Finding Text
FINDING 2024-004
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
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): 2022-2023, 2023-2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
24
GARY COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-004.
Condition and Context
An effective internal control system was not designed or implemented at the School Corporation to
ensure compliance with requirements related to the grant agreement and the Procurement and Suspension
and Debarment compliance requirement.
The School Corporation contracted with a food service management company (FSMC) for the
operation of the food service program. The School Corporation did not have policies or procedures to
ensure compliance with procurement requirements to verify that the invoices submitted to the School
Corporation were those actually paid by the FSMC or to ensure that the FSMC invoices included credits for
any discounts, rebates, or other credits. The School Corporation did not request, nor did the FSMC provide,
sufficient documentation to verify that the invoices received by the School Corporation encompassed the
same invoices that were paid by the FSMC and that the products charged were received. The School
Corporation also did not verify the return of discounts, rebates, or credits from the FSMC.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
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). . . ."
7 CFR 210.21(f)(1) states in part:
". . . (iv) The contractor must identify the amount of each discount, rebate and other applicable
credit on bills and invoices presented to the school food authority for payment and individually
identify the amount as a discount, rebate, or in the case of other applicable credits, the nature
of the credit. If approved by the State agency, the school food authority may permit the
contractor to report this information on a less frequent basis than monthly, but no less frequently
than annually;
(v) The contractor must identify the method by which it will report discounts, rebates and other
applicable credits allocable to the contract that are not reported prior to conclusion of the
contract; and
(vi) The contractor must maintain documentation of costs and discounts, rebates and other
applicable credits, and must furnish such documentation upon request to the school food
authority, the State agency, or the Department."
INDIANA STATE BOARD OF ACCOUNTS
25
GARY COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
The School Corporation did not receive complete documentation from the FSMC to support the
amounts invoiced or verify any credits or discounts received or review the invoices that were provided.
Effect
Noncompliance with the grant agreement and the compliance requirement could result in the repayment
of federal funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management design and implement a proper
system of internal controls to ensure compliance with the Procurement and Suspension and Debarment
compliance requirement.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.