South Madison Community School CorporationHigher Education

FINDING 2020-001Subject: Special Education Cluster (IDEA) - ProcurementFederal Agency: Department of EducationFederal Programs: Special Education Grants to States, Special Education Preschool GrantsCFDA Numbers: 84.027, 84.173Federal Award Numbers and Years (or Other Identifying Numbers): 14217-139-PN01, 18611-023-PN01,19611-023-PN01, 18619-023-PN01,19619-023-PN01Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding from the immediately prior audit report. The prior audit finding number was2018-009.Condition 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 procurement requirements of theProcurement and Suspension and Debarment compliance requirement.The School Corporation is a participating member school corporation of the Hamilton-Boone-Madison Special Services Cooperative (Cooperative). The grant agreements for the federal programs werebetween the Indiana Department of Education (IDOE) and each member school corporation of theCooperative. Because the grant agreements were between the IDOE and the School Corporation, theSchool Corporation was ultimately responsible for compliance with the Procurement and Suspension andDebarment compliance requirement.The written procurement policies and procedures of the Cooperative did not comply with the procurementstandards outlined in the criteria below for fiscal year 2018-2019. The written policies did notspecify avoiding the acquisition of unnecessary or duplicative items, or that all solicitations should incorporatea description of the technical requirements of the procurement. The Cooperative also had a policyto use local geographical preferences in the evaluation of bids or proposals.The School Corporation did not establish effective internal controls over purchases that fall withinthe small purchase's requirement, allowing noncompliance to go undetected. Price or rate quotes were notobtained from an adequate number of qualified sources and full and open competition was not provided.The lack of effective internal controls and noncompliance were 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 Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318 states in part:"(a) The non-Federal entity must use its own documented procurement procedures whichreflect applicable State, local, and tribal laws and regulations, provided that the procurementsconform to applicable Federal law and the standards identified in this part. . . .(d) The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicativeitems. Consideration should be given to consolidating or breaking out procurements to obtaina more economical purchase. Where appropriate, an analysis will be made of lease versuspurchase alternatives, and any other appropriate analysis to determine the most economicalapproach. . . .(i) The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to the following: rationale forthe method of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price. . . ."2 CFR 200.319 states in part:"(a) All procurement transactions must be conducted in a manner providing full and opencompetition consistent with the standards of this section. . . .(b) The non-Federal entity must conduct procurements in a manner that prohibits the use ofstatutorily or administratively imposed state, local, or tribal geographical preferences in theevaluation of bids or proposals, except in those cases where applicable Federal statutesexpressly mandate or encourage geographic preference. . . .(c) The non-Federal entity must have written procedures for procurement transactions.These procedures must ensure that all solicitations:(1) Incorporate a clear and accurate description of the technical requirements for thematerial, product, or service to be procured. . . ."2 CFR 200.320(b) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the procurement requirements could haveresulted in the loss of federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish effective internal controlsto ensure compliance and comply with the Procurement and Suspension and Debarment compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-002Subject: Special Education Cluster (IDEA) - Equipment and Real Property ManagementFederal Agency: Department of EducationFederal Programs: Special Education Grants to States, Special Education Preschool GrantsCFDA Numbers: 84.027, 84.173Federal Award Numbers and Years (or Other Identifying Numbers): 18611-023-PN01, 19611-023-PN01,20611-023-PN01, 18619-023-PN01,19619-023-PN01, 20619-023-PN01Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Equipment and Real Property ManagementAudit Findings: Material Weakness, Modified OpinionCondition 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 equipment requirements of the Equipmentand Real Property Management compliance requirement.The School Corporation is a participating member school corporation of the Hamilton-Boone-Madison Special Services Cooperative (Cooperative). The grant agreements for the federal programs werebetween the Indiana Department of Education (IDOE) and each member school corporation of theCooperative. Because the grant agreements were between the IDOE and the School Corporation, theSchool Corporation was ultimately responsible for compliance with the Equipment and Real PropertyManagement compliance requirement.The School Corporation did not have adequate procedures in place to ensure that the Cooperativecomplied with the equipment requirements. The Cooperative did not have adequate procedures in placeto ensure that equipment purchased with grant funds were properly recorded and maintained in the unit'sequipment records. Equipment that was disposed of during the audit period was removed from the equipmentlist with no documentation of the method of disposition.The lack of internal controls and lack of documentation for the disposition of equipment was isolatedto fiscal year 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 Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.313(e) states in part:"Disposition. When original or replacement equipment acquired under a Federal award is nolonger needed for the original project or program or for other activities currently or previouslysupported by a Federal awarding agency, except as otherwise provided in Federal statutes,regulations, or Federal awarding agency disposition instructions, the non-Federal entity mustrequest disposition instructions from the Federal awarding agency if required by the terms andconditions of the Federal award. Disposition of the equipment will be made as follows, in accordancewith Federal awarding agency disposition instructions: . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the grant agreement and the Equipment and Real Property Management compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the equipment requirements could have resultedin the loss of federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish effective internal controlsto ensure compliance and comply with the Equipment and Real Property Management compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION