Finding Text
#2024-004 National School Lunch Program – Assistance Listing No. 10.555; Grant period: Year Ended June 30, 2023; Pass-through entity name – Florida Department of Agriculture. Criteria – Internal control is designed, implemented, and maintained to address identified business risks that may threaten the achievement: a) The reliability of the School’s financial reporting, b) the effectiveness and efficiency of its operations, and c) its compliance with applicable laws, regulation and grant agreements. Condition – Management properly consists of a President, Vice President, Secretary and Treasurer, however, financial and operational control over the School is concentrated between two individuals serving in management capacities. Meetings of the Board of Directors are infrequent. As such, there is no independent oversight over the School’s financial or operating activities and is considered a material weakness in internal control. Cause - The lack of independent oversight is attributable to management using NSLP grant funds that were determined to be contractually non-reimbursable costs under terms of the NSLP grant. In order to further the mission of the organization, Management decided to temporarily borrow $6,291,340 to acquire additional assets including construction of a new building, new kitchen and related facilities, with the intent of returning the borrowed funds at some time in the future. If adequate independent oversight existed at the School, the unauthorized use of Federal funds may not have occurred. Possible Effects – The lack of organizational oversight may increase the possibility that errors or misstatements, including fraud, will not be prevented or detected and corrected on a timely basis. Recommendation – The School should increase the size of its board of directors to include the addition of individuals who are independent of the School and possess the necessary qualifications to provide oversight leadership. This may include the modification of the existing bylaws. Furthermore, a comprehensive review of the School’s internal control environment and activities be undertaken. Views of Responsible Officials – Management of the School agrees with the findings and will work on increasing the number of board members and increasing the number of meetings. There are several individuals who periodically meet with management to review the activities of the School. These individuals have suitable management skills and knowledge of the School’s operations. Management has agreed to formally elect these individuals as voting members of the Board of Directors.