Nineveh-Hensley-Jackson United School Corporation

FINDING 2025-001 Subject: Child Nutrition Cluster - Eligibility 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): FY24, FY25, FY24-FY25, FY24/25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 was effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. 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 School Breakfast Program and the National School Lunch Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a 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. 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 the Supplemental Nutrition Assistance Program (SNAP), the Food Distribution Program on Indian Reservations (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 was responsible for generating and reviewing the direct certification reports. Eligibility is then manually checked by the Food Service Director or Food Service Manager, then it is cross-referenced with the Child Nutrition Program web database to ensure eligibility was uploaded correctly. For two students tested who received free or reduced priced lunches, the eligibility determination was incorrect. The students were classified as free; however, the students should have been regular paying students. 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 14 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. (B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits. (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. . . ." Cause For one student, the School Corporation erroneously accepted a possible match for a student on the direct certification report without confirming the match. The other student was incorrectly entered into the School Corporation's information system as "free." Effect Providing ineligible students free lunches would cause the School Corporation to receive too much federal funding from the program as amounts received are based on free and reduced meals served. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 15 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure student eligibility for free or reduced-price lunches is accurately determined. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Finding Subject: Child Nutrition Cluster - Eligibility Contact Person Responsible for Corrective Action: Jacob Heuchan, Business Manager Contact Phone Number and Email Address: 317-878-2100, jheuchan@nhj.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Business Manager and Food Service Director will work together to implement a system of controls surrounding eligibility. The Business Manager and Food Service Director will meet on a regular basis to verify eligibility outcomes to ensure accuracy. Anticipated Completion Date: Immediate. INDIANA STATE

FINDING 2023-001 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management 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. The School Corporation had not designed an internal control system and procedures to ensure all assets purchased with federal awards were added to the property records or capital asset listing and were appropriately safeguarded and maintained. A property record or capital asset listing which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation maintained and presented the equipment and real property records for the COVID-19 - Education Stabilization Fund grant equipment; however, the records failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, the use, and condition of the property. The lack of internal controls and noncompliance were systemic issues 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 14 NINEVEH-HENSLEY-JACKSON UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. . . . (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep property in good condition. . . ." 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, the property records for the assets acquired with COVID-19 - Education Stabilization Fund award dollars did not contain all the required elements. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2023-001 Finding Subject: COVID-19 – Education Stabilization Fund – Equipment and Real Property Management Summary of Finding: An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the following compliance requirements: Equipment and Real Property Management. The School Corporation presented the equipment and real property records for the ESF grant equipment: however, the records failed to include a description (including serial number or other identification number), source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, location, use, and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). Contact Person Responsible for Corrective Action: Jacob Heuchan Contact Phone Number and Email Address: (317)-878-2100; jheuchan@nhj.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Business Manager will work with the Technology Director and the respective departments to ensure the appropriate information is being entered into the Corporation’s equipment and real property records for items purchased through ESF/federal funds. A physical inventory of the property will be taken and the results reconciled with the property records at least once every two years. Anticipated Completion Date: Immediate.