Audit 382083

2025-001 Recognition of Federal Program Revenue Program : Child and Adult Care Food Care Program (CACFP) AL#10.558 and Barrio Center CSPP Condition: During the review of operating cost allocations for the CACFP Barrio Childcare Center (Vendor # Q1180Z), it was noted that federal revenue recognized for CACFP was not supported by sufficient documentation of related operating costs. Revenue was recorded based on number of meals served for Barrio Childcare Center of $61,389 with corresponding expenses of $25,289. Criteria: Under 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, recipients must maintain adequate documentation to support costs charged to federal programs. Costs must be allowable, allocable, and reasonable under the terms and conditions of the award. Cause: The error was caused due to lack of formal cost allocation methodology for all the Organization’s Federal program. Effect: This condition resulted in questioned costs of approximately $36,100 as federal revenue may have been overstated or unsupported. This could lead to repayment obligations. Questioned Costs - $36,100 revenue not supported by eligible costs Recommendation: Management should prepare and conduct an annual review of a formal cost allocation plan to ensure all costs are allocated accurately and in compliance with federal requirements. The plan should clearly define allocation methodologies and ensure they are applied consistently across all programs. Further, we recommend management evaluate the design of internal controls over the revenue recognition process to ensure all federal revenue is matched with allowable and documented operating costs. Views of the responsible official and planned corrective action: Management concurs and provided a Corrective Action Plan which is included at the end of this report.