Audit 394062

Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Ttile: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirements: Allowable Costs/Cost Principles Criteria According to the Memo SP 60‐2016‐Indirect Costs Guidance for State Agencies and School Food Authorities, issued by the United States Department of Agriculture (USDA), and 2 CFR Part 200, Subpart E, a District may recover indirect costs of services rendered to school food service at a rate not to exceed the unrestricted indirect cost rate approved by the Arizona Department of Education (ADE). The approved indirect cost rate is subject to change each fiscal year. Condition Indirect Cost Guidance for the Child Nutrition Program was not followed correctly. Cause The District was unaware of the limitations that were imposed on indirect cost charges to the Child Nutrition Program. Effect Indirect costs of $166,469 were overcharged to the Child Nutrition Cluster program. Context The sample was not intended to be, and was not, a statistically valid sample. The District charged the Child Nutrition Cluster program, reported in the Food Service Fund, $224,500 in indirect costs for the fiscal year, whereas the maximum allowable indirect costs was calculated at $58,031. The District has since corrected this error. Recommendation The District should ensure indirect costs are calculated in accordance with the formula set forth in the guidance issued by USDA. Views of Responsible Officials See Corrective Action Plan.