Finding Text
U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Administrative Costs), 10.568 – Emergency Food Assistance Program (Administrative Costs) Award Number: 01576 Criteria or Specific Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principles – Costs charged to Federal awards must be necessary, reasonable, consistently treated, adequately documented, and allocable to the program in proportion to the benefits received. (2 CFR §200.403 and §200.405) Condition: During testing of administrative cost allocations for the Food Distribution Cluster, we identified an error in the entity’s allocation spreadsheet used to distribute administrative costs among Texas Emergency Food Assistance Program (TEFAP), Commodity Credit Corp (CCC)-funded TEFAP operations, and Commodity Supplemental Food Program (CSFP). This error caused TEFAP's share of administrative costs to be overstated by $188,459. Reimbursement requests for these overstated amounts were submitted between October and January. Although TEFAP reimbursement caps prevented any actual overpayment for the nine-month period, the early over‑allocation exhausted TEFAP funds sooner, leaving later allowable costs unreimbursed. Cause: A formula error in the allocation spreadsheet double-counted CCC amounts in the TEFAP base, inflating TEFAP’s percentage of shared administrative costs. Effect or Potential Effect: The error caused TEFAP to be assigned more in shared administrative costs than warranted by program benefit. Although reimbursement caps prevented an actual overpayment for the fiscal year, the misallocation exhausted TEFAP funds earlier, leaving later allowable costs unreimbursed. Without correction, the entity could continue to recognize TEFAP administrative and operational reimbursements earlier than warranted in future periods. Questioned Costs: Assistance Listing Number 10.568 – $188,459. Calculated difference between TEFAP funds billed versus actual allocated cost that should have been billed between October and January. Context: The allocation spreadsheet design error caused CCC amounts to be doublecounted in the TEFAP base, inflating TEFAP’s share of pooled administrative costs. Repeat Finding: No Recommendation: Correct the allocation methodology to ensure CCC amounts are not double-counted in TEFAP bases and that each program bears costs in proportion to benefit per 2 CFR §200.405. Implement a documented secondary review of the monthly allocation spreadsheet before posting. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and recommendation. While the misallocation resulted in overstated TEFAP administrative costs by $188,459, the program’s reimbursement cap and the entity’s actual incurred costs prevented any overbilling or excess Federal draw. See further information on the corrective action plan provided by management.