Finding Text
FINDING 2024-001
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): FY 2022-2023, FY 2023-2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
INDIANA STATE BOARD OF ACCOUNTS
13
TIPTON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
An effective internal control system, which would include segregation of duties, 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.
There was no documented internal control in place to ensure that timely eligibility determinations
were made and reviewed for eligibility determinations made via Direct Certification. Several listings of
students eligible for Direct Certification were provided for audit, but there was no audit evidence provided
that the information was shared and used to make timely eligibility determinations.
The lack of internal controls was a systematic issue during 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
The School Corporation did not maintain a history of the eligibility determinations made via Direct
Certification. Additionally, the School Corporation changed to a different point-of-sale software system
starting with the current school year and had very limited access to the previous point-of-sale system.
Lastly, the School Corporation had changes in staff responsible for making the eligibility determinations
during the audit period.
Effect
The failure to establish an effective internal control system places the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could also allow noncompliance with compliance requirements and allow
the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and
approvals over the activities of the program. This could result in incorrect eligibility determinations.
Questioned Costs
There were no questioned costs identified.
INDIANA STATE BOARD OF ACCOUNTS
14
TIPTON COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that the School Corporation's management establish a system of internal
controls, including segregation of duties, related to the grant agreement and compliance requirements listed
above. An internal control system, including segregation of duties, should be designed and operate
effectively to provide reasonable assurance that material noncompliance with the grant agreement or a
compliance requirement of a federal program will be prevented, or detected and corrected, on a timely
basis. In order to have an effective internal control system, it is important to have proper segregation of
duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to
have a separation of functions over certain activities related to the program. The fundamental premise of
segregation of duties is that an individual or small group of individuals should not be in a position to initiate,
approve, undertake, and review the same activity. The School Corporation should retain documentation to
show evidence that eligibility determinations were performed and internal controls were in place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.