Blackford County SchoolsLocal Government

FINDING 2024-003 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles 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 Number and Year (or Other Identifying Number): FY23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. 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 compliance requirement; however, it was not effective. The School Corporation was approved for an indirect cost rate for fiscal year 2021-2022 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, the School Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for 2021-2022 in the amount of $26,793 was not charged to the Cafeteria fund until September 2022. Per USDA guidance, it is unallowable to bill the National School Food Service Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless an agreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costs in one or more prior years. The School Corporation did not have an interfund loan agreement in place. Therefore, the amounts were considered questioned costs. The lack of effective internal controls and noncompliance were isolated to the indirect costs noted above. 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). . . ." USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part: ". . . It is unallowable to bill the NSFSA for indirect costs that were paid from the general fund in prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . . There is no Federal requirement that prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirect costs by those organizational units within the SFA that actually incur costs. Absent a documented 'inter-fund loan' as outlined above, however, an SFA may only change its policy to charge the NSFSA for indirect costs prospectively (that is going forward for the next school year.) It is unallowable to bill the NSFSA for indirect costs that were previously paid from the general fund unless an agreement exists to show that the district had been 'loaning' the NSFSA funds to cover the indirect costs in one or more prior years. . . ." 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: (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. . . . (g) Be adequately documented. . . ." Cause Management was not aware of the requirements before the transfer was made in September 2022. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected and resulted in the School Corporation charging indirect costs that were not allowable. Questioned Costs Known questioned costs of $26,793 were identified as noted in the Condition and Context. Recommendation Management of the School Corporation should develop written policies and procedures to ensure that indirect costs are properly determined and paid in the appropriate fiscal year. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY23, FY24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for suspension and debarment from the immediately prior report. The prior audit finding number was 2022-005. 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 Procurement and Suspension and Debarment compliance requirement. The School Corporation did not verify that one restaurant supplies vendor with a contract over $25,000 for both fiscal years 2022-2023 and 2023-2024 was not excluded or disqualified from participation in federal award programs. The lack of internal controls and noncompliance were systemic issues 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 180.300 states: "When you enter into a covered transaction with another person at 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 the 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 Management of the School Corporation was unaware that all vendors who received more than $25,000 during the school year had to be verified. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. As a result, the School Corporation did not verify all necessary vendors were not suspended or debarred. Without following the required methods for suspension and debarment, the Cooperative could be paying vendors who are precluded from receiving federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures to ensure vendors are not suspended or debarred. 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: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles and Activities Allowed or Unallowed Federal Agency: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles, Activities Allowed or Unallowed Audit Findings: Material Weakness, Modified Opinion Condition and Context The COVID-19 - Education Stabilization Fund (ESF), established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. A sample of 40 vendor and payroll disbursements that were charged to the ESF grant for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable allowable cost principles. Of the 40 disbursements tested, 4 payroll disbursements for accelerated learning were approved, but the School Corporation could not provide documentation to show where the governing board approved their rate of pay. In addition, there was a transfer from the ESSER II - Cares grant fund to the Education fund for $117,177 to reimburse that fund for expenses on June 20, 2024. The School Corporation was unable to provide documentation for the expenses that were reimbursed to ensure they were for allowable activities and allowable costs. The ineffective internal controls were 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). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (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. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the Allowable Costs/Cost Principles and the Activities Allowed or Unallowed compliance requirements. Management was not aware that they should have only been reimbursed for expenditures made out of the ESF funds or should have moved the expenditures and retained proper documentation to support what expenditures tied to what was reimbursed. It was noted that the accelerated learning rate of pay was discussed at a School Board meeting, but the approved wage rates were not documented in the School Board minutes or on any sort of salary schedule approved by the School Board members. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Cost/Cost Principles and the Activities Allowed or Unallowed compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs There was a total of $173,841 of questioned costs as referenced under the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure only allowable activities and allowable costs are charged to grants funds and to ensure grant money is only requested for reimbursement for monies directly related to the grant program. 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: Indiana Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U 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, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-010. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Even though the reports were reviewed by someone other than the preparer, the School Corporation was not able to provide financial information that was used to determine amounts used in the reports. The School Corporation completed and submitted four annual Data Collection reports (Reports) for the Elementary and Secondary School Emergency Relief (ESSER) grants. For all four of the Reports, the School Corporation was unable to provide financial information to support the amounts in the Reports; therefore, the Indiana State Board of Accounts could not determine the accuracy of the Reports. Additionally, eight of eight key line items selected for testing could not be verified to the financial records. 