EIN: 351076818
UEI: HVDBX9G413K9
Audited by: Crowe LLP
Oversight agency: 84 [Department of Education]
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Data as of August 28, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on March 17, 2025. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by September 17, 2025 (346 days ago).
What is a management decision? →The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Cause: The Cooperative noted that ARP portion of the Special Education grant was new for the 2022-2023 and 2023-2024 school years. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using Special Education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the Suspension and Debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect: Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For fiscal year 2023, the Cooperative had one vendor, with disbursements totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For fiscal year 2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000, but exceeded the $50,000 micro-purchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For fiscal year 2024, three vendors with disbursements totaling $175,125, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts, for goods and services awarded under a non-procurement transaction (i.e. grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the Cooperative’s management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Show full finding ▾Hide full finding ▴Information on the federal program: Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States; Special Education Preschool Grants Assistance Listings Numbers: 84.027X; 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP; 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.313(d) states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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)...." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non- Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . .” (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for pro procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . .” (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: “When you enter into a covered transaction with another person as the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Cause: The Cooperative noted that ARP portion of the Special Education grant was new for the 2022-2023 and 2023-2024 school years. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using Special Education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the Suspension and Debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect: Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For fiscal year 2023, the Cooperative had one vendor, with disbursements totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For fiscal year 2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000, but exceeded the $50,000 micro-purchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For fiscal year 2024, three vendors with disbursements totaling $175,125, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts, for goods and services awarded under a non-procurement transaction (i.e. grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. Identification as a repeat finding: No. Recommendation: We recommended that the Cooperative’s management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Context: The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. Description of Corrective Action Plan: School Corporation will reach out to the Cooperative to discuss internal controls over procurement, and suspension and debarment and request annual listing of vendors exceeding federal and state procurement thresholds to ensure Cooperative adheres to regulations and established procurement policy and request that procurement policies are written, and all procurements are fully documented based upon the applicable federal and state standards Anticipated Completion Date: The School Corporation will implement the actions noted above quarterly to ensure proper internal controls are in place. The treasurer will request this information starting in April of 2025 for the first quarter of the calendar year.
FAC accepted this audit on March 23, 2023 — management decision was due September 23, 2023.
FAC accepted this audit on April 4, 2021 — management decision was due October 4, 2021.
FINDING 2020-002Subject: Child Nutrition Cluster - Internal ControlsFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 School Breakfast Program, NationalSchool Lunch Program, COVID-19 National School Lunch ProgramCFDA Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY 2018-2019, FY 2019-2020Pass-Through Entity: Indiana Department of EducationCompliance Requirements: Cash Management, Eligibility, Special Tests and Provisions - Verificationof Free and Reduced Price Applications (NLSP), Special Tests andProvisions - Paid Lunch EquityAudit Finding: Material WeaknessCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith the grant agreement and the Cash Management, Eligibility, Special Tests and Provisions -Verification of Free and Reduced Price Applications (NLSP), and Special Tests and Provisions - Paid LunchEquity compliance requirements.Cash ManagementThe School Corporation had not developed procedures whereby the School Lunch fund balancewas monitored to ensure that the net cash resources in the fund did not exceed threemonths average expenditures.EligibilityThe Food Service Director entered application data into the School Corporation's computerizedsystem for paper applications without oversight or review of the information entered or theaccuracy of the eligibility determinations made. There was no evidence of an oversight, review,or approval process that ensured that the eligibility determinations of the applications submittedonline were correct. In addition, there was no evidence of an oversight, review, or approvalprocess of the Direct Certification listings or that they were correct and properly included in thecomputer system.Special Tests and Provisions - Verification of