Finding 3020 (2022-001)

FA 2022-001 Strengthen Controls over Special Reporting Compliance Requirement: Reporting Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 (Year: 2022) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the monthly Claims for Reimbursement process. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) based upon each School District’s monthly Form DE0106 Claim Data report submissions. These DE0106 reports are to be supported by the corresponding Form DE0112 Daily Record of Number of Breakfasts Served and Form DE0118 Daily Record of Number of Lunches Served, which are prepared by the School District from their School Food Service meal sales system. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in Title 7 CFR Section 210.7(c) require that the School District "base Claims for Reimbursement on lunch counts, taken daily at the point of service, which correctly identify the number of free, reduced price and paid lunches served to eligible children" and "correctly record, consolidate and report those lunch and supplement counts on the Claim for Reimbursement." In addition, provisions included in Title 7 CFR Section 220.11(d) state that the School District "shall establish internal controls which ensure the accuracy of breakfast counts prior to the submission of the monthly Claim for Reimbursement.” Condition: A sample of three Form DE0106 reports was randomly selected for testing using a non-statistical sampling approach. Additionally, the Form DE0106 reports for the months of July 2021 and June 2022 were selected for testing. These reports were reviewed to determine if appropriate internal controls were implemented and applicable reporting compliance requirements were met. The following deficiencies were noted:  No Form DE0112 or DE0118 reports were prepared during the period under review.  Daily meal count sheets maintained by the schools did not reflect evidence of review and approval by lunchroom managers in six instances.  Meal count errors were noted for three out of five months tested. The number of meals served per the daily meal count sheets for these three months did not match the number of meals reported and claimed on the Form DE0106 reports resulting in the under-claiming of 732 lunch or breakfast meals during the period under review. Cause: In discussing these deficiencies with management, the School District believed completion of DE0112 and DE0018 was not a requirement due to the election of the Seamless Summer Option. As a result, the School District did not follow its policies and procedures that govern the reporting process for federal programs. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to submit accurate monthly Claims for Reimbursement to GaDOE can result in the School District obtaining less federal funding than they are eligible to receive. This deficiency may expose the School District to unnecessary financial strains and shortages within the CNC fund. Recommendation: The School District should evaluate their internal control processes regarding the creation of the Form DE0106 reports and develop or modify procedures to ensure Claims for Reimbursement are based on final and accurate meals counts. The School District should become more familiar with the Federal regulations related to the CNC programs in order to develop or modify procedures that will ensure accurate reporting of meals served. Furthermore, management should develop and implement a monitoring process to ensure that controls are functioning properly. Views of Responsible Officials: We concur with this finding.