FINDING 2023-005
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): FY2023, 7182022IN890342,
7182023IN890342
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2021-003.
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 related to the eligibility determination of a child receiving meals.
Any child enrolled in a participating school or summer camp, or attending a Summer Food Service
Program (SFSP) meal service site, who meets the applicable program's definition of "child," may receive
meals under the applicable program. In the case of the National School Lunch Program and School
Breakfast Program, children belonging to households meeting nationwide income eligibility requirements
may receive meals at no charge or at a reduced price. Children who have been determined ineligible for
free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals.
Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's
eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the
submission of an annual application or statement which furnishes such information as family income and
family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing
the data reported by the child's household to published income eligibility guidelines. Additionally, a child
may be direct certified. For a direct certification, annual eligibility determinations are based on the child's
household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most
circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its
participation in one of these programs; or the school, institution, or sponsor may obtain the information
directly from the state or local agency that administers these programs. Certain foster, runaway, homeless,
and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified
households do not need to complete an application.
The Food Service Director was responsible for generating and reviewing the Direct Certification
Reports. There was no evidence that the direct certifications were correctly and properly included in the
software system, or that there was an oversight, review, or approval process over the direct certifications.
The lack of internal controls was isolated to direct certifications in fiscal year 2022-2023.
INDIANA STATE BOARD OF ACCOUNTS
23
SOUTH PUTNAM COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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
A proper system of internal controls was not designed by management of the School Corporation,
which would include segregation of key functions. Embedded within a properly designed and implemented
internal control system should be internal controls consisting of policies and procedures. Policies reflect
the School Corporation's management of what should be done to effect internal controls, and procedures
should consist of actions that would implement these policies.
Effect
Without the proper design or implementation of the components of a system of internal controls,
including policies and procedures that provide segregation of duties and additional oversight as needed,
the internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation design and implement a proper
system of internal controls, including policies and procedures that would provide segregation of duties to
ensure appropriate reviews, approvals, and oversight are taking place.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.