Delphi Community 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 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context Any child enrolled in a participating school or summer camp, or attending a SFSP meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at 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. Children attending SFSP meal service sites receive their meals at no charge. 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 SNAP, 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. Direct Certifications The Food Service Director ran the direct certification report monthly and uploaded it to the school lunch point-of-sale system. However, documentation of an oversight or review process to ensure the monthly upload occurred, had imported correctly, and students' status was updated accordingly was not evidenced. Applications The Food Service Director was responsible for reviewing the online and paper application eligibility status and entering the information into the school lunch point-of-sale system. Furthermore, the Assistant Food Service Director had access to make changes to eligibility. Documentation of an oversight or review process to ensure that the income verification, calculations, and eligibility status entered into the school lunch point-of-sale system and subsequent changes were accurate and properly supported was not evidenced. Of the 60 students tested for the school year ended June 30, 2024, the eligibility determinations were not correct as follows:  There was 1 student that received free meals; however, based on the application's income and family size, eligibility should have been for reduced-price meals.  Students were determined to be free or reduced without a properly completed application. As a result, 2 students received free meals and 1 student received reduced-price meals instead of paying regular price for meals. INDIANA STATE BOARD OF ACCOUNTS 14 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the Indiana Department of Education (IDOE) conducted an administrative review in April 2025 covering the 2024-2025 school year. The IDOE review identified multiple applications that were certified incorrectly or were approved with falsified information. The finding noted household income reported on the income application was changed by a school staff member to allow households to qualify for a free or reduced benefit. The lack of internal controls and noncompliance was systemic 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). . . ." 7 CFR 245.6(c)(4) states: "Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable." 7 CFR 245.6(e) states: "Recordkeeping. The local educational agency must maintain documentation substantiating eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain, except that if audit findings have not been resolved, the documentation must be maintained as long as required for resolution of the issues raised by the audit." Cause Management had not developed an adequate system of internal controls to ensure student eligibility status was properly determined. Effect As a result of the IDOE administrative review, the School Corporation had to return funds totaling $32,052, of which $24,639 was from the National School Lunch Program and $7,413 from the School Breakfast Program. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 15 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure student eligibility 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: Andrea Miller Contact Phone Number and Email Address: 765-564-2100 ext 1002, millera@delphi.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: We will implement a documented secondary review, the FSD will print a before and after report from Skyward, and the direct certification download. The MS/HS ECA Treasurer will review the reports, verify Skyward, and sign off on the reports for the second check. The FSD and MS/HS ECA Treasurer will receive annual compliance training. Anticipated Completion Date: June 2026

2023-003

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-151-PN01, 22611-151-ARP, 23611-151-PN01, 23619-151-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have internal controls in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met. Although the Proportionate Share Report was prepared by the Treasurer and reviewed and approved by the Special Education Director, the internal controls were not effective to ensure nonpublic school expenditures were appropriately identified and reported. The nonpublic expenditures spent did not meet the earmarking requirements for grant award numbers 22611-151-PN01, 22611-151-ARP, 23611-151-PN01, and 23619-151-PN01. The required expenditures for nonpublic proportionate shares were $11,074, $2,423, $9,363, and $504, respectively. The School Corporation could only provide documentation of expenditures of $10,465, $0, $2,561, and $0, respectively. In addition, the School Corporation did not track the expenditures in a separate line item within the ledger to specifically identify services provided for nonpublic school students. The lack of internal controls and noncompliance were isolated to the 22611-151-PN01, 22611-151-ARP, 23611-151-PN01, and 23619-151-PN01 grants. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over 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). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . . " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Through inquiry of management, they were unaware of the requirements to track the nonpublic proportionate share expenditures separately. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to track expenditures for nonpublic services and ensure the proper amount was spent which could result in the repayment of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure the required level of expenditures for nonpublic school students with disabilities is met and properly tracked to ensure compliance with the matching, level of effort, earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Finding Subject: Special Education Cluster (IDEA) - Earmarking Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number and Email Address: 765-564-2100 ext 1002, millera@delphi.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The School Corporation has joined the Clinton County Joint Services. The Director will provide the numbers for the proportionate share, and retain the documentation. The Corporation Treasurer will establish specific codes to track nonpublic proportionate share expenses, to ensure expenditures are clearly identifiable and readily reportable. Anticipated Completion Date: September 2026, we do not currently have any proportionate shares, but will with the next grant cycle.

