Finding Text
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): FY22-23, FY23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
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 a child receiving free or reduced-price meals.
INDIANA STATE BOARD OF ACCOUNTS
18
NORTH NEWTON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Any child enrolled in a participating school who meets the applicable program's definition of "child,"
may receive meals under the applicable program. In the case of the National School Lunch Program and
the School Breakfast Program, children belonging to households meeting nationwide income eligibility
requirements may receive meals at no charge or at reduced price. Children who have been determined
ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their
meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, 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 SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under
most circumstances, the 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.
Direct Certifications
The Food Service Director (Director) downloaded the Direct Certification report from the State
of Indiana database monthly and uploaded it to the school lunch point-of-sale (POS) system.
However, there was no documentation that a review process took place to ensure the uploads
had imported correctly and students' status was updated accordingly.
Applications
Eligibility for applications submitted for free and reduced lunch were determined by a Kitchen
Manager or the Director manually and by the POS system based on the published income
eligibility guidelines. For applications that were determined by a Kitchen Manager, the Director
reviewed and redetermined eligibility. However, this review process was not consistently
documented.
The Director downloaded the new income eligibility guidelines that were updated in the POS
system by the software vendor. The Director reviewed the accuracy of the income eligibility
guidelines and then saved them to the POS system. Documentation that the review process
was implemented properly could not be provided.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
19
NORTH NEWTON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
The system of internal controls over the monthly Direct Certification uploads, the review of the
income eligibility guidelines saved in the POS system, and the manual determinations were not properly
implemented. The Director did not maintain documentation that the review process had occurred.
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. Noncompliance with the grant agreement and the compliance requirement could result in
the repayment of federal funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management implement a proper system of
internal controls that would ensure that the appropriate reviews, approvals, and oversight are documented.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.