Finding 1204920 (2025-001)

2025-001 ELIGIBILITY Program: Child Nutrition Cluster CFDA Number: 10.533, 10.555 Federal Agency: U.S. Department of Agriculture Pass-Through Agency: Arizona Department of Education Grantor Number: ADE ED09-0001 Type of Finding: Noncompliance, significant deficiency in internal control Compliance Requirement: E. Eligibility Criteria: Federal regulations require participating districts to determine student eligibility for free, reduced price, and paid meals based on household income and household size thresholds established annually by the U.S. Department of Agriculture. Applications must be reviewed and approved using the current income eligibility guidelines and appropriate calculation methods to ensure correct benefit levels. Condition: During testing of 25 student meal applications, we noted 1 instance where the District incorrectly calculated household income relative to household size when determining eligibility status. In these cases, students were approved for free price meals when the income calculations supported reduced meal status. Cause: The District did not have sufficient review controls in place to ensure that eligibility determinations were recalculated or independently verified prior to approval. Effect: As a result of the errors, certain students received free meal benefits for which they were not eligible. This may have resulted in improper program reimbursement claims and indicates that the District’s controls over eligibility determinations were not operating effectively. Questioned Costs: The projected questioned costs related to these errors are not expected to be material; however, the District may have received reimbursement at the free price rate rather than the reduced rate for affected meals. Recommendation: We recommend the District strengthen internal controls over the meal eligibility determination process by:  Implementing a documented secondary review of all eligibility calculations prior to approval.  Providing additional training to staff responsible for processing applications.  Utilizing standardized calculation worksheets or system validations to ensure income is properly annualized and compared to the applicable income eligibility guidelines. Views of Responsible Officials: District management agrees with the finding and indicated that corrective actions have been implemented which are identified in a separate report.