Cashmere School District No. 222

Cashmere School District No. 222 September 1, 2018 through August 31, 2019 2019-001 The District did not have adequate controls in place to ensure compliance with federal child nutrition program verification requirements. CFDA Number and Title: 10.555 ? National School Lunch Program 10.553 ? School Breakfast Program Federal Grantor Name: United States Department of Agriculture (USDA) Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Background During fiscal year 2019, the District received $375,929 in federal funding for the School Breakfast and National School Lunch programs. These programs provide funding for free and reduced-price meals for eligible low-income students whose households meet specific income requirements set by the U.S. Department of Agriculture. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Each year, the District must select a sample of household applications and verify that family income information reported to the District is correct. The Office of Superintendent of Public Instruction (OSPI) instructs school districts how to verify program eligibility, including the number of applications and how to sample the applications. The District must review selected applicants? income documentation and confirm students are receiving correct benefits of free or reduced-price meals. Otherwise, the student is not eligible and must pay for meals at full price. Description of Condition Though the District had a process in place to perform the annual verification process, internal controls were not sufficient to ensure that the District selected and verified the required sample. The District was required to perform verification for three applications using the 3 percent random sampling method. Under certain conditions, the District may replace up to 5 percent of applications selected. However, District staff responsible for the verification process discarded the entire first sample and selected other applications for verification. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The former Administrative Assistant responsible for the verification process did not know that discarding an entire sample was unallowable. Effect of Condition and Questioned Costs Because the District did not have effective internal controls over the verification process, it increases the risk that the District might have received funding for households that did not qualify for free or reduced-priced meals. Recommendation We recommend the District establish and follow internal controls and provide adequate oversight to confirm it completes the annual verification process following OSPI and federal guidelines. District?s Response The District identified the verification control issue and brought it to the attention of the Washington State Auditor?s Office. Prior to the annual audit, the District had already corrected the verification issue. The District has implemented internal controls to ensure proper verification procedures are followed. The District?s Business Manager will review annual verification samples to confirm correct sampling of household applications following OSPI and federal guidelines. Auditor?s Remarks We appreciate the District?s commitment to resolving the issues noted and will follow up during the 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. 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 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. Title 7 CFR, Part 245, Determining Eligibility For Free And Reduced Price Meals And Free Milk In Schools, Section 6a, Verification requirements sets forth the verification requirements for verifying edibility of children for free and reduced price meal benefits.

GLENN JOHNSON Superintendent CASHMERE SCHOOL DISTRICT NO. 222 210 South Division Street Cashmere, WA 98815- 1198 Phone: (509) 782-3355 Fax: (509) 782-4747 CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER UNIFORM GUIDANCE Cashmere School District No. 228 September 1, 2018 through August 31, 2019 This schedule presents the corrective action planned by the District for findings reported in this report in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Finding ref number: 2019-001 Finding caption: The District did not have adequate controls in place to ensure compliance with federal child nutrition program verification requirements. Name, address, and telephone of District contact person: Angela Allred, Business Manager 210 South Division Street Cashmere, WA 98815 (509) 782-3355 Corrective action the auditee plans to take in response to the finding: The District identified the verification control issue and has taken measures to correct it. The District is following the proper child nutrition program verification requirements by verifying and providing documentation for all families identified in the sample. Anticipated date to complete the corrective action: 10/1/2019