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. . . ." 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." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause According to the School Corporation, these issues were due to the reporting differences of how the annual expenditure report categories are different than the annual Data Collection reports. The School Corporation indicated that it had to go employee by employee to properly place them under the correct category using the reimbursement requests but did not retain that documentation of how it came to the numbers. Effect The failure to design and implement an effective internal control system enabled noncompliance to go undetected with the Reporting compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish effective internal controls to ensure reports submitted are accurate and have supporting documentation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)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 incompliance with 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). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-004Subject: Child Nutrition Cluster - ReportingFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer Food ServiceProgram for Children, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: ReportingAudit Finding: Material WeaknessCondition and ContextAn effective internal control system was not designed or implemented at the School Corporation toensure compliance with requirements related to the grant agreement and the Reporting compliancerequirement.Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Departmentof Education (IDOE) based upon meals served for the month. The Claims were prepared by the FoodService Manager without an oversight or review process in place to prevent, or detect and correct, errors.The lack of internal controls was a systemic issue throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:INDIANA STATE BOARD OF ACCOUNTS22BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with 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). . . ."CauseManagement had not designed or implemented an effective system of internal controls that wouldhave ensured compliance with the grant agreement and the Reporting compliance requirement.EffectThe failure to establish an effective system of internal controls placed the School Corporation atrisk of noncompliance with the grant agreement and the Reporting compliance requirement.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Reporting compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the 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 incompliance with 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(i) states:"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 for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) 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."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-006Subject: Title I Grants to Local Educational Agencies - EligibilityFederal Agency: Department of EducationFederal Program: Title I Grants to Local Educational AgenciesAssistance Listings Number: 84.010Federal Award Numbers and Years (or Other Identifying Numbers): FY18, FY19, FY20, FY21Pass-Through Entity: Indiana Department of EducationCompliance Requirement: EligibilityAudit Finding: Material WeaknessCondition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Eligibility compliance requirement.Eligibility for Title I funding for the School Corporation was determined through the Textbook RentalApplication process. During the audit period, one employee entered the determinations in the SchoolDistrict's software system by uploading Direct Certification reports from the state or manually enteringTextbook Rental Assistance Applications into the software system. There was not a documented oversightor review process in place to prevent, or detect and correct, errors.The lack of internal controls was a systemic issue throughout the 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 incompliance with 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). . . ."INDIANA STATE BOARD OF ACCOUNTS26BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)CauseManagement had not designed or implemented an effective system of internal controls that wouldhave ensured compliance with the grant agreement and the Eligibility compliance requirement.EffectThe failure to establish an effective system of internal controls placed the School Corporation atrisk of noncompliance with the grant agreement and the Eligibility compliance requirement.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Eligibility compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-007Subject: Title I Grants to Local Education Agencies - EarmarkingFederal Agency: Department of EducationFederal Program: Title I Grants to Local Educational AgenciesAssistance Listings Number: 84.010Federal Award Numbers and Years (or Other Identifying Numbers): FY19, FY 20Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Matching, Level of Effort, EarmarkingAudit 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 Matching, Level of Effort, Earmarkingcompliance requirement.Officials of the School Corporation did not properly monitor the Homeless set-aside to ensureamounts were tracked for those students designated as homeless. For the Title I grant years FY19 andFY20, the entire Homeless set-aside of $1,632 and $550, respectively, was not spent. In addition, the setasideswere not carried forward for subsequent year expenses.The lack of internal controls and noncompliance were systemic issues throughout the audit period.INDIANA STATE BOARD OF ACCOUNTS27BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)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 incompliance with 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 200.400 states in part:"(a) The non-Federal entity is responsible for the efficient and effective administration of theFederal award through the application of sound management practices.(b) The non-Federal entity assumes responsibility for administering Federal funds in a mannerconsistent with underlying agreements, program objectives, and the terms and conditions ofthe Federal award. . . ."20 USC 6313(c)(3) states in part:"(A) In General. A local educational agency shall reserve such funds as are necessary underthis part, determined in accordance with subparagraphs (B) and (C), to provide servicescomparable to those provided to children in schools funded under this part to serve?(i) homeless children and youths, including providing educationally related supportservices to children in shelters and other locations where children may live;(ii) children in local institutions for neglected children; and(iii) if appropriate, children in local institutions for delinquent children, and neglected ordelinquent children in community day programs. . . .(C) Homeless children and youths. Funds reserved under subparagraph (A)(i) may be? . . .(ii) used to provide homeless children and youths with services not ordinarily provided toother students under this part, including providing?(I) funding for the liaison designated pursuant to section 11432(g)(1)(J)(ii) of title 42;and(II) transportation pursuant to section 11432(g)(1)(J)(iii) of such title."CauseManagement had not established an effective system of internal controls that would have ensuredcompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement.INDIANA STATE BOARD OF ACCOUNTS28BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls related tothe 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.

