Audit 345655

Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: National School Lunch Program FAL Number: 10.555 & 10.553 Passthrough: N/A Award Year: 2024 Criteria: Title 2 Subtitle A Chapter II Part 200 Section 200.405 Allocable Costs (a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. (b) Allocation of indirect costs. All activities which benefit from the recipient's or subrecipient's indirect cost, including unallowable activities and donated services by the recipient or subrecipient or third parties, will receive an appropriate allocation of indirect costs. (c) Limitation on charging certain allocable costs to other Federal awards. A cost allocable to a particular Federal award may not be charged to other Federal awards (for example, to overcome fund deficiencies or to avoid restrictions imposed by Federal statutes, regulations, or the terms and conditions of the Federal awards). However, this prohibition would not preclude the recipient or subrecipient from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards. (d) Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit However, when those proportions cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (c), the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or other capital asset involved, when no longer needed for the purpose for which it was originally required. See also §§ 200.310 through 200.316 and 200.439. Condition: During our review of national school lunch payroll, we identified the following issues:  The District used school lunch funds to pay the payroll of an employee who was not working in the program. The employee worked in transportation and accounts payable. Questioned Costs: $59,074.56. This is the amount of school lunch program funds which were paid to the employee. We did not identify any other employees who were not legitimate employees of the school lunch program. Cause: The District did not ensure the funds expended were related to the national school lunch program. Effect: The District is not in compliance with Federal regulations related to internal control procedures and compliance requirements in relation to the grant and could put funding in jeopardy or require the District to reimburse the program. Auditor’s Recommendation: We recommend that all expenditures from the Food Service funds be related to food service. Ensure that only employees in food service are paid out of the national school lunch program funds. Responsible official’s view:  Specific corrective action plan for the finding: This was the result of an error in changing a employee’s position from one department to another. Moving forward, the Human Resources Department will notify Payroll of any changes in position and will require TWO SIGNATURES prior to making any changes in pay coding.  Timeline for completion of corrective action plan: Immediately. This process has already been put in place.  Employee positions(s) responsible for meeting the timeline: Finance Director and Human Resources Director

Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: National School Lunch Program FAL Number: 10.555 & 10.553 Passthrough: N/A Award Year: 2024 Criteria: Title 2 Subtitle A Chapter II Part 200 Section 200.405 Allocable Costs (a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. (b) Allocation of indirect costs. All activities which benefit from the recipient's or subrecipient's indirect cost, including unallowable activities and donated services by the recipient or subrecipient or third parties, will receive an appropriate allocation of indirect costs. (c) Limitation on charging certain allocable costs to other Federal awards. A cost allocable to a particular Federal award may not be charged to other Federal awards (for example, to overcome fund deficiencies or to avoid restrictions imposed by Federal statutes, regulations, or the terms and conditions of the Federal awards). However, this prohibition would not preclude the recipient or subrecipient from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards. (d) Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit However, when those proportions cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (c), the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or other capital asset involved, when no longer needed for the purpose for which it was originally required. See also §§ 200.310 through 200.316 and 200.439. Condition: During our review of national school lunch payroll, we identified the following issues:  The District used school lunch funds to pay the payroll of an employee who was not working in the program. The employee worked in transportation and accounts payable. Questioned Costs: $59,074.56. This is the amount of school lunch program funds which were paid to the employee. We did not identify any other employees who were not legitimate employees of the school lunch program. Cause: The District did not ensure the funds expended were related to the national school lunch program. Effect: The District is not in compliance with Federal regulations related to internal control procedures and compliance requirements in relation to the grant and could put funding in jeopardy or require the District to reimburse the program. Auditor’s Recommendation: We recommend that all expenditures from the Food Service funds be related to food service. Ensure that only employees in food service are paid out of the national school lunch program funds. Responsible official’s view:  Specific corrective action plan for the finding: This was the result of an error in changing a employee’s position from one department to another. Moving forward, the Human Resources Department will notify Payroll of any changes in position and will require TWO SIGNATURES prior to making any changes in pay coding.  Timeline for completion of corrective action plan: Immediately. This process has already been put in place.  Employee positions(s) responsible for meeting the timeline: Finance Director and Human Resources Director