cents.(iii) Optional price increases. A school food authority may increase the average priceby more than ten cents. . . ."CauseManagement had not established an effective system of internal controls that would have ensuredcompliance with the Special Tests and Provisions - Paid Lunch Equity compliance requirement.EffectThe failure to establish an effective internal control system enabled noncompliance to go undetected.Noncompliance with the grant agreement and the compliance requirement could have resulted inthe loss of federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish an effective system ofinternal controls to ensure compliance with the grant agreement and the Special Tests and Provisions -Paid Lunch Equity compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-004Subject: Special Education Cluster (IDEA) - EarmarkingFederal Agency: Department of EducationFederal Program: Special Education Grants to StatesCFDA Number: 84.027Federal Award Numbers and Years (or Other Identifying Numbers): 18611-044-PN01, 19611-044-PN01,20611-042-PN01Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Matching, Level of Effort, EarmarkingAudit Findings: Material Weakness, Modified OpinionRepeat FindingThis is a repeat finding from the immediately prior audit report. The prior audit finding number was2018-005.Condition and ContextThe School Corporation did not properly design or implement a system of internal controls relatedto the grant agreement and the earmarking requirement of the Matching, Level of Effort, Earmarking compliancerequirement.The School Corporation was a participating member school corporation of the Northeast IndianaSpecial Education Cooperative (Cooperative). The School Corporation partially prepared the ProportionateShare Monitoring Report, based on school calculations, submitted by the Cooperative. There was noreview, oversight, or approval process at the School Corporation level over the preparation of the report.The School Corporation did not provide audit evidence to test the earmarking requirement for nonpublicschools proportionate share. Supporting documentation to determine if the earmarking requirementwas met for the Proportionate Share Quarterly Monitoring Reports was not properly maintained and presentedfor audit. The failure to present appropriate audit evidence prevented the determination of theSchool Corporation's compliance with the earmarking requirement of the Matching, Level of Effort,Earmarking compliance requirement.The lack of internal controls and noncompliance were systemic issues, which occurred throughoutthe 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 in compliancewith Federal statutes, regulations, and the terms and conditions of the Federal award.These internal controls should be in compliance with guidance in 'Standards for InternalControl in the Federal Government' issued by the Comptroller General of the United Statesor the 'Internal Control Integrated Framework', issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). . . ."2 CFR 200.333 states in part:"Financial records, supporting documents, statistical records, and all other non-Federal entityrecords pertinent to a Federal award must be retained for a period of three years from the dateof submission of the final expenditure report or, for Federal awards that are renewed quarterlyor 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 asubrecipient. . . ."CauseManagement of the School Corporation did develop or implement a system of internal controls toensure that documentation was maintained and made available for audit relating to the Matching, Level ofEffort, Earmarking compliance requirement.EffectThe failure to design and implement an internal control system placed the School Corporation atrisk of noncompliance with the grant agreement and the compliance requirement. The failure to maintainsupporting documentation prevented the ability to verify if the School Corporation was in compliance withthe earmarking requirements.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management develop and implement proceduresand establish internal controls to ensure that documentation was maintained and made available for auditrelating to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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