FINDING 2025-006 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 Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context 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 of $5,000. The School Corporation hired a consultant to compile a capital asset listing report that was to contain all inventory and assets purchased that exceeded the School Corporation's capitalization threshold through June 30, 2025. The consultant prepared the report; however, the School Corporation did not have any policies or procedures in place to ensure the listing was complete. The School Corporation spent $802,314 on improvements, of which $344,829 was paid with COVID-19 - Education Stabilization Funds. The improvements should have been recorded as a capital asset purchased with grant funds as this project exceeded the capitalization threshold. The capital asset listing provided only included part of the project totaling $167,208 and did not identify the source of the funding, the correct cost of the property, or the percentage of federal participation as required. The lack of internal controls and noncompliance were isolated to the ESSER III grant S425U210013 in both fiscal years 2023-2024 and 2024-2025. 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). . . ." 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. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. INDIANA STATE BOARD OF ACCOUNTS 25 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 the property in good condition. . . ." Cause Effective internal controls were not in place to ensure that all assets purchased with federal funds were added to the School Corporation's capital asset listing. The School Corporation uses a consultant to prepare the capital asset listing which did not include all required information. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls that would ensure compliance with the equipment and real property management requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-006 Finding Subject: COVID-19 Education Stabilization Fund - Equipment and Real Property Management Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number and Email Address: 765-564-2100 ext 1002, millera@delphi.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The School Corporation will amend the capital asset listing to include the full $802,314 improvement project, and accurately account for the $344,829 federal portion and calculate the percentage of federal participation. The Corporation Treasurer will prepare a spreadsheet to track all future construction progress and share with the Superintendent and Maintenance Director. This document will then be shared with the capital asset consultant annually for reporting purposes. A column will be added to the capital asset ledger to mark if federal funds were used. Anticipated Completion Date: June 2026

FINDING 2023-002 Subject: Child Nutrition Cluster - Verification of Free and Reduced Price Lunch Applications Federal Agency: Department of Agriculture Federal Program: National School Lunch Program Assistance Listings Number: 10.555 Federal Award Number and Year (or Other Identifying Number): FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Verification of Free and Reduced Price Lunch Applications (NSLP) Audit Findings: Material Weakness, Other Matters Condition and Context By November 15 of each school year, the Local Educational Agencies (LEA) must verify the current free and reduced price eligibility of households selected from a sample of applications that it has approved for free and reduced price meals, unless the LEA is otherwise exempt from the verification requirement. The verification sample size is based on the total number of approved applications on file on October 1. If the LEA performs the verification function it must be in accordance with instructions provided by the state agency. The LEA must follow up on children whose eligibility status has changed as the result of verification activities to put them in the correct category. As instructed, LEAs must select a sample of applications to be verified utilizing one of the following methods: a. Standard sample size - The lesser of 3 percent or 3,000 of the approved applications on file as of October 1, selected from error-prone applications. For this purpose, error prone applications are those showing household incomes within $100 monthly or $1,200 annually of the income eligibility guidelines for free and reduced price meals. b. Alternative sample sizes - 1) The lesser of 3 percent or 3,000 applications selected at random from approved applications on file as of October 1 of the school year, or (2) The sum of (a) the lesser of 1 percent of all applications identified as error-prone or 1,000 error-prone applications, and (b) the lesser of 1/2 of 1 percent of, or 500, approved applications in which the household provided, in lieu of income information, a case number showing participation in the SNAP, TANF, or FDPIR. In accordance with the above guidance, the School Corporation selected a sample of verifications based on the alternative sample size. As such, the School Corporation was required to review the lesser of three percent or 3,000 applications selected at random from approved applications on file as of October 1 of the 2022-2023 school year. On October 1, the School Corporation had 178 applications on file and determined that 6 applications were required to be verified; however, the School Corporation chose to verify 14 applications. The Food Service Director was responsible for reviewing the applications selected for verification in fiscal year 2022-2023. A second review was performed by the Assistant Food Service Director as indicated on the Verification Collection Report. Of the 14 applications verified by the School Corporation, a sample of 6 applications were selected for testing. The following errors were noted: (1) For two students, 1 application was to have the eligibility status changed from "Free" to "Paid"; however, this change was not updated and made in the School Corporation's system. (2) For five students, 1 application had the eligibility status of "Reduced" in the School Corporation's system as of July 18, 2022, which agreed to the income verification. However, the eligibility status was changed in the School Corporation's system to "Free" as of August 26, 2022. The lack of internal controls and noncompliance was isolated to 2022-2023. 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 245.6a states in part: ". . . (f) Verification procedures and assistance for households – . . . (7) Eligibility changes. Based on the verification activities, the local educational agency shall make appropriate modifications to the eligibility determinations made initially. The local educational agency must notify the household of any change. Households must be notified of any reduction in benefits in accordance with paragraph (j) of this section. Households with reduced benefits or that are longer eligible for free or reduced price meals must be notified of their right to reapply at any time with documentation of income or participation in one of the eligible programs in paragraph (a)(1) of this section. . . . (j) Adverse action. If verification activities fail to confirm eligibility for free or reduced price benefits or should the household fail to cooperate with verification efforts, the school or local educational agency shall reduce or terminate benefits, as applicable, as follows: Ten days advance notification shall be provided to households that are to receive a reduction or termination of benefits, prior to the actual reduction or termination. The first day of the 10 day advance notice period shall be the day the notice is sent. The notice shall advise the household of: (1) The change; (2) The reasons for the change; (3) Notification of the right to appeal and when the appeal must be filed to ensure continued benefits while awaiting a hearing and decision; (4) Instructions on how to appeal; and (5) The right to reapply at any time during the school year. The reasons for ineligibility shall be properly documented and retained on file at the local educational agency." 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, verifications for free and reduced price applications were not appropriately changed. 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 verifications for free and reduced price applications are appropriately changed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2023-002 Finding Subject: Child Nutrition Cluster - Verification of Free and Reduced Price Lunch Applications Summary of Finding: Management had not developed or implemented a system of internal control that would have ensured compliance with requirements related to the grant agreement and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number and Email Address: 765-564-2100, millera@delphi.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Food Service Director or Assistant will review the applications, the other will do a second review. The Food Service Director and Assistant sign each application that is verified to ensure all information is accurate and the eligibility status is correct in Skyward. If additional verification information is provided, it will be documented and recorded in the binder with the applications. Anticipated Completion Date: August 2024

