Finding Text
Federal Program: Child Nutrition Cluster (Assistance Listing Numbers 10.555 and 10.553) Compliance Requirement: Special tests and Provisions – Nonprofit School Food Service Account Type of Finding: Noncompliance Criteria Federal regulations require that a nonprofit school food service account operate on a nonprofit basis. In accordance with 7 CFR 210.14(b), net cash resources may not exceed three months of average expenditures unless the school food authority obtains approval from the state agency to maintain net cash resources in excess of allowable limits. Condition At June 30, 2025, the School reported net cash resources in excess of three months of average expenditures and had not obtained approval from the state agency to maintain the excess as of the date of this report. The state agency requested submission of a plan to reduce the excess; however, the plan had not been submitted. Cause The School did not have procedures in place to ensure required follow-up actions were completed after state review of the statement of financial performance. Turnover in personnel and lack of clearly defined roles and responsibilities contributed to the required actions not being completed. Effect Failure to submit a plan and obtain state agency approval to maintain excess net cash resources resulted in noncompliance with requirements related to the nonprofit operation of the food service program. Questioned Costs There are no questioned costs related to this finding. Recommendation We recommend that the School prepare and submit a plan to the state agency to address excess net cash resources and obtain the required approval. Additionally, the School should implement procedures to monitor net cash resource limits and ensure timely completion of required follow-up actions. Views of Responsible Officials Management acknowledges the finding related to net cash resources exceeding allowable limits. Management is in the process of addressing this matter and has developed a corrective action plan to ensure compliance with program requirements. See the Corrective Action Plan for additional details.