Finding Text
FINDING 2023-004
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): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Eligibility, Reporting
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding for Eligibility from the prior audit report. The prior audit finding number was
2021-005.
Condition and Context
Eligibility
Any child enrolled in a participating school who meets the applicable program's definition of
"child," may receive meals under the applicable programs. A child belonging to households
meeting nationwide income eligibility requirements may receive meals at no charge or at a
reduced price. Children that have been determined ineligible for free or reduced-price meals
pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a
Child Nutrition Cluster program may be established by the submission of an annual application
or statement which furnished such information as family income and family size. The School
Corporation determines eligibility by comparing the data reported by the child's household to
published income eligibility guidelines. Annual eligibility determinations may also be based on
the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or,
under most circumstances, the TANF program. A household may furnish documentation if its
participation in one of those programs, or the School Corporation may obtain the information
directly from the State or local agency that administers those 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.
Paper applications and online applications are processed in the School Corporation's software
system to determine if students are eligible for free or reduced meals. Paper applications are
input by the Nutrition Services Director and online applications are directly submitted by
parents. The software's determination of eligibility is recalculated by the Nutrition Services
Director without an oversight or review process in place to ensure accuracy. Additionally, the
Nutrition Services Director downloaded the Direct Certifications file from the CNC Web Portal
and uploaded the file into the School Corporation's software on a monthly basis without a
documented oversight or review process in place to ensure directly certified students were
properly processed.
The lack of internal controls was isolated to fiscal year 2022-2023.
Reporting
The School Corporation must submit monthly sponsor claims for reimbursement (claims) for
meals and snacks served to eligible students within 60 days following the last day of the month
covered by the claim.
Claims were submitted to the Indiana Department of Education (IDOE) as required; however,
the claims were prepared by one employee without a review or approval process in place to
prevent, or detect and correct, errors.
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
A proper system of internal controls, which would include segregation of key functions, 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 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.