Finding Text
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553, 10.555, AND 10.582 PASS-THROUGH NUMBER 7503 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Activities Allowed or Unallowed / Allowable Costs/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200, subpart E - Cost Principles, establishes principles for determining the allowable costs incurred by the District under federal awards. Such costs are to be necessary and reasonable for the performance of the federal award. Condition: During our tests of payroll and non-payroll expenditures, we identified $1,603 in unallowable costs paid from the Child Nutrition program. These unallowable costs were comprised of $1,353 that should have been paid from District operating and activity funds, $192 due to payroll overpayments, and $58 due to an overpayment of an invoice. In April 2026, the District paid $1,353 from operating and activity funds to the food service fund to reimburse a portion of the unallowable costs. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $1,603 were paid from the Child Nutrition program. Questioned costs: The amount of questioned costs was $1,603. Context: An examination of 2 Child Nutrition employees with payroll totaling $33,673 from a population of 11 employees with payroll totaling $141,447 and an examination of 11 Child Nutrition non-payroll expenditures totaling $25,622 from a population of 109 checks totaling $432,754. Our samples were not statistically valid. Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit for resolution regarding this matter and implement stronger internal controls over program expenditures Views of responsible officials: The District will implement proper control over program expenditures. Expenditures for other programs will be paid directly from those program funds, if possible.