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
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 Eligibility compliance requirement.
Information from free and reduced-price applications was entered into the School Corporation's
school nutrition software by the Food Service Director. The software system calculated students' eligibility
for free and reduced-price meals based on the parameters within the system. There was no documented
oversight, review, or approval process in place to ensure information from the applications was entered into
the system correctly.
The system parameters were updated at the beginning of each school year by the School
Corporation's IT Department, without a documented review or oversight process to ensure the parameters
entered were accurate. Additionally, there was no review process in place to ensure that the eligibility
determinations made by the software system complied with the requirements of the programs.
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
The School Corporation's management had not developed a system of internal controls to ensure
the information from the free and reduced-price applications were entered into the software system
correctly, that the updated software system parameters for eligibility were accurate, and that the eligibility
determination made by the software complied with the program requirements.
Effect
Without the proper implementation of an effectively designed system of internal controls related to
the free and reduced-price applications and the eligibility determination process, the internal control system
cannot be capable of effectively preventing, or detecting and correcting, material noncompliance related to
the Eligibility compliance requirement.
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 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.