Finding Text
Criteria: In accordance with 7 CFR 210.14 and 7 CFR 220.7, School Food Authorities are required to maintain a nonprofit school food service account. All revenues received from food service operations and federal reimbursements must be retained and used only for the operation or improvement of the nonprofit school food service. Additionally, sound internal control practices and fund accounting principles require that food service funds be accounted for separately to ensure proper accountability, transparency, and compliance with federal program requirements. Condition: The District did not maintain a separate bank account for its Cafeteria Fund during fiscal year 2024. Instead, cafeteria-related receipts and disbursements were processed through the District’s General Fund bank account. As a result, cafeteria activity was commingled with General Fund activity rather than maintained separately. Cause: The District did not establish separate cash management procedures to ensure cafeteria fund activity was maintained in a separate bank account. This resulted from inadequate internal controls over fund segregation and cash management for the nonprofit school food service program. Effect: Failure to maintain a separate bank account for the Cafeteria Fund increases the risk that cafeteria funds may not be properly safeguarded, tracked, or used solely for allowable food service purposes. This condition may result in noncompliance with federal program requirements and reduces transparency and accountability over cafeteria fund operations. Questioned Costs: None Recommendation: We recommend that the District establish a separate bank account for its Cafeteria Fund to ensure that all food service revenues and expenditures are properly segregated and accounted for in accordance with federal regulations and sound internal control practices. The District should implement procedures to ensure cafeteria funds are used exclusively for allowable food service purposes and are properly monitored and reconciled. Views of Responsible Officials: Management is in agreement with the finding. Prior Year Finding: None