Finding 374281 (2023-003)

Material Weakness
Requirement
E
Questioned Costs
-
Year
2023
Accepted
2024-03-07

AI Summary

  • Core Issue: The School Corporation lacks a proper system of internal controls, leading to a material weakness in eligibility determinations for child nutrition programs.
  • Impacted Requirements: Compliance with 2 CFR 200.303, which mandates effective internal controls to ensure adherence to federal regulations and guidelines.
  • Recommended Follow-Up: Management should design and implement a robust internal control system, including clear policies and procedures for segregation of duties and oversight.

Finding Text

FINDING 2023-003 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a SFSP meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children who have been determined ineligible for free or reduced price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, 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 Food Service Director was responsible for reviewing the on-line and paper application eligibility status and entering the information into the School Corporation's system (Skyward). There was no evidence of an oversight, review, or approval process to ensure that the income verification, calculations, and information entered into the Skyward system were accurate and the eligibility status was correct. In addition, the Food Service Director was responsible for generating and reviewing the Direct Certification Reports. There was no evidence of an oversight, review, or approval process to ensure that the Direct Certification Reports were generated and reviewed. The lack of internal controls was isolated to the fiscal year ended June 30, 2023. 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). . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Corrective Action Plan

FINDING 2023-003 Finding Subject: Child Nutrition Cluster - Eligibility Summary of Finding: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Eligibility compliance requirements. The failure to establish an effective internal control system places the School Corporation at risk of noncompliance with the grant agreement and the Eligibility compliance requirements. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the Eligibility compliance requirements listed above. Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number and Email Address: 765-564-2100, millera@delphi.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Food Service Director or Assistant will enter online and paper applications, the other will review the entries compared to the applications, and both will sign off the applications. An additional selection will be added in Skyward to document which type of classification. A legend for the codes will be kept in the front of the binder where the applications are kept for reference. Anticipated Completion Date: August 2024

Categories

School Nutrition Programs Internal Control / Segregation of Duties Eligibility Material Weakness Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 374279 2023-004
    -
  • 374280 2023-005
    Material Weakness
  • 374282 2023-004
    Material Weakness
  • 374283 2023-005
    Material Weakness
  • 374284 2023-004
    Material Weakness
  • 374285 2023-005
    Material Weakness
  • 374286 2023-002
    Material Weakness
  • 374287 2023-003
    Material Weakness
  • 374288 2023-004
    Material Weakness
  • 374289 2023-005
    Material Weakness
  • 374290 2023-004
    Material Weakness
  • 374291 2023-005
    Material Weakness
  • 374292 2023-003
    Material Weakness
  • 374293 2023-004
    Material Weakness
  • 374294 2023-005
    Material Weakness
  • 374295 2023-006
    Material Weakness
  • 374296 2023-006
    Material Weakness
  • 374297 2023-006
    Material Weakness
  • 950721 2023-004
    -
  • 950722 2023-005
    Material Weakness
  • 950723 2023-003
    Material Weakness
  • 950724 2023-004
    Material Weakness
  • 950725 2023-005
    Material Weakness
  • 950726 2023-004
    Material Weakness
  • 950727 2023-005
    Material Weakness
  • 950728 2023-002
    Material Weakness
  • 950729 2023-003
    Material Weakness
  • 950730 2023-004
    Material Weakness
  • 950731 2023-005
    Material Weakness
  • 950732 2023-004
    Material Weakness
  • 950733 2023-005
    Material Weakness
  • 950734 2023-003
    Material Weakness
  • 950735 2023-004
    Material Weakness
  • 950736 2023-005
    Material Weakness
  • 950737 2023-006
    Material Weakness
  • 950738 2023-006
    Material Weakness
  • 950739 2023-006
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program Fy2022 $761,674
10.555 National School Lunch Program Fy2023 $665,512
84.425 Education Stabilization Fund Fy2022 $579,379
84.425 Education Stabilization Fund Fy2023 $433,356
84.010 Title I Grants to Local Educational Agencies Fy2023 $281,847
84.027 Special Education_grants to States Fy2022 $250,932
10.553 School Breakfast Program Fy2022 $174,317
10.553 School Breakfast Program Fy2023 $162,806
32.009 Emergency Connectivity Fund Program Fy2022 $154,090
10.559 Summer Food Service Program for Children Fy2022 $143,956
84.027 Special Education_grants to States Fy2023 $127,270
32.009 Emergency Connectivity Fund Program Fy 2023 $111,076
84.367 Improving Teacher Quality State Grants Fy2023 $49,740
93.778 Medical Assistance Program Fy2022 $38,939
93.778 Medical Assistance Program Fy2023 $35,196
84.010 Title I Grants to Local Educational Agencies Fy2022 $33,878
10.579 Child Nutrition Discretionary Grants Limited Availability Fy2022 $30,000
84.424 Student Support and Academic Enrichment Program Fy2023 $13,049
10.559 Summer Food Service Program for Children Fy2023 $11,114
84.173 Special Education_preschool Grants Fy 2022 $5,426
84.367 Improving Teacher Quality State Grants Fy2022 $4,439
84.173 Special Education_preschool Grants Fy2023 $4,055