Audit 300216

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-002 Information on the federal program: Subject: Child and Adult Care Food Program Federal Agency: Department of Agriculture Federal Program: Child and Adult Care Food Program Assistance Listing Number: 10.558 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: i.) Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; ii.) Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; iii.) Monitor the food service operation through periodic on-site visits; iv.) Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the review, a total of $623,724 was disallowed for unsupported meal claims from September 2020 through May 2021 from the Child and Adult Care Food Program (CACFP) for At-Risk suppers reimbursed through the CACFP program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified which was paid in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-002. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-004 Information on the federal program: Subject: Child and Adult Care Food Program – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Child and Adult Care Food Program Assistance Listing Number: 10.558 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child and Adult Care Food Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-004. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-001 Information on the federal program: Subject: Child Nutrition Cluster Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: • Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; • Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; • Monitor the food service operation through periodic on-site visits; • Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the IDOE review, a total of $1,299,365 was disallowed from the Summer Food Service Program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified. The School Corporation completed the repayment to IDOE in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-001. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-003. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-002 Information on the federal program: Subject: Child and Adult Care Food Program Federal Agency: Department of Agriculture Federal Program: Child and Adult Care Food Program Assistance Listing Number: 10.558 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . .” 7 CFR 220.7(d) states in part: "(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall: i.) Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company; ii.) Ensure that the food service operation is in conformance with the school food authority's agreement under the Program; iii.) Monitor the food service operation through periodic on-site visits; iv.) Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;” Condition: There was not an effective control in place to review underlying transaction detail billed by the food service management compliance to verify compliance with Activities Allowed or Unallowed requirements. There was also not an effective control in place to monitor and review the food service management company followed procurement and suspension and debarment regulations. Cause: The School Corporation relied on the food service management company to operate the food service program without sufficient oversight. Effect: The failure to establish an effective internal control system could place the School Corporation at risk of noncompliance with the grant agreement and related compliance requirements. Questioned Costs: $663 of known questioned costs has been identified related to Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Context: As a result of the COVID-19 pandemic, waivers from the federal government provided free meals to all students through the Summer Food Service Program and allowed meals to be consumed off-site. Due to the changing regulations, the USDA and IDOE required School Corporations to implement an Integrity Plan for any schools providing Grab and Go Meals which includes inquiring of any adult requesting meals without children present as to how many children under the age of 18 would be served. Prior to March 2020, the School Corporation was using a point-of-sale system to record meals served. Starting in March 2020, the School Corporation was authorized by IDOE to utilize a clicker to track meals served. During the summer months of 2021, the School Corporation was also authorized by IDOE to provide meal pickup service on Wednesdays from 3 – 6 p.m. for 5 days’ worth of meal for both breakfast and lunch, resulting in 10 meals being served per child under the age of 18 each week. In June 2021, the Indiana Department of Education performed an unannounced meal site observation and a second, announced meal site review noting several program compliance and administrative issues. In July 2021, the IDOE performed a targeted review of the Summer Food Service Program for the period of March 2020 through May 2021 noting the following program compliance issues. • Meals were distributed without ensuring they were going to children ages 18 and younger as required by SFSP regulations. • Meals were taken off site to be distributed/dropped off at non—approved locations. • Meals were distributed and claimed on days when no meal service was approved, • Meals were distributed outside of approved meal service times. • Some meals were not distributed in household size quantities to the parent or guardian but distributed in bulk to large groups and knowingly transported in unsafe and unsanitary ways. • Meal count records were incomplete, unsigned, or missing required information. • Meal production was not adjusted when attendance fluctuations were noted. • Different menu items were ordered for and distributed to a specific group of individuals that was not the same as the planned menu. • Menu planning did not consider food inventory on hand and MSD of Pike Township’s access to USDA Foods (commodities) to reduce overall food costs. • Unauthorized donation, distribution, and disposal of foods purchased with federal funds was made without MSD Pike administration knowledge or approval. The review also noted a lack of administrative oversight of the food service management company contract including the following issues: • Food service management company representatives were making decisions regarding child nutrition program operations without consulting MSD of Pike Township administration. This practice was ongoing and occurred over several administrations. • Potential unallowable expenditures were noted in a review of monthly itemized invoices presented to MSD of Pike Township for recent payment. Items for personal consumption of food service management employees such as coffee, energy drinks, donuts, lunches, and even unauthorized travel expenses were presented but are considered unallowable expenditures from the food service account. As a result of the review, a total of $623,724 was disallowed for unsupported meal claims from September 2020 through May 2021 from the Child and Adult Care Food Program (CACFP) for At-Risk suppers reimbursed through the CACFP program. The School Corporation and IDOE agreed to a repayment plan to repay the disallowed costs identified which was paid in December 2021. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During the testing of activities allowed or unallowed and allowed costs/cost principles, we selected 6 monthly invoices from the food service management company during the audit period. We noted there was not an internal control in place by School Corporation personnel to obtain and view the underlying support of transactions charged by the food service management company to verify the transaction was for a business purpose. The School Corporation did not obtain and review source documents, such as invoices or proof of payment for vendor transactions or a schedule of employees, assigned locations, salaries, and hours to be worked for payroll transactions submitted by the food service management company for reimbursement. We also selected a sample of 40 vendor transactions charged to Fund 0800 to test which were not related to the food service management company and incurred directly by the School Corporation. For 6 of the 40 transactions tested, we noted transactions for concession fees which were charged to the School Nutrition Program from July 2021 through September 2022 and are deemed unallowable. In October 2022, the School Corporation began recording all concession activity to Fund 2180, Concessions – District. The six concession transactions in our sample total $663 which are considered known questioned costs. Procurement and Suspension and Debarment The School Corporation did not have an internal control in place to monitor the food service management company was following proper procurement standards. School Corporations that contract with a food service management company on a cost reimbursement basis should ensure they are monitoring contracts sufficiently including verifying or reviewing the following: • The School Corporation should receive contract commits to supply • Reviewing invoices received from the food service management company compared to amounts paid by the food service management company • Reviewing contracts for compliance with Buy American • Verifying return of discounts, rebates, or credit are properly applied to the School Corporation’s account Identification as a repeat finding, if applicable: Yes. See Finding 2021-002. Recommendation: We recommend the School Corporation maintain an internal food service director with strong working knowledge of USDA Child Nutrition Programs to oversee the contract and be the liaison for all decisions made between the food service management company and the School Corporation. Internal controls should be established to perform a detailed, documented review of underlying disbursement transactions billed to the School Corporation by the food service management company as well as procedures to verify and review that the food service management company adheres to federal and state procurement standards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-004 Information on the federal program: Subject: Child and Adult Care Food Program – Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Child and Adult Care Food Program Assistance Listing Number: 10.558 Federal Award Numbers and Years (Or Other Identifying Number): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child and Adult Care Food Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: During the audit period, the School Corporation had purchases over $25,000 from three vendors charged to Fund 0800 – School Lunch Fund which requires suspension and debarment procedures. For one of two vendors selected for testing, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The total amount disbursed to the vendor during the audit period was $141,128. Identification as a repeat finding, if applicable: Yes, See Finding 2021-004. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.