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: Significant Deficiency
INDIANA STATE BOARD OF ACCOUNTS 13
SPENCER-OWEN COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
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.
The Deputy Treasurer selected a random sample of students with a free or reduced-price lunch
status and verified that their benefit was calculated correctly. This review happens annually in October or
November. This internal control would not find issues with Direct Certification or applications completed for
students after the annual review date. In an Indiana Department of Education Administrative review of the
School Corporation during the audit period, four Direct Certification students were found to have been
inappropriately issued reduced benefits as opposed to free benefits. Further, there was no documented
review of the free or reduced-price lunch parameters in the School Corporation's nutrition management
software, Titan.
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 245.3(c) states in part: "Each School Food Authority shall serve free and reduced price
meals or free milk in the respective programs to children eligible under its eligibility criteria. . . ."
Cause
The School Corporation was not aware of the requirement to document its review of parameters
involving free or reduced-price lunch meals. The School Corporation's current internal control in place did
not account for students who may enter into the School Corporation after the October or November count
and random selection by the Deputy Treasurer. These errors associated with social economic status could
cause incorrect funding and meal prices charged. Thus, the School Corporation's management had not
developed a system of internal controls to ensure compliance with eligibility requirements.
Effect
The failure to establish an effective internal control system by the School Corporation caused
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also allowed noncompliance with the compliance requirements
and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight,
reviews, and approvals over the activities of the programs. Incorrect funding will be given if the social
economic status is not verified by the School Corporation.
INDIANA STATE BOARD OF ACCOUNTS
14
SPENCER-OWEN COMMUNITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish a system of internal
controls related to the grant agreement and eligibility compliance requirements.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.