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FINDING 2022-004Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Reporting, SpecialTests and Provisions - Non-Profit School Food Service AccountsFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirements: Activities Allowed or Unallowed, Reporting, Special Tests andProvisions - Non-Profit School Food Service AccountsAudit Finding: Material WeaknessCondition and ContextAn effective internal control system was not designed nor implemented at the School Corporationto ensure compliance with requirements related to the grant agreement and the Activities Allowed orUnallowed, the Reporting, and the Special Tests and Provisions - Non-Profit School Food Service Accountscompliance requirements.Activities Allowed or UnallowedThe School Corporation had not designed nor implemented a system of internal control overSchool Lunch fund disbursements to ensure all activities were for the benefit of the ChildNutrition Cluster. One employee was responsible for processing disbursements without anoversight or review process in place to prevent, or detect and correct, errors.ReportingThe School Corporation had not designed nor implemented a system of internal control toensure that reimbursement requests were accurately submitted. The reimbursement requestswere prepared by one employee based on meals served without an oversight or review processin place to prevent, or detect and correct, errors.Special Tests and Provisions - Non-Profit School Food Service AccountsThe School Corporation had not designed nor implemented a system of internal controls toensure all revenue generated by the school food service was used to operate and improve itsfood service. One employee was responsible for the receipting and disbursing of School Lunchfunds without an oversight or review process in place to prevent or detect and correct errors.The lack of internal controls was a systemic issue throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."CauseManagement had not developed nor implemented a system of internal controls that would haveensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Reporting, andthe Special Tests and Provisions - Non-Profit School Food Service Accounts compliance requirements.EffectThe failure to establish an effective internal control system could have enabled material noncomplianceto go undetected.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance with the grant agreement and the Activities Allowed or Unallowed, the Reporting, and theSpecial Tests and Provisions - Non-Profit School Food Service Accounts compliance requirements.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.