Finding Text
Criteria:
Districts are to design and implement internal controls over the collection of local revenue, in particular, the fees for student reduced and full-price meals and ala cart items, as well as adult meals purchased. These internal controls should include segregation of duties at the campus level as well as management review and approval at the central office. Districts are required to reimburse from the general fund any unpaid meals at year end where students were allowed to charge but never paid for their meal.
Condition:
Upon initial review and analytical procedures performed during the planning stage of the audit we noted only $71,126 in local revenue in the food service program related to monies collected by the district at the campus level for full and reduced-priced student breakfast and lunch as well as any ala cart items and including meal served to teachers and other adults. Management’s initial response to our inquiry as to the low amount of collection was that participation was low in the food service program in general. We performed a predictive test to calculate the amount of local revenue expected based on the meal prices and the number of meals noted as served to students from the system designs report for the number of meals served for the year ended August 31, 2024. We calculated we should have collected $131,700 in local revenue, resulting in a difference of $60,582.49 of revenue booked.
We also noted the District purged from the point of sale system the negative balance of 993 students who had been allowed to accumulate $54,724 in charges during the year under audit. Students were allowed to charge their meals, and no attempt was made to collect the balances due from the students. Per management the write-off of unpaid balances annually has been in practice for multiple years the amount of write-off for the year ended August 31, 2023, was $50,272.
Cause:
There is a lack of segregation of duties related to the food service program. There is a lack of review, reconciliation and management oversight at the central office level of the activity in the food service program in general. No one at any level within the district was properly monitoring the local collections of monies for the meals provided. There is a lack of knowledge of the rules and requirements of the food service program.
Effect:
Some but not all local revenue for which the district is entitled is being collected and deposited into the district’s accounts. The District must reimburse the Food Service Fund $54,724, for fiscal year August 31, 2024 write-offs as well as $50,272 for August 31, 2023 write-offs.