FINDING 2023-003 Subject: Child Nutrition Cluster - Eligibility 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 Number and Year (or Other Identifying Number): FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness 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 eligibility determination of a child receiving meals. Any child enrolled in a participating school or summer camp, or attending a SFSP meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast 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. Children attending SFSP meal service sites receive their meals at no charge. 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 SNAP, 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 reviewing the on-line and paper application eligibility status and entering the information into the School Corporation's system (Skyward). There was no evidence of an oversight, review, or approval process to ensure that the income verification, calculations, and information entered into the Skyward system were accurate and the eligibility status was correct. In addition, the Food Service Director was responsible for generating and reviewing the Direct Certification Reports. There was no evidence of an oversight, review, or approval process to ensure that the Direct Certification Reports were generated and reviewed. The lack of internal controls was isolated to the fiscal year ended June 30, 2023. 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 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.

FINDING 2023-003 Finding Subject: Child Nutrition Cluster - Eligibility Summary of Finding: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Eligibility compliance requirements. The failure to establish an effective internal control system places the School Corporation at risk of noncompliance with the grant agreement and the Eligibility compliance requirements. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the Eligibility compliance requirements listed above. Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number and Email Address: 765-564-2100, millera@delphi.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Food Service Director or Assistant will enter online and paper applications, the other will review the entries compared to the applications, and both will sign off the applications. An additional selection will be added in Skyward to document which type of classification. A legend for the codes will be kept in the front of the binder where the applications are kept for reference. Anticipated Completion Date: August 2024

