Finding Text
FINDING 2023-006
Subject: Child Nutrition Cluster - Reporting
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
Assistance Listings Numbers: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
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 the monthly reimbursement claims.
Meal count reports were run from the School Corporation's meal software system on a monthly
basis. The reports were then utilized by the Food Service Director or the Food Service Secretary to prepare
the monthly claims for reimbursement. There was no documented review or oversight process over the
monthly claims for reimbursement to prevent, or detect and correct, errors.
Of the four monthly claims for reimbursement selected for testing, two included overstatements in
the number of meal counts used for reimbursement purposes when compared to the supporting documentation.
The lack of internal controls and noncompliance were systemic issues during 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). . . ."
7 CFR 210.8(a) states in part: "The school food authority shall establish internal controls which
ensure the accuracy of meal counts prior to submission of the monthly Claim for Reimbursement. . . ."
INDIANA STATE BOARD OF ACCOUNTS
24
RANDOLPH EASTERN SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
7 CFR 210.7(c)(1) states in part:
"Lunch count system. To ensure that the Claim for Reimbursement accurately reflects the
number of lunches and meal supplements served to eligible children, the school food authority
shall, at a minimum: . . .
(iii) Base Claims for Reimbursement on lunch counts, taken daily at the point of service,
which correctly identify the number of free, reduce price and paid lunches served to
eligible children;
(iv) Correctly record, consolidate and report those lunch and supplement counts on the
Claim for Reimbursement; . . ."
7 CFR 220.11(b) states in part: "Claims for Reimbursement shall include data in sufficient detail to
justify the reimbursement claimed . . ."
7 CFR 220.11(d) states in part: "The school food authority shall establish internal controls which
ensure the accuracy of breakfast counts prior to submission of the monthly Claim for Reimbursement. . . ."
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. As a result, reimbursement claims were not supported by the underlying records.
Noncompliance with the grant agreement and the Reporting compliance requirement could result
in the loss of future federal funds to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management establish a proper system of internal
controls and develop policies and procedures to ensure meal counts are correctly reported.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.