FAC Explorer

Audit 298525

FY End
2023-06-30
Total Expended
$4.36M
Findings
8
Programs
18
Organization: Northwestern Consolidated School District of Shelby County (IN)
Year: 2023 Accepted: 2024-03-27
Auditor: Indiana State Board of Accounts

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
386119 2023-002 Material Weakness Yes ABN
386120 2023-002 Material Weakness Yes ABN
386121 2023-002 Material Weakness Yes ABN
386122 2023-002 Material Weakness Yes ABN
962561 2023-002 Material Weakness Yes ABN
962562 2023-002 Material Weakness Yes ABN
962563 2023-002 Material Weakness Yes ABN
962564 2023-002 Material Weakness Yes ABN

Programs

ALN Program Spent Major Findings
84.425 Education Stabilization Fund 2022 $1.04M Yes 0
10.555 National School Lunch Program 2022 $666,861 Yes 1
10.555 National School Lunch Program 2023 $477,628 Yes 1
84.425 Education Stabilization Fund 2023 $265,358 Yes 0
84.010 Title I Grants to Local Educational Agencies 2023 $246,930 - 0
10.553 School Breakfast Program 2022 $121,016 Yes 1
84.010 Title I Grants to Local Educational Agencies 2022 $120,212 - 0
10.553 School Breakfast Program 2023 $84,693 Yes 1
84.027 Special Education_grants to States 2023 $57,042 - 0
84.367 Improving Teacher Quality State Grants 2023 $55,406 - 0
84.424 Student Support and Academic Enrichment Program 2023 $29,191 - 0
84.027 Special Education_grants to States 2022 $10,591 - 0
93.778 Medical Assistance Program 2022 $7,454 - 0
84.424 Student Support and Academic Enrichment Program 2022 $6,690 - 0
93.778 Medical Assistance Program 2023 $5,633 - 0
84.367 Improving Teacher Quality State Grants 2022 $3,375 - 0
84.173 Special Education_preschool Grants 2022 $1,704 - 0
84.173 Special Education_preschool Grants 2023 $162 - 0

Contacts

Name Title Type
FP4XK4TAWGJ3 Tammy Achenbach Auditee
3178357461 Beth Kelley, Cpa, Cfe Auditor
No contacts on file

Notes to SEFA

Accounting Policies: Note 1. Summary of Significant Accounting Policies A. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of the School Corporation under programs of the federal government for the years ended June 30, 2022 and 2023. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the SEFA presents only a select portion of the operations of the School Corporation, it is not intended to and does not present the financial position of the School Corporation. The Uniform Guidance requires an annual audit of nonfederal entities expending a total amount of federal awards equal to or in excess of $750,000 in any fiscal year unless by constitution or statute a less frequent audit is required. In accordance with Indiana Code (IC 5-11-1-25), audits of school corporations shall be conducted biennially. Such audits shall include both years within the biennial period. B. Other Significant Accounting Policies Expenditures reported on the SEFA are reported on the cash basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowed or are limited as to reimbursement. When federal grants are received on a reimbursement basis, the federal awards are considered expended when the reimbursement is received. De Minimis Rate Used: N Rate Explanation: Note 2. Indirect Cost Rate The School Corporation has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002
FINDING 2023-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY 2022 / FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-002. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed nor implemented internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). Activities Allowed or Unallowed and Allowable Costs/Cost Principles The School Corporation entered into a cost-reimbursement contract with a food service management company (FSMC) to oversee the School Corporation's food service operations. Some food service personnel paid with program funds were employees of the FSMC, not the School Corporation. The FSMC billed the School Corporation for the personnel on a regular basis. There was no documented oversight or review process in place to ensure that the amounts billed for personnel were allowable activities and were in conformance with the applicable cost principles for the child nutrition program. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation relied on the food service management company to perform verification procedures of free and reduced price applications, as required by federal regulations. There was no documented oversight or review process by the School Corporation to ensure that the verifications were properly performed by the food service management company. The lack of internal controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles was a systemic issue throughout the audit period. The lack of internal controls over Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) was isolated to fiscal year 2021-2022. 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 A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. 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. INDIANA STATE BOARD OF ACCOUNTS 17 NORTHWESTERN CONSOLIDATED SCHOOL DISTRICT OF SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.