Finding Text
FINDING 2024-003
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Audit Finding: Material Weakness, Material Noncompliance, Qualified Opinion
Criteria: 2 CFR section 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 awards 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). . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement.
Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles requirements.
Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements could result in the loss of future federal funds to the School Corporation.
Questioned Costs: $17,811 (Known).
Context: During testing we noted the following issues in a sample of forty child nutrition cluster payroll claims:
• 6 of 40 payroll transactions where a timecard was not completed by the employee to validate their hours worked and the time charged to food service.
• 19 of 40 payroll transactions where the School Corporation was unable to provide supporting documentation for approval of the hourly rate paid to employee.
The noncompliance was isolated to the payroll periods through August 4, 2023. The School Corporation corrected the issues starting with the next payroll period.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the School Corporation's management ensure all amounts paid to employees are supported by an approved rate schedule. Additionally, we recommend that School Corporation ensure timecards are completed and reviewed to support all time charged to the program.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.