Finding Text
FINDING 2024-003
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Condition and Context
An effective internal control system was not in place at the School Corporation in order to ensure
compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost
Principles compliance requirements.
A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for
testing to determine whether internal control procedures were effective. Supporting documentation of
internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was
produced after the sample was requested for testing. Supporting documentation of internal control
implementation for 4 payroll disbursements was not presented.
The lack of internal controls were systemic throughout the audit period.
INDIANA STATE BOARD OF ACCOUNTS
20
GOSHEN COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 indicated there was some staff turnover during the audit period and had
not developed a system of internal controls for a period of time when management lacked staff to perform
all necessary duties.
Effect
The failure to establish an internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement.
A lack of segregation of duties within an internal control system could also allow noncompliance with
compliance requirements and allow the misuse and mismanagement of federal funds and assets by not
having proper oversight, reviews, and approvals over the costs of the program.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish and document a system
of internal controls, including segregation of duties, related to the grant agreement and the compliance
requirement listed above. An internal control system, including segregation of duties, should be designed
and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or
a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely
basis.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.