Finding Text
FINDING 2024-002
Subject: Child Nutrition Cluster - Eligibility
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 23, FY 24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Condition and Context
An effective internal control system was not in place at the School Corporation to ensure
compliance with requirements related to the grant agreement and the Eligibility compliance requirement.
The Indiana Department of Education defines "Direct Certification" (DC) as follows: "(DC) is a
method to automatically qualify students for free or reduced meals using data from Family and Social
Services Administration (SNAP, TANF, and Medicaid) and Department of Child Services (Foster) and
matching that with the Local Educational Agency's reported enrollment. Direct Certified households do not
need to complete a meal application and will not be included in the verification process because their
eligibility has already been verified."
Internal controls had not been properly designed and implemented over students receiving
free/reduced price meal benefits via DC. The Assistant Food Service Director generated the DC reports
on the School Nutrition Program Indiana web portal and entered resulting eligibility determinations into the
point-of-sale system (Harmony) without a documented oversight, review or approval in process in place to
ensure their accuracy.
The lack of internal controls over the DCs was a systemic issue 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). . . ."
Cause
School Corporation officials were unaware they should document a review of the DC process by
someone other than the Assistant Food Service Director.
Effect
The lack of an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the Eligibility compliance requirement. Verifying the accuracy
of students directly certified for benefits in the point-of-sale system will ensure that ineligible students do
not receive free or reduced-price meals.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management strengthen its system of internal
controls to ensure that directly certified students eligible for meal benefits are verified for accuracy in
Harmony by someone other than the Assistant Food Service Director.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.