FAC Explorer

Audit 358138

FY End
2024-06-30
Total Expended
$4.58M
Findings
8
Programs
12
Organization: Dequeen School District (AR)
Year: 2024 Accepted: 2025-06-05
Auditor: Arkansas Legislative Audit

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
563963 2024-001 Material Weakness - I
563964 2024-001 Material Weakness - I
563965 2024-001 Material Weakness - I
563966 2024-001 Material Weakness - I
1140405 2024-001 Material Weakness - I
1140406 2024-001 Material Weakness - I
1140407 2024-001 Material Weakness - I
1140408 2024-001 Material Weakness - I

Programs

ALN Program Spent Major Findings
84.010 Title I Grants to Local Educational Agencies $1.12M - 0
84.027 Special Education Grants to States $596,541 Yes 0
10.553 School Breakfast Program $427,405 Yes 1
84.011 Migrant Education State Grant Program $115,371 - 0
84.365 English Language Acquisition State Grants $83,754 - 0
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $82,565 - 0
84.424 Student Support and Academic Enrichment Program $71,468 - 0
84.358 Rural Education $59,860 - 0
10.579 Child Nutrition Discretionary Grants Limited Availability $49,391 - 0
10.555 National School Lunch Program $31,035 Yes 1
84.173 Special Education Preschool Grants $28,189 Yes 0
84.425 Covid-19 - Education Stabilization Fund $1,994 - 0

Contacts

Name Title Type
MH4NM9JM1C91 Kendra Icenhower Auditee
8705844312 Matt Fink, CPA Auditor
No contacts on file

Notes to SEFA

Title: Medicaid Funding (SEFA Note 4) Accounting Policies: Basis of Presentation (SEFA Note 1) - The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of DeQueen School District No. 17 (District) under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position or changes in financial position of the District. Summary of Significant Accounting Policies (SEFA Note 2) - Expenditures reported on the Schedule are reported on the regulatory basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The District has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance (SEFA Note 3) During the year ended June 30, 2024, the District received Medicaid funding of $132,012 from the Arkansas Department of Human Services. Such payments are not considered Federal awards expended, and therefore, are not included in the above Schedule.
Title: Nonmonetary Assistance (SEFA Notes 5 and 6) Accounting Policies: Basis of Presentation (SEFA Note 1) - The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of DeQueen School District No. 17 (District) under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position or changes in financial position of the District. Summary of Significant Accounting Policies (SEFA Note 2) - Expenditures reported on the Schedule are reported on the regulatory basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The District has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance (SEFA Note 3) Nonmonetary assistance is reported at the approximate value as provided by the U. S. Department of Defense through an agreement with the U. S. Department of Agriculture. Nonmonetary assistance is reported at the approximate value as provided by the Arkansas Department of Human Services.
Title: Federal ALN Not Available For Certain Program(s) (SEFA Note 7) Accounting Policies: Basis of Presentation (SEFA Note 1) - The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of DeQueen School District No. 17 (District) under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position or changes in financial position of the District. Summary of Significant Accounting Policies (SEFA Note 2) - Expenditures reported on the Schedule are reported on the regulatory basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The District has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance (SEFA Note 3) The Federal ALN was not available. An alternative identifying number was utilized.

Finding Details

Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.
Finding 2024-001
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 6701 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Procurement and Suspension and Debarment Criteria or specific requirement: In accordance with 7 CFR 210.21, School Food Authorities (SFA) must follow proper procurement procedures to ensure expenditures meet the requirements to be paid from the nonprofit school food service account and maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications in their contracts. The District entered into a cost reimbursable contract with a food service management company (FSMC) that included a provision allowing the FSMC to provide a loan for investment not to exceed $250,000. Additionally, 7 CFR 250.51 states that a food service management company (FSMC) must disclose and credit the SFA for the value of USDA donated foods and maintain records of all donated food received, used, or credited. Condition: A contract monitoring review conducted by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) revealed the District purchased equipment totaling $494,203, which exceeded the food service management company (FSMC) loan for investment limit outlined in the FSMC contract by $244,203. In January 2025, the District transferred $244,203 in operating funds to the food service account to reimburse the unallowable costs. In addition, FSMC invoices reviewed during the audit period did not disclose the value of USDA donated foods received and used in meal preparation. Cause: Lack of monitoring of the terms, conditions, and specifications of the FSMC contract. Additionally, the District did not establish procedures to ensure accurate tracking and reporting of USDA donated food usage and credits. Effect or potential effect: The District exceeded the contractual loan for investment limit and incurred unallowable costs in the nonprofit Child Nutrition account. In addition, the lack of tracking and crediting donated foods could potentially result in the District not receiving full credit from the FSMC for USDA donated food. Questioned costs: $244,203 Context: Results of a procurement review performed by DESE, CNU and review of the FSMC contract and monthly invoices. Identification as a repeat finding: No Recommendation: The District should implement stronger internal controls over FSMC contract monitoring, including regular reconciliation of equipment purchases against contract terms, and procedures to ensure all USDA donated food is tracked and credited on FSMC invoices. Views of responsible officials: The District has implemented controls to ensure that USDA donated food is tracked and credited on future FSMC invoices. The District made journal entries from Operating to cover the $244,203 that had been originally approved verbally by CNU. We then found out this was not an approved expense from Child Nutrition and corrected this expense.