Finding Text
FINDING 2023-005
Subject: Child Nutrition Cluster - Special Tests and Provisions - Non-Profit School Food Service Accounts
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): FY 2022, FY 2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Special Tests and Provisions - Non-Profit School Food Service Accounts
Audit Finding: Material Weakness
Condition and Context
All revenues and expenditures of the non-profit school food service account are to be accounted
for in accordance with state and federal requirements. As such separate accounting is to be made for the
school food service, federal reimbursements are to be correctly credited to the food service account and
transfers out of the school food service account are to be for allowable costs of the school food service.
The School Corporation did not have a process in place to ensure that submitted reimbursements
were received, that reimbursements received were credited to the food service account, or that transfers
out of the fund 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
WABASH CITY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
A proper system of internal controls, which would include appropriate segregation of duties, 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 the School Corporation's management 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.