Finding 36084 (2022-005)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2023-03-28

AI Summary

  • Core Issue: The School Corporation lacks an effective system of internal controls, leading to noncompliance with federal grant requirements.
  • Impacted Requirements: Failure to maintain proper documentation for allowable costs resulted in questioned costs totaling $23,438.
  • Recommended Follow-Up: Management should implement robust internal controls to ensure compliance and proper documentation for all program costs.

Finding Text

FINDING 2022-005 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-002. Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The School Corporation had not designed nor implemented adequate policies and procedures to ensure that program costs were supported by proper documentation, were allowable, and solely for the operation and improvement of the food service program. Out of 16 disbursements selected for testing, supporting documentation could not be provided for 3 of the disbursements totaling $23,438. These 3 disbursements were paid to the Food Service Management Company that the School Corporation had entered into a cost-reimbursement contract with to oversee the School Corporation's food service operations. Due to lack of sufficient documentation we were unable to determine if the disbursements were allowable for the federal program. The lack of internal controls, noncompliance, and failure to maintain adequate supporting documentation of program costs were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 CENTRAL NOBLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.21(f)(1) states in part: ". . . (ii) (A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in a manner suitable for contract cost determination and verification; (ii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." 7 CFR 220.7(e) states in part: "Each school food authority approved to participate in the program shall enter into a written agreement with the State agency or the Department through the FNSRO, as applicable, that may be amended as necessary. . . . Such agreements shall provide that the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (1) . . . (ii) In accordance with the financial management system established under ? 220.13(i) of this part, use all revenues received by such food service only for the operation or improvement of that food service . . . (12) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable; . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, prevented the determination of the School Corporation's compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Questioned Costs Known questioned costs in the amount of $23,438 were identified as noted in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 25 CENTRAL NOBLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

Questioned Costs School Nutrition Programs Allowable Costs / Cost Principles

Other Findings in this Audit

  • 36074 2022-005
    Material Weakness Repeat
  • 36075 2022-006
    Material Weakness
  • 36076 2022-005
    Material Weakness Repeat
  • 36077 2022-006
    Material Weakness
  • 36078 2022-005
    Material Weakness Repeat
  • 36079 2022-006
    Material Weakness
  • 36080 2022-005
    Material Weakness Repeat
  • 36081 2022-006
    Material Weakness
  • 36082 2022-005
    Material Weakness Repeat
  • 36083 2022-006
    Material Weakness
  • 36085 2022-006
    Material Weakness
  • 36086 2022-003
    Material Weakness
  • 36087 2022-003
    Material Weakness
  • 36088 2022-003
    Material Weakness
  • 36089 2022-004
    Material Weakness
  • 612516 2022-005
    Material Weakness Repeat
  • 612517 2022-006
    Material Weakness
  • 612518 2022-005
    Material Weakness Repeat
  • 612519 2022-006
    Material Weakness
  • 612520 2022-005
    Material Weakness Repeat
  • 612521 2022-006
    Material Weakness
  • 612522 2022-005
    Material Weakness Repeat
  • 612523 2022-006
    Material Weakness
  • 612524 2022-005
    Material Weakness Repeat
  • 612525 2022-006
    Material Weakness
  • 612526 2022-005
    Material Weakness Repeat
  • 612527 2022-006
    Material Weakness
  • 612528 2022-003
    Material Weakness
  • 612529 2022-003
    Material Weakness
  • 612530 2022-003
    Material Weakness
  • 612531 2022-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund Fy22 $582,955
10.555 National School Lunch Program Fy22 $514,972
32.009 Emergency Connectivity Fund Program Fy22 $430,000
84.027 Special Education_grants to States Fy21 $311,437
84.027 Special Education_grants to States Fy22 $279,068
10.559 Summer Food Service Program for Children Fy21 $260,289
84.010 Title I Grants to Local Educational Agencies Fy21 $235,698
84.010 Title I Grants to Local Educational Agencies Fy22 $145,147
10.559 Summer Food Service Program for Children Fy22 $122,646
84.425 Education Stabilization Fund Fy21 $107,131
10.553 School Breakfast Program Fy22 $97,055
10.555 National School Lunch Program Fy21 $68,176
84.367 Improving Teacher Quality State Grants Fy22 $58,941
93.778 Medical Assistance Program Fy22 $35,981
84.424 Student Support and Academic Enrichment Program Fy22 $23,252
84.424 Student Support and Academic Enrichment Program Fy21 $15,776
84.367 Improving Teacher Quality State Grants Fy21 $14,367
84.173 Special Education_preschool Grants Fy21 $6,585
84.173 Special Education_preschool Grants Fy22 $6,584
10.649 Pandemic Ebt Administrative Costs Fy22 $614