Finding No.: 2025-004 – Reporting Identification of the federal program: Federal Agency: U.S. Department of Agriculture AL No. and Title: 10.555 Child Nutrition Cluster Federal Award No.: 7GU300GUB Criteria or specific requirement (including statutory, regulatory or other citation): 7 CFR 226.7(d) states: Each State agency shall also submit to FNS a quarterly Financial Status Report (FNS-777) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred. Further, financial reports should be traceable to accounting records that support the audited financial statements and the Schedule of Expenditures of Federal Awards. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). 2 CFR Appendix-A-to-Part-170(a)(1) states: (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. Conditions: 1. We noted variances between the expenditures reported in Financial Status Report FNS 777 Quarter 1 Report against the underlying accounting records as summarized below: FY25 QTR 1 (10/01/24 - 12/30/24) Total per Expenditure Details Over (Under) Reported variance STATUS OF FUNDS PROGRAMS/FUNCTIONS/ACTIVITIES Total outlays this report period $2,344,464 $5,350,607 ($3,006,143) Less: Program income credits - - - Net outlays this report period (Line b minus line c) 2,344,464 5,350,607 ( 3,006,143) Net outlays to date (Line a plus line d) 2,344,464 5,350,607 (3,006,143) Less: Non-Federal Share of outlays - - - Total Federal share of outlays (Line e minus line f) 2,344,464 5,350,607 (3,006,143) Total unliquidated obligations 3,107,529 1,669,399 1,438,130 Less: Non-Federal Share of unliquidated obligations shown on line h - - - Federal share of unliquidated obligations 3,107,529 1,669,399 1,438,130 Total Federal share of outlays and unliquidated obligations 5,451,993 7,020,006 (1,568,013) Total cumulative amount of Federal fund authorized 3,967,521 3,950,885 16,636 Unobligated balance of Federal funds ($1,484,472) ($3,069,121) $ 1,584,649 2. We noted variances between the expenditures reported in Financial Status Report FNS 777 Quarter 3 Report against the underlying accounting records as summarized below: FY25 QTR 3 (04/01/25 - 06/30/25) Total per Expenditure Details Over (Under) Reported variance STATUS OF FUNDS PROGRAMS/FUNCTIONS/ACTIVITIES Net outlays previously reported $ 9,643,180 $11,537,658 ($1,894,478) Total outlays this report period 1,510,303 3,264,946 ( 1,754,643) Less: Program income credits - - - Net outlays this report period (Line b minus line c) 1,510,303 3,264,946 ( 1,754,643) Net outlays to date (Line a plus line d) 11,153,483 14,802,604 ( 3,649,121) Less: Non-Federal Share of outlays - - - Total Federal share of outlays (Line e minus line f) 11,153,483 14,802,604 ( 3,649,121) Total unliquidated obligations 3,459,149 3,277,821 181,328 Less: Non-Federal Share of unliquidated obligations shown on line h - - - Federal share of unliquidated obligations 3,459,149 3,277,821 181,328 Conditions, continued: FY25 QTR 3 (04/01/25 - 06/30/25) Total per Expenditure Details Over (Under) Reported variance Total Federal share of outlays and unliquidated obligations 14,612,632 18,080,425 (3,467,793) Total cumulative amount of Federal fund authorized 15,910,166 15,871,080 39,086 Unobligated balance of Federal funds $ 1,297,534 ($ 2,209,345) $ 3,506,879 3. Subawards are not reported in FSRS, as follows: Transactions Tested Subaward Not Reported Dollar Amount of Tested Transactions Subaward Not Reported 3 3 $744,643 $744,643 Cause: GDOE did not enforce controls over compliance with the applicable reporting requirement relative to Financial Status Report FNS 777. Moreover, GDOE lacks controls over compliance with applicable reporting requirements relative to Federal Funding Accountability and Transparency Act. Effect or Potential Effect: GDOE is in noncompliance with applicable reporting requirements. Questioned Costs: Not applicable. No questioned cost is presented as the non-compliance was related to reporting requirements. Context: We identified four quarterly FNS-777 Financial Status Reports required to be submitted during the year. We tested two quarterly reports. The samples were statistically valid. Variances between the expenditures reported and underlying accounting records were noted for all two quarterly reports tested. Moreover, for all 3 (or 100%) subawards tested, subawards are not reported in FSRS. Identification as a repeat finding, if applicable: 2024-004 Recommendation: Responsible personnel should implement controls over compliance with applicable reporting requirements relative to submitting accurate reporting of FNS-777. Moreover, GDOE should establish controls over compliance with applicable reporting requirements relative to Federal Funding Accountability and Transparency Act. Views of Responsible Officials: GDOE agrees with the finding and provides details in its Corrective Action Plan.