FINDING 2021-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID 19 - School Breakfast Program, National School Lunch Program, COVID 19 - 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 2020, FY 2021 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Program Income, Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report related to Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP). The prior audit finding number was 2019-005. Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Program Income and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. Program Income The School Corporation had not designed and implemented a system of internal control over program income. Transfers were made from the Prepaid School Lunch Accounts fund to the School Lunch fund without an oversight or review to ensure the accuracy of the amount transferred. Additionally, there was no evidence that the School Board approved meal prices during the audit period. Special Test and Provisions - Verification of Free and Reduced Price Applications (NSLP) The School Corporation had not designed or implemented a system of internal control to ensure that the verifications of Free and Reduced Price Applications were accurately completed. One employee selected and verified the required sample of approved free and reduced-price applications without an oversight, review, or approval process. 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 Management had not developed or implemented a system of internal control that would have ensured compliance with requirements related to the grant agreement and the Program Income and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. Effect The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Program Income and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control related to the grant agreement and the Program Income and Special Tests and Provisions - Verification of Free and Reduced Price Applications (NSLP) compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2021-002(Auditor Assigned Reference Number) Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number: 765-564-2100 Views of Responsible Official: We agree with the repeat finding identified. Description of Corrective Action Plan: The Food Service Director will be responsible for sending over the meal prices before each school year to the Corporation Secretary for board approval .Each month the cafeteria director will provide the corporation treasurer with monthly sales activity reports and the amounts to transfer to the appropriate fund, and initial. The corporation treasurer will complete the transfer and send a Fund Transfer report for the Food Service Director to print initial and retain the reports. Special Test and Provisions ? Verification of Free and Reduced Price Applications (NSLP) The School Corporation will publish and adhere to eligibility criteria. The Food Service Director or Assistant do an initial review of free and reduced applications to ensure eligibility determinations are accurate. Whomever did not do the initial review, provides secondary verification of both the paper application and the computer entry for every 10th application. Both the Food Service Director and Assistant Food Service director initial applications as evidence of the dual control and they also do the verification at the end of the year. Anticipated Completion Date: May 2022

2019-005

FINDING 2019-004 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program CFDA Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): FY2019 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement. The School Corporation did not have effective controls in place to ensure the accuracy of the information entered into the school lunch software from paper applications for free and reduced price meals. Of the applications tested, there were three instances of incorrect income and status determinations made by the School Corporation. Paper applications tested were initialed by the Food Service Director and a second individual to evidence review of the application; however, this control was not effective and did not prevent errors from occurring. The lack of controls and the 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). . . ." 7 CFR 245.3 states: "(a) Each State agency, or FNSRO where applicable, shall by July 1 of each year announce family-size income standards to be used by local educational agencies, as defined in ? 245.2, under the jurisdiction of such State agency, or FNSRO where applicable, in making eligibility determinations for free or reduced price meals and for free milk. Such family size income standards for free and reduced price meals and for free milk shall be in accordance with Income Eligibility Guidelines published by the Department by notice in the Federal Register. (b) Each participating local educational agency and all participating schools under its jurisdiction must adhere to the eligibility criteria specified in this part. Local educational agencies must include these eligibility criteria in their policy statement as required under ? 245.10 and it must be publicly announced in accordance with the provisions of ? 245.5. Additionally, each State agency, or FNSRO where applicable, must require that local educational agencies accept as income eligible for free meals and free milk, children who are categorically eligible for those benefits based on documentation of eligibility, as specified in ? 245.6 (b). (c) Each School Food Authority shall serve free and reduced price meals or free milk in the respective programs to children eligible under its eligibility criteria. When a child is not a member of a family (as defined in ? 245.2), the child shall be considered a family of one. In any school which participates in more than one of the child nutrition programs, eligibility shall be applied uniformly so that eligible children receive the same benefits in each program. If a child transfers from one school to another school under the jurisdiction of the same School Food Authority, his eligibility for free or reduced price meals or for free milk, if previously established, shall be transferred to, and honored by, the receiving school if it participates in the National School Lunch Program, School Breakfast Program, Special Milk Program and the School Food Authority has elected to provide free milk, or is a commodity-only school." 7 CFR 245.6 states in part: ". . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in ? 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in ? 245.2, the children in that household must be approved for free or reduced price benefits, as applicable. . . ." Cause Management had not developed a system of internal control that would have ensured compliance with the Eligibility compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish controls to ensure compliance and comply with the grant agreement and the eligibility compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2019-004 Contact Person Responsible for Corrective Action: Andrea Miller Contact Phone Number: 765-564-2100 ext. 1002 Views of Responsible Official: We agree with the finding. Description of Corrective Action Plan: The School Corporation will publish and adhere to eligibility criteria. The Food Service Director or her Assistant do an initial review of free and reduced applications to ensure eligibility determinations are accurate. Whomever did not do the initial review, provides secondary verification of both the paper application and the computer entry. Both the Food Service Director and Assistant Food Service director initial applications as evidence of the dual control. Anticipated Completion Date: March 2020

GSA_MIGRATION

GSA_MIGRATION

2016-004

GSA_MIGRATION

GSA_MIGRATION