FINDING 2022-008Subject: COVID-19 - Education Stabilization Fund - SpecialTests and Provisions - Wage Rate RequirementsFederal Agency: Department of EducationFederal Program: COVID-19 - Education Stabilization FundAssistance Listings Numbers: 84.425D, 84.425UFederal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013,S425U210013Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Special Tests and Provisions - Wage Rate RequirementsAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not designed nor implemented at the School Corporationto ensure compliance with requirements related to the grant agreement and the Special Tests andProvisions - Wage Rate Requirements compliance requirement.Construction contracts in excess of $2,000 financed by federal assistance funds must pay wagesnot less than those established for the locality of the project (prevailing wage rates) by the Department ofLabor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their constructioncontracts, subject to the Wage Rate Requirements, a provision that the contractor or subcontractor complywith these requirements and the DOL regulations. This would include a requirement to submit a copy ofthe payroll and statement of compliance to the entity for each week in which contract work was performed.The School Corporation was not aware of the Wage Rate Requirements when it entered intoagreements with two contractors providing services on HVAC projects. The necessary provision wasincluded in both of the contracts; however, a copy of the certified payrolls was not provided to the SchoolCorporation on a weekly basis as work was performed. The School Corporation received certified payrollswhen the contractors sent them an invoice for payment.INDIANA STATE BOARD OF ACCOUNTS29BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)The lack of internal controls and noncompliance were systemic issues throughout the 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 incompliance with 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). . . ."29 FR 5.5 states in part:"(a) The Agency head shall cause or require the contracting officer to insert in full in anycontract in excess of $2,000 which is entered into for the actual construction, alteration and/orrepair, including painting and decorating, of a public building or public work, or building or workfinanced in whole or in part from Federal funds or in accordance with guarantees of a Federalagency or financed from funds obtained by pledge of any contract of a Federal agency to makea loan, grant or annual contribution (except where a different meaning is expressly indicated),and which is subject to the labor standards provisions of any of the acts listed in ? 5.1, thefollowing clauses . . .(1) Minimum wages -(i) All laborers and mechanics employed or working upon the site of the work (orunder the United States Housing Act of 1937 or under the Housing Act of 1949 in theconstruction or development of the project), will be paid unconditionally and not lessoften than once a week, and without subsequent deduction or rebate on any account(except such payroll deductions as are permitted by regulations issued by theSecretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wagesand bona fide fringe benefits (or cash equivalents thereof) due at time of paymentcomputed at rates not less than those contained in the wage determination of theSecretary of Labor which is attached hereto and made a part hereof, regardless of anycontractual relationship which may be alleged to exist between the contractor and suchlaborers and mechanics . . .(3)(ii)(A) The contractor shall submit weekly for each week in which any contract workis performed a copy of all payrolls to the (write in name of appropriate federalagency) if the agency is a party to the contract, but if the agency is not such aparty, the contractor will submit the payrolls to the applicant, sponsor, or owner, asthe case may be, for transmission to the (write in name of agency). . . ."INDIANA STATE BOARD OF ACCOUNTS30BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200 Appendix II states in part:"In addition to other provisions required by the Federal agency or non-Federal entity; allcontracts made by the non-Federal entity under the Federal award must contain provisionscovering the following, as applicable. . . .(D) Davis-Bacon Act, as amended (40 U.S.C 3141-3148). When required by Federalprogram legislations, 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 Laborregulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts CoveringFederally Financed and Assisted Construction'). In accordance with the statue, contractsmust be required to pay wages to laborers and mechanics at a rate note less than theprevailing wages specified in wage determination made by the Secretary of Labor. Inaddition, contractors must be required to pay wages not less than once a week. . . ."CauseManagement had not designed or implemented a system of internal controls that would haveensured compliance with the grant agreement and the Special Tests and Provisions - Wage RateRequirements compliance requirement.EffectThe failure to design and implement an effective system of internal controls enabled noncomplianceto go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - WageRate Requirement compliance requirement could result in the loss of future federal funds to the SchoolCorporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internalcontrols, as well as appropriately and timely document adherence to required requirements to ensurecompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirementcompliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-009Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property ManagementFederal Agency: Department of EducationFederal Program: COVID-19 - Education Stabilization FundAssistance Listings Number: 84.425DFederal Award Number and Year (or Other Identifying Number): S425D210013Pass-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 designed properly at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Equipment and Real PropertyManagement compliance requirement.A property record or capital asset listing, which would include a description of the property, a serialnumber or other identification number, the source of funding for the property (including the federal awardidentification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage offederal participation in the project costs for the federal award under which the property was acquired, thelocation, and use and condition of the property, is to be maintained for assets purchased that exceed theSchool Corporation's capitalization threshold.The School Corporation does not have a current capital asset listing that includes new equipmentor real property that was purchased during the audit period. The capital asset listing is only updated everytwo years when the physical inventory takes place. An asset purchased during the audit period in theamount of $72,221, from the ESSER II award, was not included in the School Corporation's capital assetlisting or a property record.