Corrective Action Plans

FINDING 2023-003 Information on the federal program: Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Number and Year (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness, Modified Opinion Contact Person Responsible for Corrective Action: Adrian Wilkerson, Chief Financial Officer Contact Phone Number and Email Address: (219) 838-1819 awilkerson@lakeridgeschools.net Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles. Context: The School Corporation had not designed or implemented a system of internal control to ensure that program costs incurred by the Food Service Management Company were supported by proper documentation and were allowable. The School Corporation entered into a cost reimbursement contract with a food service management company (FSMC). The FSMC incurred costs and invoiced the School Corporation for reimbursement of the costs. Due to the lack of effective internal controls, the following errors were noted: In a test of 44 items, 22 items (50%) totaling $6,641 did not have proper documentation to support that the expenses were allowable and for the benefit of food service. Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: In addition to the monthly review of the FSMC invoice and budget, the Chief Financial Officer will review and approve the supporting documentation (invoices, payroll records) provided by the FSMC to ensure that expenses are allowable and for the benefit of food service. Anticipated Completion Date: Immediate

Finding 2022-001 Condition: The auditor selected 73 samples out of which one cost was a gift to a retiring employee who had worked on the federal grant. The cost was not allowable per the above federal regulation. Corrective action plan: We put in place the following: 1. HMRI hired a new Grants Director on February 6, 2023, who along with the accounting team ensures all costs are being charged to their respective federal revenue streams in accordance with the federal agreements and guidelines. CFO reviews and approves after Grants Director?s review. 2. HMRI has conducted training to refresh and reinforce the guidelines with employees who charge costs to federal grants. 3. HMRI will continuously provide Federal Allowable Expense Trainings to all staff involved. Responsible Individual: Chief Financial Officer: Gabriel Rincon Planned Completion date: The unallowable cost of $73 was returned to NIH in January 2023.