Finding Text
Subject: Child Nutrition Cluster – Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service
Program for Children, Fresh Fruit and Vegetable Program
Assistance Listing Number: 10.553, 10.555, 10.559, 10.582
Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Significant Deficiency
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). . . ."
2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures
which reflect applicable State, local, and tribal laws and regulations, provided that the procurements
conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part:
"The non-Federal Entity must use one of the following methods of procurement. . . .
(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple
and informal procurement methods for securing services, supplies, or other property that do not
cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price
or rate quotations must be obtained from an adequate number of qualified sources. . . ."
Condition: An effective internal control system was not in place at the School Corporation to ensure
compliance with requirements related to the Child Nutrition Program and Procurement compliance
requirements.
Cause: The School Corporation's management had not developed a system of internal controls that would
have ensured compliance with the Procurement and Suspension and Debarment compliance requirement.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs.
Questioned Costs: There were no questioned costs identified.
Context: For the two small purchase method procurements sampled for testing, we noted that the School
Corporation, did not obtain quotes from an adequate number of qualified sources. Additionally, the School
Corporation did not perform a suspension and debarment check on the vendors. The sample items were
for $76,200 and $31,639 worth of repair supplies in FY2023 and FY2024, respectively.
Identification as a repeat finding: This is a repeat finding from the immediately prior audit. The prior
finding number was 2022-003.
Recommendation: We recommended that the School Corporation's management establish a system of
internal controls related to ensure that the School Corporation’s procurement policy is adhered to and
quotes are obtained from an adequate number of qualified sources as required for small purchase method
procurements. Additionally, we recommend management monitor annual vendor activity to ensure vendors
that exceed small purchase threshold and suspension and debarment threshold in aggregate are reviewed
for potential analysis and suspension and debarment checks required by federal and state regulations.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.