Finding Text
2024-001 Excess Food Service Fund Balance (Material Weakness) Federal Agency: U.S. Department of Agriculture Pass-through Agency: New Hampshire Department of Education Cluster/Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553 & 10.555 Passed-through Identification: N/A Compliance Requirement: Special Tests and Provisions Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School District, as a recipient of Federal funds, must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, under 7 CFR, 210.14(b), Net Cash Resources, “the school food authority shall limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service.” Condition: During review of the food service unassigned fund balance, it was noted that the balance exceeded three months’ average expenditures. The fund balance in the food service fund amounted to $392,995 whereas three months’ average expenditure was $202,689. This generates excess fund balance of $190,306. Effect: The School District is not in compliance with CFR Title 7, 210.14(b) by maintaining fund balance more than three months average expenditures. Cause: Management identified the excess net cash resources condition and developed a corrective action plan; however, implementation of the plan was still in progress at fiscal year-end, and net cash resources remained above the allowable limit. Questioned Costs: No questioned costs were identified, as the condition relates to excess net cash resources rather than unallowable or unsupported expenditures. Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat finding of 2023-004. Recommendation: We recommend that the School District take immediate steps to reduce its net cash resources by having an acceptable, approved plan for using surplus fund balance. Since program funds must be used only for program purposes, excess fund balance must be reduced by improving the quality of food served or purchasing needed supplies, services, or equipment unless otherwise directed by the State of New Hampshire Department of Education. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.