Finding Text
Significant Deficiency
Other Noncompliance
Program: Assistance Listing: 10.553/10.555 – Child Nutrition Cluster
Assistance Listing: 84.425D – Elementary and Secondary School Emergency Relief Fund
(ESSER II)
Repeat Finding: No
Criteria: 2 CFR 200.303 requires that a non-federal entity establish, document and maintain effective
internal control over a federal award that provides reasonable assurance that the non-federal
entity is managing the federal award in compliance with federal statues, regulations, and the
terms and conditions of the federal award. These internal controls should align with the
guidance in “Standards for Internal Control in the Federal Government” issued by the
Comptroller General of the United States or the “Internal Control-Integrated Framework” issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
7 CFR 210.14(g) also requires school food authorities to follow fair and consistent
methodologies to identify and allocate allowable indirect costs to the nonprofit school food
service account, in accordance with 2 CFR part 200 as implemented by 2 CFR part 400.
Condition: Our procedures indicate that the District’s internal control system is inadequate for ensuring that
indirect costs charged to various federal grant programs are adequately documented and
accurately calculated. Specifically:
Child Nutrition Cluster: The District could not provide documentation of its calculation to
support the $25,000 per quarter requested as reimbursement for indirect costs.
Elementary and Secondary School Emergency Relief (ESSER II): The District used an
indirect cost rate from a prior year to calculate indirect costs charged to the ESSER II
program which resulted in an overcharge of $68,829.
Our procedures indicate that the District’s internal control system is insufficient to ensure that
the indirect cost charged to the program is accurately calculated and based on calculations that
meet the requirements outlined in Sections 2 CFR 200.303, 2 CFR 200.414 and Appendix VII to
Part 200.
Context/
Perspective: This finding arises from our audit procedures on internal control, where attempted to obtain
documentation of the District's calculation and subsequent approval of reimbursement for
indirect costs as well as other procedures performed by us recalculating indirect costs charged to
certain federal grant programs.
Cause: The District lacks the necessary internal controls to ensure that requests for reimbursement of
indirect costs are accurately calculated, properly documented and approved by the appropriate
director.
Effect: The lack of adequate internal controls over the calculation of indirect cost reimbursement may
increase the risk of misappropriation or loss of public funds. It could also result in inappropriate
charges to the federal award, potentially leading to disallowed costs being applied to the
program.
Questioned
Costs: $68,829 (Elementary and Secondary School Emergency Relief II)
Recommendation: The District should implement stronger internal controls to ensure that indirect cost
reimbursements are accurately calculated, properly documented, and approved by the
appropriate federal grant program director.
Views of
Responsible
Officials: The Auditee’s Corrective Action Plan lists the District’s response to the findings.