Audit 397060

Non-Federal entities must establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the non-Federal entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Federal Government reimburses the District for meals served to eligible children as part of the Child Nutrition Cluster program. The District is required to determine a child's eligibility to receive program benefits. The District accepted both paper and online applications for free and reduced-price meals, and eligibility was determined based on factors such as family size and income. The District contracted with i3 Verticals to use their PaySchools system to determine eligibility for both types of applications, either completing an application in the system through their online account, or by using paper applications where the applications were manually input into PaySchools. Out of sixty applications tested, 4 were online applications, where the system determined the proper eligibility status and no control procedures were in place to ensure the system determined the proper eligibility status. Failure to implement controls over online eligibility applications could result in ineligible students receiving benefits. The District should implement control procedures and/or request a SOC 1 Type II report from PaySchools for online applications to ensure students are properly marked as paid, free or reduced.