Free and Reduced Price Applications (NLSP)The Food Service Director prepared the Verification of Free and Reduced Price Applications(NLSP) report for fiscal year 2019-2020 and was also responsible for verification of the applications.There was no oversight, review, or approval process to ensure that the verificationprocess was accurate and complete.Special Tests and Provisions - Paid Lunch Equity (National School LunchProgram and COVID-19 National School Lunch Programs only)The Paid Lunch Equity calculations were prepared by the Food Service Director without asystem of oversight or review.The lack of internal controls for Cash Management and the Special Tests and Provisions - PaidLunch Equity was a systemic issue throughout the audit period. The lack of internal controls for Eligibilityand the Special Tests and Provisions - Verification of Free and Reduced Price Applications (NLSP) wereisolated to 2019-2020.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."CauseManagement had not developed a system of internal controls to ensure compliance with the compliancerequirements listed above.EffectThe failure to establish an effective internal control system placed the School Corporation at risk ofnoncompliance with the grant agreement and the compliance requirements listed above.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls related tothe grant agreement and the Cash Management, Eligibility, Special Tests and Provisions - Verification ofFree and Reduced Price Applications (NLSP), and Special Tests and Provisions - Paid Lunch Equitycompliance requirements.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Show full finding ▾Hide full finding ▴FINDING 2020-002Subject: Child Nutrition Cluster - Internal ControlsFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 School Breakfast Program, NationalSchool Lunch Program, COVID-19 National School Lunch ProgramCFDA Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY 2018-2019, FY 2019-2020Pass-Through Entity: Indiana Department of EducationCompliance Requirements: Cash Management, Eligibility, Special Tests and Provisions - Verificationof Free and Reduced Price Applications (NLSP), Special Tests andProvisions - Paid Lunch EquityAudit Finding: Material WeaknessCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith the grant agreement and the Cash Management, Eligibility, Special Tests and Provisions -Verification of Free and Reduced Price Applications (NLSP), and Special Tests and Provisions - Paid LunchEquity compliance requirements.Cash ManagementThe School Corporation had not developed procedures whereby the School Lunch fund balancewas monitored to ensure that the net cash resources in the fund did not exceed threemonths average expenditures.EligibilityThe Food Service Director entered application data into the School Corporation's computerizedsystem for paper applications without oversight or review of the information entered or theaccuracy of the eligibility determinations made. There was no evidence of an oversight, review,or approval process that ensured that the eligibility determinations of the applications submittedonline were correct. In addition, there was no evidence of an oversight, review, or approvalprocess of the Direct Certification listings or that they were correct and properly included in thecomputer system.Special Tests and Provisions - Verification of Free and Reduced Price Applications (NLSP)The Food Service Director prepared the Verification of Free and Reduced Price Applications(NLSP) report for fiscal year 2019-2020 and was also responsible for verification of the applications.There was no oversight, review, or approval process to ensure that the verificationprocess was accurate and complete.Special Tests and Provisions - Paid Lunch Equity (National School LunchProgram and COVID-19 National School Lunch Programs only)The Paid Lunch Equity calculations were prepared by the Food Service Director without asystem of oversight or review.The lack of internal controls for Cash Management and the Special Tests and Provisions - PaidLunch Equity was a systemic issue throughout the audit period. The lack of internal controls for Eligibilityand the Special Tests and Provisions - Verification of Free and Reduced Price Applications (NLSP) wereisolated to 2019-2020.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."CauseManagement had not developed a system of internal controls to ensure compliance with the compliancerequirements listed above.EffectThe failure to establish an effective internal control system placed the School Corporation at risk ofnoncompliance with the grant agreement and the compliance requirements listed above.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls related tothe grant agreement and the Cash Management, Eligibility, Special Tests and Provisions - Verification ofFree and Reduced Price Applications (NLSP), and Special Tests and Provisions - Paid Lunch Equitycompliance requirements.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2020-002Contact Person Responsible for Corrective Action: Christine OrrContact Phone Number: 260-351-2067Views of Responsible Official: We concur with the finding.Description of Corrective Action Plan: The internal control systems of the Child Nutrition Cluster will becorrected as follows:1. Cash Management ? The CFO has created a spreadsheet to monitor the three months averageexpenditure requirement.2. Eligibility ? An oversight and review system will be put into place for paper applications, onlineapplications, and Direct Certification listings. The approval process with be shared by twoemployees.3. Special Tests and Provisions ? Verification of Free and Reduced Price Applications - Theverification process duties will be shared by two employees with oversight, review, and approvalprocesses implemented.4. Special Test and Provisions ? Paid Lunch Equity ? The PLE tool will be prepared by the CFO andreviewed by the Superintendent.Anticipated Completion Date: The School Corporation has implemented the actions noted above toensure proper internal controls are in place.
