Finding Text
FINDING 2024-002
Subject: Child Nutrition Cluster- Special Tests and Provisions - Non-Profit School Food Service Accounts
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): SY 2022-2023, SY 2023-2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Special Tests and Provisions - Non-Profit School Food Service Accounts
Audit Finding: Material Weakness
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the School Corporation in order to ensure compliance with requirements related to the grant agreement
and the Special Tests and Provisions - Non-Profit School Food Service Accounts compliance requirement.
INDIANA STATE BOARD OF ACCOUNTS
18
SOUTHWESTERN JEFFERSON COUNTY CONSOLIDATED SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
All revenues and expenditures of the nonprofit school food service account are to be accounted for
in accordance with state and federal requirements. As such, separate accounting is to be made for the
school food service, federal reimbursements are to be correctly credited to the food service account, and
transfers out of the school food service account are to be for allowable costs of the school food service.
Receipt of the School Corporation's federal reimbursements were posted to the ledger by one individual,
the established internal control of having the Treasurer review and sign the receipts to ensure that all
reimbursements were properly credited to the food service account was not documented after March 2023.
The lack of internal controls was a systemic issue from March of 2023 through the end of 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
After an upgrade to the School Corporation's financial management software, the Treasurer no
longer manually signed the receipts to document her review. No alternative documentation of her review,
or a compensating internal control was presented for audit.
Effect
Without the proper design or implementation of internal controls, the internal control system cannot
be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result
in revenues not being correctly credited to the food service account to be used for allowable costs.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation design its system of internal
controls to ensure that internal controls are in place and properly documented.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.