FINDING 2024-003
Subject: Child Nutrition Cluster - Eligibility
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): SY2022-2023, SY2023-2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation had not properly 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 determining the eligibility of a child to receive free or reduced-price
meals.
A child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be
established by the submission of an annual application or statement which furnishes such information as
family income and family size. Local educational agencies, institutions, and sponsors then determine
eligibility by comparing the data reported by the child's household to published income eligibility guidelines.
Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are
based on the child's household receiving benefits under the Supplemental Nutrition Assistance Program
(SNAP), the Food Distribution Program on the Indian Reservations (FDPIR), the Head Start program (ALN
93.600), or, under most circumstances, the Temporary Assistance for Needy Families (TANF) program
(ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the
school, institution, or sponsor may obtain the information directly from the state or local agency that
administers these programs. Certain foster, runaway, homeless, and migrant children are categorically
eligible for free school lunches and breakfasts. Direct certified households do not need to complete an
application for free or reduced-price meals.
The School Corporation contracted with a Food Service Management Company (FSMC) for the
operation of the food service program during the audit period. The FSMC had a dedicated representative
who worked exclusively with the School Corporation. The School Corporation did not have policies or
procedures in place to ensure compliance with determining the eligibility of students for free and reduce
price meals as noted in the following:
INDIANA STATE BOARD OF ACCOUNTS
19
METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Direct Certifications
The FSMC representative was responsible for generating and reviewing the direct certification
file. The FSMC representative downloaded the direct certification file from the State of Indiana
database and uploaded it to the school lunch point-of-sale (POS) system. There was no
documentation of review by the School Corporation to ensure the upload had been completed,
that the upload had imported correctly, or the students' statuses were updated accordingly.
Applications
The School Corporation utilized a POS system to determine eligibility of the applications
submitted for free and reduced price meals based on income eligibility guidelines. The income
eligibility guidelines were input by the FSMC representative and reviewed by a knowledgeable
school employee for the year ended June 30, 2024; however, there was no documented review
or approval in place to ensure the guidelines were properly entered for the year ended June
30, 2023.
Applications were submitted online as part of the annual registration process, and, when fully
complete, the determination of eligibility was completed by the POS system based on the
inputted income eligibility guidelines. The School Corporation relied solely on the POS system
to calculate and determine the eligibility status of student applications. There was no documentation
of procedures or review to ensure the software system was accurately calculating
and determining the student eligibility status.
Of the 30 students receiving free and reduced-price meals that were tested, the following
noncompliance was noted:
Two students were receiving free meals but, based on reported income, were
determined to be eligible for reduced-priced meals.
Two students were receiving reduced-price meals but, based on reported income,
were determined to be eligible for free meals.
The lack of internal controls and noncompliance were systemic 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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 20
METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
7 CFR 245.6(c)(4) states:
"The local educational agency must use the income information provided by the household on the
application to calculate the household's total current income. When a household submits an
application containing complete documentation, as defined in § 245.2, and the household's total
current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as
defined in § 245.2, the children in that household must be approved for free or reduced price
benefits, as applicable."
Cause
The system of internal controls over the monthly direct certification uploads, review of the income
eligibility guidelines saved in the POS system, and application records were not properly implemented. The
School Corporation relied on the FSMC and the POS to determine eligibility without an oversight process
in place.
Effect
Without the proper implementation of an effectively designed system of internal controls, the School
Corporation did not calculate eligibility accurately. Noncompliance with the provisions of federal statutes,
regulations, and the terms and conditions of the federal award could result in the repayment of federal
funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation design and implement a proper
system of internal controls, including policies and procedures that would ensure student eligibility for free
or reduced-price lunches is accurately determined and that all documentation is retained.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.