Audit 381556

Criteria or specific requirement: Eligibility for free or reduced meal prices are based on eligibility through direct certification or income guidelines. Children from households with incomes at or below 130 percent of the federal poverty level are eligible to receive meals or milk free under the School Nutrition Programs. Children from households with incomes above 130 percent but at or below 185 percent of the federal poverty level are eligible to receive reduced price meals. Persons from households with incomes exceeding 185 percent of the poverty level pay the full price (7 CFR sections 245.2, 245.3, and 245.6; section 9(b)(1) of the NSLA (42 USC 1758 (b)(1)); sections 3(a)(6) and 4(e) of the CNA (42 USC 1772(a)(6) and 1773(e))). Condition: Testing revealed that 1 of the 25 students tested were given the incorrect determination of free or reduced meal prices. Questioned Costs: None required to be reported. Context: A student was incorrectly classified as free based on income guidelines but the income level submitted fell into the reduced category. The incorrect determination was due to the student's family submitting a paper application and the administrator who reviewed and approved the application incorrectly added the income submitted. Effect: There was no effect on the financial statements since the difference in the free and reduced rates for reimbursements are the same amounts that are charged for reduced meals. The District was over reimbursed through the federal program and under paid by the student. Cause: The manual application circumvented controls in place through the electronic application process. Recommendation: The District should encourage all applications electronically. If a paper application is submitted, there should be multiple levels of review before approval. Management's response: The District will review procedures to determine if added steps are needed to ensure proper classification of manual applications.