Finding Text
Finding Number: 2024‐001
Repeat Finding: No
Program Name/Assistance Listing Title: 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: $609,000
Type of Finding: Noncompliance, Significant Deficiency
Compliance Requirement: Allowable Costs/Cost Principles
Criteria
According to the Memo SP60‐2016, Indirect Costs Guidance for State Agencies and School Food
Authorities, issued by the United States Department of Agriculture (USDA), a District may recover
indirect costs of services rendered to school food service at a total value not to exceed $25,000 for
contracted expenses.
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 $609,000 were overcharged to the Child Nutrition Cluster program.
Context
When recording indirect costs, the District did not charge the maximum allowable amount of $25,000
for contracted expenses. Therefore, the District overcharged $609,000 to the Child Nutrition Cluster
program as reported in the Food Service Fund.
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.
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