Audit 345680

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation if its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 nonfederal 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 $10,000 or under, and small purchase procedures for those purchases above the micro-purchase 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. During the audit period, the School Corporation had two vendors, totaling $900,414, that were considered simplified acquisition purchases. Both vendors were selected for testing. For one vendor in both fiscal years, the School Corporation procured more than $150,000 in services without providing bid tabulations or evaluation criteria for awarding the bid and without obtaining a contract agreement. For the other vendor, services were properly procured; however, the School Corporation did not have a contract with this vendor. During the audit period, the School Corporation had nine vendors, totaling $324,810, that were considered small purchases. Two vendors were selected for testing. For one vendor during the fiscal year 2022-2023, the School Corporation procured $12,830 in services and could not provide evidence of open competition or quotes for the purchase. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation had 122 transactions, totaling $106,328, that were considered micro-purchases. Eighteen transactions were selected for testing. Three of the transactions sampled did not include the approval of the Food Service Director per the internal control process. The internal control was not properly implemented. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed that the Food Service Director verified vendors were not suspended or debarred by reviewing the SAMs exclusions. The School Corporation had three vendors in both fiscal years, and one vendor in 2022-2023 had incurred more than $25,000 in covered transactions, totaling $1,150,939. The School Corporation did not maintain documentation to show that the vendor was verified for suspension and debarment status prior to payment. 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases— . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; INDIANA STATE BOARD OF ACCOUNTS 22 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and INDIANA STATE BOARD OF ACCOUNTS 23 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agency expects the purchase to be: (1) at least fifty thousand ($50,000); and (2) not more than one fifty thousand ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. . . . (d) If the purchasing agency receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." Cause There was no documented evidence of the internal control process. The School Corporation and the Food Service Director had not developed an adequate system of internal controls that would ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. According to the Food Service Director and the Chief Financial Officer, due to the change of the Food Service Director, the School Corporation did not have the proper safeguards in place to ensure that the documentation was properly maintained. As a result, the Chief Financial Officer and the Food Service Director were unable to locate the documentation for each procurement method. INDIANA STATE BOARD OF ACCOUNTS 24 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The School Corporation was not able to provide the documentation that they followed the proper procurement procedures or that they verified vendors were not suspended or debarred. By not following proper procurement procedures, the School Corporation may not be receiving the most competitive pricing. If the School Corporation does not verify that vendors are not suspended or debarred, the School Corporation may be purchasing from vendors that are not eligible to receive federal funds. Without a proper system of internal controls in place that operated effectively, material noncompliance remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Documentation of all procurement and suspension and debarment activities should be maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.