Finding 1080492 (2023-005)

Material Weakness Repeat Finding
Requirement
LN
Questioned Costs
-
Year
2023
Accepted
2024-10-29

AI Summary

  • Core Issue: The School Corporation lacks effective internal controls for verifying free and reduced price applications, leading to a repeat finding of material weakness.
  • Impacted Requirements: Compliance with 2 CFR 200.303 is not met due to inadequate segregation of duties and oversight in reimbursement requests and application verifications.
  • Recommended Follow-Up: Management should establish a robust internal control system with clear policies and procedures to ensure proper reviews and approvals are conducted.

Finding Text

FINDING 2023-005 Subject: Child Nutrition Cluster - Reporting, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Reporting, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report regarding Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2021-003. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to reimbursement requests and verification of free and reduced price applications. Reporting The School Corporation had not designed or implemented effective internal controls to ensure that reimbursement requests were accurately submitted. The reimbursement requests were prepared by one employee based on meals served without evidence of an oversight or review process to ensure they were accurate. Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) (Applies to National School Lunch Program only) The School Corporation had not designed or implemented effective internal controls to ensure the verification of free and reduced price applications were accurately completed. One employee selected and verified the required sample of approved free and reduced price applications without an oversight or review process. The lack of internal controls was a systemic issue throughout the audit period. 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 A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

School Nutrition Programs Internal Control / Segregation of Duties Cash Management Material Weakness Reporting Matching / Level of Effort / Earmarking Special Tests & Provisions

Other Findings in this Audit

  • 504040 2023-003
    Material Weakness
  • 504041 2023-003
    Material Weakness
  • 504042 2023-004
    Material Weakness
  • 504043 2023-004
    Material Weakness
  • 504044 2023-004
    Material Weakness
  • 504045 2023-004
    Material Weakness
  • 504046 2023-004
    Material Weakness
  • 504047 2023-005
    Material Weakness Repeat
  • 504048 2023-005
    Material Weakness Repeat
  • 504049 2023-005
    Material Weakness Repeat
  • 504050 2023-005
    Material Weakness Repeat
  • 504051 2023-006
    Material Weakness
  • 504052 2023-006
    Material Weakness
  • 504053 2023-006
    Material Weakness
  • 504054 2023-006
    Material Weakness
  • 504055 2023-006
    Material Weakness
  • 504056 2023-007
    Material Weakness
  • 504057 2023-007
    Material Weakness
  • 504058 2023-007
    Material Weakness
  • 504059 2023-007
    Material Weakness
  • 504060 2023-007
    Material Weakness
  • 1080482 2023-003
    Material Weakness
  • 1080483 2023-003
    Material Weakness
  • 1080484 2023-004
    Material Weakness
  • 1080485 2023-004
    Material Weakness
  • 1080486 2023-004
    Material Weakness
  • 1080487 2023-004
    Material Weakness
  • 1080488 2023-004
    Material Weakness
  • 1080489 2023-005
    Material Weakness Repeat
  • 1080490 2023-005
    Material Weakness Repeat
  • 1080491 2023-005
    Material Weakness Repeat
  • 1080493 2023-006
    Material Weakness
  • 1080494 2023-006
    Material Weakness
  • 1080495 2023-006
    Material Weakness
  • 1080496 2023-006
    Material Weakness
  • 1080497 2023-006
    Material Weakness
  • 1080498 2023-007
    Material Weakness
  • 1080499 2023-007
    Material Weakness
  • 1080500 2023-007
    Material Weakness
  • 1080501 2023-007
    Material Weakness
  • 1080502 2023-007
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program 2022 $1.10M
10.555 National School Lunch Program 2023 $1.01M
84.425 Education Stabilization Fund 2023 $656,836
84.027 Special Education_grants to States 2022 $517,084
84.027 Special Education_grants to States 2023 $516,779
84.010 Title I Grants to Local Educational Agencies 2022 $463,225
84.425 Education Stabilization Fund 2022 $363,543
84.010 Title I Grants to Local Educational Agencies 2023 $363,369
10.553 School Breakfast Program 2023 $284,339
10.553 School Breakfast Program 2022 $276,054
84.367 Improving Teacher Quality State Grants 2023 $147,150
84.424 Student Support and Academic Enrichment Program 2022 $43,152
81.041 State Energy Program $33,200
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) 2022 $32,039
10.559 Summer Food Service Program for Children 2022 $29,473
84.424 Student Support and Academic Enrichment Program 2023 $27,667
84.173 Special Education_preschool Grants 2022 $23,150
84.173 Special Education_preschool Grants 2023 $1,278