Finding 1230045 (2025-002)

2025 - 002 Internal Controls Related to Activities Allowed and Allowable Costs – Significant Deficiency Child and Adult Care Food Program Federal Agency – U.S. Department of Agriculture Federal Award Number – 10.558 Pass-Through Entity – State of Nevada Criteria: In accordance with the Uniform Guidance, the Organization is required to establish and maintain effective internal control over its federal awards that provide reasonable assurance that federal awards are managed in compliance with applicable federal statues, regulations, and the terms and conditions of the federal awards. Such controls should include an appropriate documented review and approval process over activities allowed and allowable costs allocated to each federal award. Condition: During the course of the audit, the engagement team noted that the Organization does not have a documented review and approval process to verify that costs included in the requests for reimbursement were appropriately allocated to the Child and Adult Care Food Program (CACFP) prior to submitting the request for reimbursement. Cause: Documentation of the review and approval of costs allocated to the CACFP is not retained. Effect: Without an effective review and approval control over the monthly reimbursement process, there is an increased risk that costs could be incorrectly allocated to the CACFP rather than another federal award or program and that such errors would not be identified and corrected prior to submission of the reimbursement request. No instances of noncompliance or questioned costs were identified as a result of our testing. Questioned Costs: None. Context: Controls over compliance were not operating effectively as it relates to this compliance requirement. Identification As A Repeat Finding: No. Recommendation: The Organization should develop a documented review and approval process over monthly CACFP reimbursement requests, including a review of the underlying costs and allocations to ensure amounts charged to the CACFP are appropriate and allowable prior to submission. View Of Responsible Officials: Management of the Organization concurs with the finding and will develop review and approval processes over activities allowed and allowable costs are it relates to the CACFP.