FINDING 2020-003Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles, Program Income,Special Tests and Provisions - School Food AccountsFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 School Breakfast Program, National SchoolLunch Program, COVID-19 National School Lunch ProgramCFDA Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY 2018-2019, FY 2019-2020Pass-Through Entity: Indiana Department of EducationCompliance Requirements: Allowable Costs/Cost Principles, Program Income, SpecialTests and Provisions - School Food AccountsAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles, ProgramIncome, and Special Tests and Provisions - School Food Accounts compliance requirements.Based upon the payroll operating costs tested, the School Corporation did not maintain proper timeand effort documentation for some employees paid from the School Lunch fund. The amounts paid to theseemployees were based on a budgeted amount rather than actual time spent. This compensation relatedto food service operations, which was not supported by time records, totaled $27,360. These undocumentedexpenditures were considered questioned costs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal awards incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for documentation of Personnel Expenses (1) Charges to Federal awards forsalaries and wages must be based on records that accurately reflect the work performed.These records must:(i) Be supported by a system of internal control which provides reasonable assurancethat the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated by thenon-Federal entity, not exceeding 100% of compensated activities (for IHE, this perthe IHE's definition of IBS); . . .(vii) Support the distribution of the employee's salary or wages among specific activitiesor cost objectives if the employee works on more than one Federal award; a Federalaward and non-Federal award; an indirect cost activity and a direct cost activity; twoor more indirect activities which are allocated using different allocation bases; or anunallowable activity and a direct or indirect cost activity. . . ."7 CFR 220.7(e) states in part:"Each school food authority approved to participate in the program shall enter into a writtenagreement with the State agency or the Department through the FNSRO, as applicable, thatmay be amended as necessary. . . . Such agreements shall provide that the School FoodAuthority shall, with respect to participating schools under its jurisdiction: . . .(1)(i) Maintain a nonprofit school food service; . . .(ii) In accordance with the financial management system established under ? 220.13(i)of this part, use all revenues received by such food service only for the operation orimprovement of that food service Except that, facilities, equipment, and personnelsupport with funds provided to a school food authority under this part may be used tosupport a nonprofit nutrition program for the elderly, including a program funded underthe Older Americans Act of 1965 (42 U.S.C. 3001 et seq.); . . ."7 CFR 210.14(a) states:"Nonprofit school food service. School food authorities shall maintain a nonprofit school foodservice. Revenues received by the nonprofit school food service are to be used only for theoperation or improvement of such food service, except that, such revenues shall not be usedto purchase land or buildings, unless otherwise approved by FNS, or to construct buildings.Expenditures of nonprofit school food service revenues shall be in accordance with the financialmanagement system established by the State agency under ? 210.19(a) of this part. Schoolfood authorities may use facilities, equipment, and personnel supported with nonprofit schoolfood revenues to support a nonprofit nutrition program for the elderly, including a programfunded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.)."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the grant agreement and the compliance requirements listed above.EffectThe failure to establish an effective internal control system enabled noncompliance to go undetected.Noncompliance with the grant agreement and the compliance requirements listed above could haveresulted in the loss of funds to the School Corporation.Questioned CostsKnown questioned costs of $27,360 were identified in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish controls to ensure complianceand comply with the grant agreement and the Allowable Costs/Cost Principles, Program Income, andSpecial Tests and Provisions - School Food Accounts compliance requirements.