Finding Text
Subject: Child Nutrition Cluster - Internal Controls 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): FY 2024, FY 2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 14 CROWN POINT COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance related to the grant agreement and the Eligibility and the Special Tests and Provisions - Non-Profit School Food Service Accounts compliance requirements. Eligibility - Direct Certifications 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. The Direct Certification Report was downloaded from the State of Indiana database and uploaded to the School Corporation's lunch point-of-sale (POS) system at the beginning of the school year and then monthly throughout the school year. An oversight or review process to ensure the Direct Certification Report was downloaded monthly, the upload had imported correctly, and that students' statuses were updated accordingly was not designed or implemented. Special Tests and Provisions - Non-Profit School Food Service Accounts A School Food Authority (SFA) is required to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. An SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services. Federal reimbursement receipts were posted to the School Lunch fund by one individual without a documented oversight or review process to ensure they were correctly credited to the school food service account. The lack of internal controls was systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 15 CROWN POINT COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 Management had not developed or documented that an oversight or review process to ensure the direct certification report was properly processed or that reimbursements related to the Non-Profit Food Service Account were properly posted to the School Lunch fund. Effect The failure to design or implement a system of internal controls places the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management design and implement a proper system of internal controls that would ensure that the appropriate reviews, approvals, and oversight are completed and documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.