Finding 627291 (2022-003)

Significant Deficiency
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2023-03-28
Audit: 52593
Organization: Twin Lakes School Corporation (IN)
Auditor: Crowe LLP

AI Summary

  • Core Issue: The School Corporation lacks an effective internal control system to ensure compliance with federal grant requirements, risking misuse of funds.
  • Impacted Requirements: Compliance with 2 CFR section 200.303 and 7 CFR 210.21(f)(1) regarding allowable costs and internal controls.
  • Recommended Follow-Up: Implement a review process to ensure employee hours and pay rates match time sheets accurately.

Finding Text

FINDING 2022-003 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, Summer Food Service Program, Fresh Fruits & Vegetables Program Assistance Listing Numbers: 10.553, 10.555, 10.559, 10.582 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Significant Deficiency 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). . . ." 7 CFR 210.21(f)(1) states in part: ". . . (ii)(A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or (B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in a manner suitable for contract cost determination and verification; (iii) The contractor's determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars; . . . (vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department." Condition: 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 Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of proper internal controls could have allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were $166 of known questioned costs identified. The known questioned costs were calculated by taking the employee?s contracted hourly rate multiplied by the number of regular hours the employee worked (79 hours) per the reviewed time sheet for the two-week period and then factoring in what their Food Service overtime rate would be multiplied by the overtime the employee worked (1 hour) that should have been charged to fund 800. This was then compared to the pay amount that was actually charged to the food service program for that time period per the payroll distribution report, which resulted in an overpayment of $166 that was charged to fund 800. Context: During testing of 10 payroll disbursements for allowable costs/cost principles, we noted there was one instance where the timecard for the Food Services employee displayed 79 total hours of normal pay and one hour of overtime for the two-week period. We reviewed the payroll distribution report for this time period and note that the employee was paid for 69.5 hours of normal pay and 10.5 hours of overtime. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation establish an effective review control to ensure the hours paid to employees agrees to the time sheet for the corresponding timeframe as well as the correct rate is being paid. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Categories

Questioned Costs School Nutrition Programs Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Other Findings in this Audit

  • 50848 2022-002
    Material Weakness
  • 50849 2022-003
    Significant Deficiency
  • 50850 2022-002
    Material Weakness
  • 50851 2022-003
    Significant Deficiency
  • 50852 2022-002
    Material Weakness
  • 50853 2022-003
    Significant Deficiency
  • 50854 2022-002
    Material Weakness
  • 50855 2022-003
    Significant Deficiency
  • 50856 2022-002
    Material Weakness
  • 50857 2022-003
    Significant Deficiency
  • 627290 2022-002
    Material Weakness
  • 627292 2022-002
    Material Weakness
  • 627293 2022-003
    Significant Deficiency
  • 627294 2022-002
    Material Weakness
  • 627295 2022-003
    Significant Deficiency
  • 627296 2022-002
    Material Weakness
  • 627297 2022-003
    Significant Deficiency
  • 627298 2022-002
    Material Weakness
  • 627299 2022-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
10.553 School Breakfast Program $706,821
84.425 Education Stabilization Fund $607,449
10.555 National School Lunch Program $295,762
10.559 Summer Food Service Program for Children $268,727
93.778 Medical Assistance Program $246,743
84.010 Title I Grants to Local Educational Agencies $210,733
84.287 Twenty-First Century Community Learning Centers $113,179
15.904 Historic Preservation Fund Grants-in-Aid $31,386
10.582 Fresh Fruit and Vegetable Program $30,205
84.027 Special Education_grants to States $18,720
84.424 Student Support and Academic Enrichment Program $14,933
84.173 Special Education_preschool Grants $6,647
10.649 Pandemic Ebt Administrative Costs $3,063
84.048 Career and Technical Education -- Basic Grants to States $2,444
84.365 English Language Acquisition State Grants $1,765
84.367 Improving Teacher Quality State Grants $1,200