Finding Text
Criteria The United States Department of Agriculture has established several grant programs for the purpose of providing school breakfast and lunch for eligible children, known as the Child Nutrition Grant Program. These programs contain requirements for what the grants can be used for related to the District providing child nutrition services. Condition As noted in Comment 2023.003, the District borrowed monies legally restricted to support general fund operations, which included monies borrowed from the Child Nutrition Grant Program. The Child Nutrition Program, for purposes of the District’s single audit for 2023, is classified as a major program resulting in test of internal control and compliance with laws and regulations. Accordingly, we are required to specifically report the material weakness in internal control and noncompliance with laws and regulations for this program separately, although part of the District-wide issue.
There is a deficiency in internal control over the bank reconciliation process regarding appropriate segregation of duties and/or supervision and review.
Context
Review of the District’s bank reconciliation as of year end for the Child Nutrition Grant Program listed a material transfer into the restricted bank account. It was noted that this amount was not received within 30 days of year end.
Cause
The District currently has the same individual who’s authorized to make bank transactions also perform the bank reconciliation process without any supervision and review.
Effect
It appears the District likely violated legal and contractual obligations by using monies for unauthorized purposes.
Recommendation
The District should immediately return all borrowed cash. The District should look for additional opportunities to allow for segregation of duties among individuals who are authorized to make bank transactions and those who perform bank reconciliations. The District should consider implementing supervision and review procedures over the bank reconciliation process. These procedures should include: reviewing the reconciliations for unusual activity, including large transfers and deposits; looking for repeat reconciling items from month-to-month; and reviewing the following month’s bank statement to ensure deposits and transfers of monies listed on the reconciliation cleared the bank. This review should be documented within the system or on the bank reconciliation by initialing and noting the date of the individual performing the review.
View of Responsible Officials
See Corrective Action Plan