Finding 526665 (2024-002)

FINDING 2024-002 Subject: Child Nutrition Cluster - Eligibility and Special Tests and Provisions - Non-Profit School Food Accounts 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 Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Accounts Audit Finding: Material Weakness Condition and Context Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the 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 if 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. Paper applications and online applications are processed in the School Corporation's software system to determine if students are eligible for free or reduced meals. Paper applications are input by the Food Service Director for all schools except one. These applications are input by a long-term cafeteria employee and the Food Service Director reviews the data; however, no evidence was provided to show this review. Online applications are directly submitted by parents. A random review of applications is performed by the Food Service Director; however, there was no documentation provided to show this review. The software's determination of eligibility is recalculated by the Food Service Director without an oversight or review process in place to ensure accuracy. Additionally, the Food Service Director downloaded the Direct Certifications file from the CNC Web Portal and uploaded the file into the School Corporation's software on a monthly basis without a documented oversight or review process in place to ensure directly certified students were properly processed. INDIANA STATE BOARD OF ACCOUNTS 18 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Special Tests and Provisions - Non-Profit School Food Accounts The School Corporation had established an internal control process where the Food Service Director maintained accurate reports and records and provided the information to the School Corporation Chief Financial Officer. However, there was no evidence of that review. The lack of internal controls was systemic throughout the audit period for the Eligibility and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. 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 Although the School Corporation had designed a system of internal controls, there was no documented evidence of the implementation of the internal control process. Due to the lack of documentation, it could not be determined if the School Corporation and the Food Service Director had developed a system of internal controls that would have ensured compliance with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements listed above. Without a proper system of internal controls over eligibility, improper determination could go undetected and result in incorrect prices charged to students and improper claiming of federal reimbursement. Without a proper system of internal controls over the Special Tests and Provisions - Non-Profit School Food Accounts, improper reporting of receipts and disbursements could remain undetected and result in improper reporting on the financial statement of the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide documentation of those internal controls to ensure compliance and comply with the grant agreement, the Eligibility, and the Special Tests and Provisions - Non-Profit School Food Accounts compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.