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with 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). . . ."INDIANA STATE BOARD OF ACCOUNTS32BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.313(d)(1) states:"Property records must be maintained that include a description of the property, a serial numberor other identification number, the source of funding for the property (including the FAIN), whoholds title, the acquisition date, cost of the property, percentage of Federal participation in theproject costs for the Federal award under which the property was acquired, the location, useand condition of the property, and any ultimate disposition data including the date of disposaland sales price of the property."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Equipment and Real Property Management compliance requirement.EffectThe failure to design and implement an effective internal control system enabled noncompliance togo undetected. Noncompliance with the grant agreement and the Equipment and Real PropertyManagement compliance requirement could result in the loss of future federal funds to the SchoolCorporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internalcontrols to ensure compliance and comply with the grant agreement and the Equipment and Real PropertyManagement compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-010Subject: COVID-19 - Education Stabilization Fund - ReportingFederal Agency: Department of EducationFederal Program: COVID-19 - Education Stabilization FundAssistance Listings Numbers: 84.425D, 84.425UFederal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013,S425U210013Pass-Through Entity: Indiana Department of EducationCompliance Requirement: ReportingAudit Findings: Material Weakness, Modified OpinionINDIANA STATE BOARD OF ACCOUNTS33BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not designed or implemented at the School Corporation toensure compliance with requirements related to the grant agreement and the Reporting compliancerequirement.The School Corporation completed and submitted four annual Data Collection reports (Reports) forthe Elementary and Secondary School Emergency Relief (ESSER) grants. For three of the four Reportstested, the Reports were not supported by the unit's records. The financial information provided did notagree to the data submitted in the Reports; therefore, we could not determine the accuracy of the Reports.Additionally, seven of seven key line items selected for testing could not be traced to supporting documentation.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with 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 200.302(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 Federalaward or program in accordance with the reporting requirements set forth in?? 200.328 and 200.329. . . ."34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and formatthat assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out otherresponsibilities under the program."2 CFR 200.334 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 ofa subrecipient. . . ."INDIANA STATE BOARD OF ACCOUNTS34BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance withprogram requirements."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Reporting compliance requirement.EffectThe failure to design and implement an effective internal control system enabled noncompliance togo undetected with the Reporting compliance requirement.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 grant agreement and the Reporting compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.INDIANA STATE BOARD OF ACCOUNTS35

FINDING 2020-003 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: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 18-19, FY 19-20, FY 18-20 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), Special Tests and Provisions - School Food Account Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report regarding Eligibility and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit report finding number was 2018-003. Also, it's a repeat finding regarding internal controls over Cash Management. The prior audit report finding number was 2018-004. Condition and Context An effective system of internal controls, which would include segregation of duties, was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), and Special Tests and Provisions - School Food Account compliance requirements. Cash Management The School Corporation had not designed or implemented a system of internal controls to monitor and ensure that the School Lunch fund's net cash resources did not exceed three months average expenditures. Eligibility The School Corporation had not designed or implemented an effective system of internal controls to ensure that free and reduced price meal applications were accurately evaluated for eligibility. The application information was entered into the food service software, which automatically made the eligibility determination dependent on the information entered. There was no oversight or review to ensure the information entered into the food service software was accurate. