Finding Text
Information on the federal program: Subject: Child Nutrition Cluster (CNC) – Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (Or Other Identifying Numbers): FY23-FY24, FY24-FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Eligibility compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: During testing of internal controls over eligibility requirements, we noted there is no formal, documented review of the eligibility income guidelines entered into the food service software to ensure that system parameters were in agreement with USDA guidelines on an annual basis. For the 2023-2024 school year, the income eligibility guidelines were not updated timely by the School Corporation. During compliance testing of eligibility, we noted 3 instances isolated to 2023-2024, in a sample of 60 students, in which the eligibility status was incorrectly determined. In two instances, the eligibility status was changed from Reduced to Free upon updating the eligibility income guidelines. In one stance, the status changed from Pay to Reduced. The lack of internal controls over the review of the eligibility income guidelines impacted both years under audit. The noncompliance with eligibility determinations was isolated to fiscal year 2024. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation implement an internal control to ensure the annual updates to the income eligibility guidelines are updated in the food service software prior to each school year. By July 1 of every year, the new income eligibility guidelines are issued by the USDA and posted on the IDOE website. The income eligibility guidelines updates made to the food service software should be reviewed by two parties to ensure any errors are caught prior to processing applications for the upcoming school year. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.