FINDING 2023-004
Subject: Child Nutrition Cluster - Eligibility
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 Number and Year (or Other Identifying Number): FY2022-2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Eligibility
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the prior audit. The prior audit finding number was 2021-004.
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 a child receiving meals that was a direct certified or that
submitted an electronic application.
Any child enrolled in a participating school 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
the School Breakfast Program, children belonging to households meeting nationwide income eligibility
requirements may receive meals at no charge or at 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 ran the direct certification report weekly and uploaded it to the school
lunch point-of-sale system. The Food Service Director verified the information was imported correctly by
comparing reports from the point-of-sale system to the upload file. This process continued weekly;
however, there was no documentation of the review to ensure the upload had imported correctly and
students' status was updated accordingly.
In addition, the School Corporation used a food software program to store, manage, and
automatically make eligibility determinations dependent upon the information entered into the software by
the parents, guardians, or school lunch employees. The School Corporation did not have a proper system
of oversight or review to ensure that the federal income guidelines entered into the software program were
accurate for fiscal year 2022-2023.
The lack of internal controls was isolated to direct certifications and electronic applications during
the 2022-2023 school year.
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 implemented 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 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.