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) (School Breakfast Program and National School Lunch Program only) The School Corporation had not separated incompatible activities related to the eligibility verifications performed as part of the Verification Summary Reports. There was no documentation of an internal control in place, such as an oversight, review, or approval process, to ensure the eligibility determinations were properly performed. Special Tests and Provisions - School Food Account The School Corporation had not designed or implemented an internal control system for the receipt activity of the School Food Account. There were no internal controls in place to ensure that receipts were recorded timely or that the activity was food service related. 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 established and implemented an effective internal control system that would have ensured compliance with the grant agreement and the Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), and Special Tests and Provisions - School Food Account compliance requirements. Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. 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, to ensure compliance and comply with the grant agreement and the Cash Management, Eligibility, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP), and Special Tests and Provisions - School Food Account compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-004 Subject: Child Nutrition Cluster - Suspension and Debarment 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): FY 18-19, FY 19-20, FY 18-20 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place 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 contracted with two vendors during the audit period and did not perform procedures to ensure the vendors were not excluded or disqualified from participation in federal award programs. The lack of internal controls and noncompliance were isolated to the two vendors procured by the School Corporation. 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 180.300 states: "When you enter into a covered transaction with another person at 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 Management had not developed an effective 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 system of internal controls enabled noncompliance with the grant agreement and the compliance requirement listed above. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls, including segregation of duties, 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 2020-005 Subject: Child Nutrition Cluster - Program Income Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children, COVID-19 Summer Food Service Program for Children CFDA Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 18-19, FY 19-20, FY 18-20 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Program Income Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2018-006. Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Program Income compliance requirement. The School Corporation had not established an effective system of internal controls to ensure that program income was being properly and timely (at least monthly) transferred from the Cafeteria Clearing fund (Fund 8400) to the School Lunch fund (Fund 800). Transfers were documented by recording a negative receipt instead of properly recording a disbursement/transfer between the funds. The negative receipt amounts could not be verified to the lunch system sales and collection reports. There were variances for each of the four months tested between the negative receipt amount recorded and the lunch system report amounts. The largest variance identified in the test occurred in March 2019. The lunch system report indicated $15,065 should have been transferred to the School Lunch fund, but that amount could not be found in the School Lunch fund. The lack of internal controls and noncompliance were systemic issues 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). . . ." 7 CFR 210.14(c) states: "Financial assurances. The school food authority shall meet the requirements of the State agency for compliance with ? 210.19(a) including any separation of records of nonprofit school food service from records of any other food service which may be operated by the school food authority as provided in paragraph (a) of this section." 7 CFR 210.14(f)(3) states: "All revenue from the sale of nonprogram foods shall accrue to the nonprofit school food service account of a participating school food authority." 7 CFR 225.6(e) states in part: "State-Sponsor Agreement. A sponsor approved for participation in the Program must enter into a permanent written agreement with the State agency. All sponsors must agree in writing to: . . . (12) Maintain a financial management system as prescribed by the State agency; . . ." 7 CFR 220.7(e) states in part: "Each school food authority approved to participate in the program shall enter into a written agreement with the State agency or the Department through the FNSRO, as applicable, that may be amended as necessary. . . . Such agreements shall provide that the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (12) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable; . . ." When a student puts money into their individual meal account, it should not be considered income to the child nutrition program until that student goes through the lunch line and charges a meal to their account. Therefore, while money is in the student's individual account, the balance should not be included in Fund 800 School Lunch. A school should set up a clearing account with the fund number of 8400 Prepaid School Lunch Accounts, which is included in Chapter 4 of the State Board of Accounts Uniform Compliance Guidelines for Indiana Public School Corporations. When a student brings in a deposit the receipt should be recorded to fund 8400 using receipt account 1630 Special Functions. After the student has charged meals, you should disburse the amount charged from 8400 using expenditure account 31900 Other Food Services and receipt this into fund 800 using the Food Services receipt accounts 1611-1623 at the time established in a written school policy to ensure accurate monthly reporting. At this point the receipts are considered program income and should be included on any reports that are required to be completed. Also, on a monthly basis it is required that the balance of the 8400 fund be reconciled with the total of the individual meal accounts. (The School Bulletin and Uniform Compliance Guidelines, February 2019) Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Program Income compliance requirement. Effect The failure to establish an effective system of internal controls enabled noncompliance with the grant agreement and the compliance requirement listed above. