Finding Text
FINDING 2023-001
Subject: Child Nutrition Cluster - Eligibility, Procurement and Suspension
and Debarment, Special Tests and Provisions - Verification
of Free and Reduced Price Applications (NSLP)
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children, Special Milk
Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.556
Federal Award Numbers and Years (or Other Identifying Numbers): 2021-22, 2022-23
Pass-Through Entity: Indiana Department of Education
Compliance Requirements: Eligibility, Procurement and Suspension and Debarment,
Special Tests and Provisions - Verification of Free
and Reduced Price Applications (NSLP)
Audit Finding: Material Weakness
Repeat Finding
This is a repeat of Finding 2021-001 from the prior audit report regarding Procurement and
Suspension and Debarment.
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls
that would likely be effective in preventing, or detecting and correcting, noncompliance.
Eligibility
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. The Food Service Director reviewed and issued the initial eligibility
determination without a system of oversight or review to ensure the eligibility determination
was correct.
Suspension and Debarment
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 vendor's suspension and
debarment status. The Food Service Director verified applicable vendors were not suspended
or debarred from participation in federal programs prior to entering into a covered transaction
without a system of oversight or review to ensure compliance prior to payment.
INDIANA STATE BOARD OF ACCOUNTS
16
SEYMOUR COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP)
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 verification of free and
reduced price applications. There were no established internal controls in place to ensure that
applications selected for verification were in compliance with requirements related to the program.
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 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 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.