Audit 396257

Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program Federal Award Number: 255GA32N1199 (Year: 2025) Questioned Costs: None Identified Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures are reviewed and approved prior to payment. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,582,957.71 were expended and reported on the Screven County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Condition: Auditors performed a review of various expenditure activity associated with the CNC programs to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 40 expenditures was randomly selected for testing using a nonstatistical sampling approach. Evidence of review and approval was not reflected for seven of the expenditures tested. • A sample of 40 procurement transactions was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for five of the transactions tested. Cause: The School District did not follow its policies and procedures that govern the approval of expenditure for federal programs. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance related to the CNC programs. Failure to ensure that expenditures are appropriately approved exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that expenditures are reviewed and approved prior to payment. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding