Finding Text
FINDING 2023-005
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch
Program, Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): 2021-2022, 2022-2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Eligibility, Reporting, Special Tests and Provisions -
Non-Profit School Food Service Accounts
Audit Finding: Material Weakness
Condition and Context
The School Corporation had not established effective internal controls, which would include segregation
of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance.
INDIANA STATE BOARD OF ACCOUNTS
24
COMMUNITY SCHOOLS OF FRANKFORT
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Eligibility
The Data Collection Specialist entered direct certifications into the School Corporation's
software system. A student that was direct certified was coded in the software system as an
import. The Food Service Director then viewed the direct certification listing monthly. However,
there was no evidence that the Food Service Director's review took place, nor was there a
review or oversight process in place to ensure that direct certifications were properly uploaded
into the system or that that the software system accurately recording the direct certification
students.
Reporting
During the 2021-2022 school year, the School Corporation operated under the Seamless
Summer Option (SSO), which allowed all students to receive free meals. Therefore, the
cafeteria cashiers at each school manually recorded meals served on the meal count forms
provided and prescribed by the Indiana Department of Education. The Food Service Director
used the meal count forms to compile and submit the monthly claim for reimbursement without
an oversight or review process in place to detect and correct errors.
During the 2022-2023 school year, the School Corporation did not operate under SSO and thus
resumed the use of their software, Café Enterprise. Café Enterprise, generated meal count
reports by type (i.e., free, reduced, paid, etc.) at each school. The Food Service Director used
the meal count reports to compile and submit the monthly claim for reimbursement without an
oversight or review process in place to detect and correct errors.
Special Tests and Provisions - Non-Profit School Food Service Accounts
A receipt was prepared and recorded in the school food service account when reimbursement
was received for meals served. On a monthly basis, the Deputy Treasurer generated a Fund
Report and Revenue History Report and provided it to the Food Service Director. The Food
Service Director prepared and utilized a monthly spreadsheet to reconcile the Food Service
accounts to the corporation account. While appropriate financial records were prepared and
exchanged, there was no documented oversight, review, or approval process in place to ensure
the separate accounting took place, that reimbursements were correctly credited to the school
food sever account and that transfers out of the food service account were for allowable costs
of the food service.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
25
COMMUNITY SCHOOLS OF FRANKFORT
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
A proper system of internal controls was not designed by management of the School Corporation.
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 statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, 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.