Finding Text
2023-001 The District charged unallowable costs to the Supply Chain Assistance award of the Child Nutrition Cluster.
Assistance Listing Number and Title: 10.553 – School Breakfast Program
10.555 – National School Lunch Program
10.559 – Summer Food Service Program for Children
Federal Grantor Name: U.S. Department of Agriculture
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public Instruction
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $25,938
Prior Year Audit Finding: N/A
Background
The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program, National School Lunch Program and Summer Food Service Program for Children. These programs provide free or reduced-price meals to students from families with low incomes. In the 2022–23 school year, the District received $1,571,422 in federal funding, including $287,371 in Supply Chain Assistance awards, to administer these programs.
Federal regulations require school districts to comply with allowable uses of the funds. Specifically, for the Supply Chain Assistance awards, district must use funds exclusively to purchase domestic, unprocessed or minimally processed food products for the school meal programs.
Description of Condition
The District had adequate internal controls for ensuring it materially complied with activities allowed and allowable cost requirements. While the District had a process to track all food items it claimed under the Supply Chain Assistance award, our audit found the District charged unallowable and unsupported food items to the award.
Cause of Condition
The Supply Chain Assistance award was new for the Child Nutrition Cluster in the 2022–23 school year. The District did not perform sufficient monitoring and relied on one staff member to ensure allowable costs were applied to the program. Staff were unfamiliar with the restrictive requirements for the award and claimed all food-related expenditures as allowable.
Effect of Condition and Questioned Costs
We determined the District received reimbursement for 17 unallowed food purchases of processed food products totaling $25,938. We are questioning these costs.
Federal regulations require the Office of the Washington State Auditor to report known questioned costs that are more than $25,000 for each type of compliance requirement. Failure to comply with federal requirements may jeopardize the District’s eligibility for future federal assistance.
Recommendation
We recommend the District monitor to ensure staff understand program requirements and only charge allowable costs to federal programs in compliance with federal allowable cost requirements.
District’s Response
The district concurs with the auditors regarding claiming processed items under the Supply Chain Assistance award. Although the district was aware of the restrictions on this award and sought input from others regarding the allowability of the claimed items, there were several processed food products that slipped into the final claim. The disallowed items cost a total of $25,938. The district had an additional list of fruits and vegetables for 2022-23 totaling $75,059.71 that were not included in the original claim, an amount far exceeding the disallowed total.
For 2023-24, the district has made multiple checks for processed vs unprocessed foods claimed in the Supply Chain Assistance award. This includes multiple staff reviewing the claimed items and cross-checking against the 2022-23 claim. All items deemed processed have been removed from the2023-24 claim.
Auditor’s Remarks
We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs.
Office of Superintendent of Public Instruction (OSPI) Bulletin 029-22, Child Nutrition Services, establishes requirements for allowable use of Supply Chain Assistance funds.