Finding Text
U.S. Department of Agriculture Pass-Through Iowa Department of Education Child Nutrition Cluster Programs: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.555 National School Lunch Program-Supply Chain Assistance 10.555 Commodities -DOD (Noncash) 10.555 Commodities (Noncash) Federal Award Year: 2025 Finding: The District overcharged indirect costs to the Child Nutrition Cluster Program. Criteria: The 2 Code of Federal Regulation (CFR) Part 200, Subpart E provides guidance on the provisions of indirect costs. Indirect cost rates are applied to modified total direct costs (MTDC). 2 CFR 200 defines MTDC as: All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. On November 19, 2024, the Iowa Department of Education issued guidance for applying the indirect cost rate to nutrition programs. The guidance specifically states the calculation is applied to the lower of total federal revenue that allows indirect cost recovery or total MTDC. Condition: The District applied the indirect cost rate to an estimated amount derived from a mixture of the total direct revenue base and the total direct expenditure base. Cause: The District did not use new state provided guidance and templates when calculating the indirect costs. Effect: The District could overcharge federal awards for indirect costs. Questioned costs: The District overcharged the program approximately $6,200 computed by applying the unrestricted indirect cost rate provided by the Iowa Department of Education to the lower of total federal revenue or MTDC.. Context: The overcharge represents less than one percent of the program revenue base and of the total program expenditures on the Schedule of Expenditures of Federal Awards. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District annually prepare the indirect cost worksheet based on current state guidance and templates. Response and Corrective Action Plan: The District will annually prepare the indirect cost charged to the program based on current state guidance and templates.