Finding Text
FINDING 2024-005
Subject: Child Nutrition Cluster - Eligibility
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Condition and Context
Any child enrolled in a participating school, who meets the applicable program's definition of "child,"
may receive meals under applicable programs. A child belonging to households meeting nationwide
income eligibility requirements may receive meals at no charge or at a reduced price. Children that have
been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's
eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by
the submission of an annual application or statement which furnished such information as family income
and family size. The School Corporation determines eligibility by comparing the data reported by the child's
household to published income eligibility guidelines. Annual eligibility determinations may also be based
on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most
circumstances, the TANF program. A household may furnish documentation of its participation in one of
those programs, or the School Corporation may obtain the information directly from the State or local
agency that administers those 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.
One employee uploaded the Direct Certification reports from the state into the software system
without a documented oversight or review process in place to ensure direct certified students were properly
processed.
The lack of internal controls was isolated to the direct certified households.
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, which would include segregation of key functions, was not
implemented by management of the School Corporation. 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 statements 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.