Toledo School District No. 237

2020-002 The District?s internal controls were inadequate for ensuring compliance with federal eligibility requirements for the School Breakfast and National School Lunch programs. CFDA Number and Title: 10.553 ? School Breakfast Program 10.555 ? National School Lunch Program 10.555 ? COVID-19 ? National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Background The District participates in the School Breakfast and National School Lunch programs, which provide funding for free and reduced-price meals for low-income students. Families must meet income guidelines to be eligible for these programs. During the school year, the District spent $300,947 in program funds. Federal regulations require awarded recipients to establish and implement internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The District lacked internal controls to ensure it only provided eligible students with free and reduced-priced meals. We found the District did not have in place a secondary review and approval of applications. Our audit found errors in how the District determined students? eligibility for free and reduced-priced meals. We consider this deficiency in internal controls to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition The District?s food service department did not adequately follow the Office of Superintendent of Public Instruction?s detailed guidance regarding eligibility, and did not perform a secondary review of applications to ensure students? eligibility was accurate and supported. Effect of Condition and Questioned Costs We tested 30 free and reduced-price meal applications. We found the District incorrectly determined eligibility for free and reduced-price meals, including the following: ? Income reported on three applications placed families above the free and reduced-price threshold; however, the District did not change the students? eligibility. ? The District was unable to provide support for its determination and approval for two applications. These errors resulted in the District receiving $1,925 in excess federal funds. Recommendation We recommend the District establish internal controls to: ? Provide food service staff training related to eligibility and determination ? Implement and document a secondary review of applications to determine students? eligibility for the program ? Maintain proper documentation for audit review District?s Response The District agrees with the information presented in the finding. As noted in the Cause of Condition, the Food Service Secretary did not adequately follow the OSPI guidance regarding eligibility and a secondary review of the applications to confirm eligibility was not performed. The District has scheduled Food Service training for the Food Service Secretary, Skyward Data Technician and the Business Manager to ensure all levels and mediums of applications are processed in accordance with OSPI Child Nutrition Service guidelines. A monthly review of all applications and Direct Cert Reports will be performed to ensure accurate reporting and eligibility of students with proper documentation. Since the issue was identified, the District has put in place a process for Food Service Application review and documentation. Auditor?s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 7 CFR Part 245, Section 245.6 ? Application, eligibility and certification of children for free and reduced price meals and free milk.