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FINDING 2022-005 Subject: Child Nutrition Cluster - Reporting, Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 20-21, SY 21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Reporting, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting noncompliance. Reporting Monthly claims for reimbursement were prepared and submitted to the Indiana Department of Education by a single employee without oversight or a secondary review process to prevent, or detect and correct, errors. Procurement and Suspension and Debarment The School Corporation is a member of the Southern Indiana Commodity Cooperative (SICC) who bids food and dairy products on behalf of its members. Although the SICC properly bid and contracted for the food and dairy products, the School Corporation did not have oversight or a review process in place to ensure that the products purchased were billed in accordance with the bid/contract prices. The lack of internal controls 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 Management had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the Reporting and the Procurement and Suspension and Debarment compliance requirements. Effect The failure to establish an effective system of internal controls could have enabled noncompliance with the grant agreement and the Reporting and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance with the grant agreement and the Reporting and the Procurement and Suspension and Debarment compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.