Audit of the Department of Education’s Inventory Controls Over the School Lunch Program

The Office of the Virgin Islands Inspector General has issued the audit of the Department of Education’s (Education) inventory controls over the School Lunch Program. The audit objectives were to determine if Education: (i) administered its inventory systems for the School Lunch Program in accordance with established criteria; and, (ii) had controls in place to effectively safeguard and monitor School Lunch Program inventories. We found that Education officials did not adequately administer and manage the School Lunch Program inventory systems in accordance with established criteria and best practices. In addition, they did not adequately implement proper internal controls and safeguards to protect the inventory from the risk of loss due to fraud, theft, or negligence. Although there were some recent changes in the administration and management of the School Lunch Program, significant deficiencies still exist. Specifically, the audit found that Education officials: (i) did not maintain complete, accurate, consistent and current records of the receipt, distribution, and warehousing of inventory; (ii) modified or adjusted inventory records without proper or written justification; (iii) were negligent in securing and accounting for inventory received, delivered, stored, and/or used at district warehouses and schools; (iv) did not always conduct monthly and annual inventory reconciliations as required; (v) did not properly segregate warehouse duties; (vi) did not ensure that schools’ inventory management practices in the districts were uniform and consistent with federal and state requirements; (vii) used a system for ordering food items and planning cycle menus that was ineffective and inefficient; (viii) did not implement key recommendations made by a management and consulting firm; (ix) did not ensure the timely and complete installation and implementation of food service management software; (x) did not ensure that warehouse and school personnel had been given sufficient training to use the software; and, (xi) have failed at all levels of the department in their responsibility to ensure that the School Lunch Program was functioning in an efficient and effective manner. As a result: (i) Education officials did not accurately know the actual total values and quantities of inventory on hand as of specific times; (ii) School Lunch Program inventory was susceptible to the risk of loss due to negligence or unauthorized use; (iii) Education officials could not properly forecast and plan the ordering of food items to meet monthly cycle menu requirements; (iv) students participating in the School Lunch Program may not have been receiving meals with the nutritional value and requirements specified by the federal government; (v) Education officials expended more than $920,000 for consulting services and food management software and have not aggressively resolved issues to improve School Lunch Program operations; and, (vi) an inefficient and ineffective School Lunch Program has continued for decades, and unless significant improvements are made, the School Lunch Program will continue to be susceptible to fraud, waste and abuse. To view the report, click here.