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure compliance and comply with the grant agreement and Program Income compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-006 Subject: Child Nutrition Cluster - Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program CFDA Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 18-19, FY 19-20, FY 18-20 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The School Corporation calculated the number of applications that needed verified for fiscal year 2019-2020, but did not test the required number of applications as calculated. The lack of internal controls was a systemic issue throughout the audit period, and the noncompliance was isolated to 2019-2020. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 245.11(c) states in part: "Local educational agency requirements. Beginning July 1, 2014, and each July 1 thereafter, local educational agencies selected by the State agency to conduct a second review of applications must ensure that the initial eligibility determination for each application is reviewed for accuracy prior to notifying the household of the eligibility or ineligibility of the household for free and reduced price meals. The second review must be conducted by an individual or entity who did not make the initial determination. This individual or entity is not required to be an employee of the local educational agency but must be trained on how to make application determinations. All individuals or entities who conduct a second review of applications are subject to the disclosure requirements set forth in ? 245.6(f) through (k). . . ." 7 CFR 245.6a(c)(3) states: "Standard sample size. Unless eligible for an alternative sample size under paragraph (d) of this section, the sample size for each local educational agency shall equal the lesser of: (i) Three (3) percent of all applications approved by the local educational agency for the school year, as of October 1 of the school year, selected from error prone applications; or (ii) 3,000 error prone applications approved by the local educational agency for the school year, as of October 1 of the school year. (iii) Local educational agencies shall not exceed the standard sample size in paragraphs (c)(3)(i) or (c)(3)(ii) of this section, as applicable, and, unless eligible for one of the alternative sample sizes provided in paragraph (c)(4) of this section, the local educational agency shall not use a smaller sample size than those in paragraphs (c)(3)(i) or (c)(3)(ii) of this section, as applicable. (iv) If the number of error-prone applications exceeds the required sample size, the local educational agency shall select the required sample at random, i.e., each application has an equal chance of being selected, from the total number of error-prone applications." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirement. Effect The failure to establish an effective system of internal controls enabled noncompliance with the grant agreement and the compliance requirement listed above. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) 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 2020-007 Subject: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants CFDA Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 18611-008-PN01, 19611-008-PN01, 20611-008-PN01, 45717-008-PN01, 18619-008-PN01, 19619-008-PN01, 20619-008-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation had not established internal controls to ensure that semiannual certifications were maintained and approved in support of compensation paid to employees from grant funds. The School Corporation did not provide completed documentation that would have served as a certification of employees paid 100 percent from the Special Education Cluster (IDEA) programs. The lack of internal controls and noncompliance were systemic issues 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 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls enabled noncompliance with the grant agreement and the compliance requirement listed above. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure compliance and comply with the grant agreement and the Allowable Costs/Cost Principles 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 2020-008 Subject: Special Education Grants to States - Period of Performance Federal Agency: Department of Education Federal Program: Special Education Grants to States CFDA Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 20611-008-PN01 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Period of Performance compliance requirement. The School Corporation did not record the expenditures and grant reimbursements to a separate grant fund for the 20611-008-PN01 award, which would have allowed for the proper identification of transactions for the Period of Performance compliance requirement. Therefore, transactions recorded in the financial records for this grant could not be specifically identified and tested. The total expenditures for this grant were $410,216. The lack of internal controls and noncompliance were isolated to the 20611-008-PN01 grant award and fiscal year 2019-2020. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framwork', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.309 states: "A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in ? 200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity." Cause Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Period of Performance compliance requirement. Effect The failure to establish an effective system of internal controls enabled noncompliance with the grant agreement and the compliance requirement listed above. Questioned Costs Questioned costs identified totaled $410,216. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure compliance and comply with the grant agreement and Period of Performance compliance requirement. 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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