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Show full finding ▾Hide full finding ▴FINDING 2020-003Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles, Program Income,Special Tests and Provisions - School Food AccountsFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 School Breakfast Program, National SchoolLunch Program, COVID-19 National School Lunch ProgramCFDA Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY 2018-2019, FY 2019-2020Pass-Through Entity: Indiana Department of EducationCompliance Requirements: Allowable Costs/Cost Principles, Program Income, SpecialTests and Provisions - School Food AccountsAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles, ProgramIncome, and Special Tests and Provisions - School Food Accounts compliance requirements.Based upon the payroll operating costs tested, the School Corporation did not maintain proper timeand effort documentation for some employees paid from the School Lunch fund. The amounts paid to theseemployees were based on a budgeted amount rather than actual time spent. This compensation relatedto food service operations, which was not supported by time records, totaled $27,360. These undocumentedexpenditures were considered questioned costs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal awards incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for documentation of Personnel Expenses (1) Charges to Federal awards forsalaries and wages must be based on records that accurately reflect the work performed.These records must:(i) Be supported by a system of internal control which provides reasonable assurancethat the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated by thenon-Federal entity, not exceeding 100% of compensated activities (for IHE, this perthe IHE's definition of IBS); . . .(vii) Support the distribution of the employee's salary or wages among specific activitiesor cost objectives if the employee works on more than one Federal award; a Federalaward and non-Federal award; an indirect cost activity and a direct cost activity; twoor more indirect activities which are allocated using different allocation bases; or anunallowable activity and a direct or indirect cost activity. . . ."7 CFR 220.7(e) states in part:"Each school food authority approved to participate in the program shall enter into a writtenagreement with the State agency or the Department through the FNSRO, as applicable, thatmay be amended as necessary. . . . Such agreements shall provide that the School FoodAuthority shall, with respect to participating schools under its jurisdiction: . . .(1)(i) Maintain a nonprofit school food service; . . .(ii) In accordance with the financial management system established under ? 220.13(i)of this part, use all revenues received by such food service only for the operation orimprovement of that food service Except that, facilities, equipment, and personnelsupport with funds provided to a school food authority under this part may be used tosupport a nonprofit nutrition program for the elderly, including a program funded underthe Older Americans Act of 1965 (42 U.S.C. 3001 et seq.); . . ."7 CFR 210.14(a) states:"Nonprofit school food service. School food authorities shall maintain a nonprofit school foodservice. Revenues received by the nonprofit school food service are to be used only for theoperation or improvement of such food service, except that, such revenues shall not be usedto purchase land or buildings, unless otherwise approved by FNS, or to construct buildings.Expenditures of nonprofit school food service revenues shall be in accordance with the financialmanagement system established by the State agency under ? 210.19(a) of this part. Schoolfood authorities may use facilities, equipment, and personnel supported with nonprofit schoolfood revenues to support a nonprofit nutrition program for the elderly, including a programfunded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.)."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the grant agreement and the compliance requirements listed above.EffectThe failure to establish an effective internal control system enabled noncompliance to go undetected.Noncompliance with the grant agreement and the compliance requirements listed above could haveresulted in the loss of funds to the School Corporation.Questioned CostsKnown questioned costs of $27,360 were identified in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish controls to ensure complianceand comply with the grant agreement and the Allowable Costs/Cost Principles, Program Income, andSpecial Tests and Provisions - School Food Accounts compliance requirements.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2020-003Contact Person Responsible for Corrective Action: Christine OrrContact Phone Number: 260-351-2067Views of Responsible Official: We concur with the finding.Description of Corrective Action Plan: The lack of internal controls for employees paid from the SchoolLunch fund will be corrected by eliminating the percentage split in these budgeted salaries. From now on,only those employees that work as a Food Service employee will be paid from the School Lunch fund.Anticipated Completion Date: The School Corporation has implemented the actions noted above toensure proper internal controls are in place.
FAC accepted this audit on April 11, 2019 — management decision was due October 11, 2019.
FAC accepted this audit on April 12, 2018 — management decision was due October 12, 2018.
GSA_MIGRATION
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GSA_MIGRATION
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