Finding Text
FINDING 2024-002
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): SY 2022-2023, SY 2023-2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Significant Deficiency
Condition and Context
An effective internal control system was not designed or implemented at the School Corporation to
ensure compliance with the Eligibility compliance requirement.
A child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be
established by the submission of an annual application or statement which furnishes such information as
family income and family size. Local educational agencies, institutions, and sponsors then determine
eligibility by comparing the data reported by the child's household to published income eligibility guidelines.
Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are
based on the child's household receiving benefits under the Supplemental Nutrition Assistance Program
(SNAP), Food Distribution Program on Indian Reservations (FDPIR), the Head Start program (ALN 93.600),
or, under most circumstances, the Temporary Assistance for Needy Families (TANF) program
(ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the
school, institution, or sponsor may obtain the information directly from the state or local agency that administers
these 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
for free or reduced-priced meals.
The direct certification report was downloaded from the State of Indiana database monthly and
uploaded to the School Corporation's lunch point-of-sale (POS) system. However, the School Corporation
had not developed an oversight or review process to ensure the direct certification report was downloaded
monthly, or that the upload had imported correctly, and students' status was updated accordingly. Additionally,
a year-to-date direct certification report was not completed to identify any potential discrepancies.
An internal control process was in place for students who submitted free and reduced-price applications,
but not for students who were directly certified.
The lack of internal controls was a systemic issue throughout the audit period but isolated to
students directly certified.
INDIANA STATE BOARD OF ACCOUNTS
18
SCHOOL CITY OF MISHAWAKA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over 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
The School Corporation had not developed an oversight or review process to ensure the direct
certification report was downloaded monthly or that the upload had imported correctly, and students' status
was updated accordingly.
Effect
The failure to design or implement a system of internal controls places the School Corporation at
risk of noncompliance with the grant agreement and the compliance requirement.
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 ensure that the appropriate
reviews, approvals, and oversight are documented.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.