Federal Program Affected Federal Agency: U.S. Department of Agriculture Pass-Through Entity: California Department of Education (CDE) Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555 Compliance Requirement: A/B (Activities Allowed or Unallowed and Allowable Costs/Cost Principles) Criteria or Specific Requirements Per Title 2, Code of Federal Regulations, Subtitle A, Part 200, Subpart E, Section 200.403(a), in order for costs to be allowable under Federal awards, they must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430(i)(1)(vii), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. A semi-annual certification may be completed if 100% of an employee?s time if charged to one Federal award. Conditions The District did not have sufficient controls in place to ensure that expenditures charged to the Child Nutrition program were allowable in accordance with federal requirements. The District uses the program administrator?s signature on invoices to document the administrator?s approval to charge expenditures to specific accounts, including those for child nutrition funds. We noted the following: ? Three of 20 non-payroll items selected for allowability testing, in the amount of $6,421, did not have the food service director?s signature indicating approval of the expenditure. ? Two of 20 non-payroll expenditures, in the amount of $1,233, were not allowable for the child nutrition program. Both were for HVAC projects not related to food service facilities. ? One of 20 did not include an itemized receipt, in the amount of $95, which prevented us from determining if the expenditure was allowable. The District did not have sufficient controls in place to ensure that employees who were charged to Child Nutrition program completed time accounting documentation in accordance with federal requirements. The District was not able to provide time accounting documentation for one of 40 employees selected for testing. Questioned Costs There were no questioned costs associated with the identified condition. Context The condition was identified through inquiry with District personnel and through review of available supporting documentation. Effect The District has not complied with the requirements identified in Title 2, Code of Federal Regulations, Subtitle A, Part 200, Subpart E, Section 200.403(a) and Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430(i)(1)(vii). Cause The condition identified appears to have materialized due to the District?s lack of established procedures to ensure compliance with the requirements under Title 2, Code of Federal Regulations, Subtitle A, Part 200, Subpart E, Section 200.403(a) and Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430(i)(1)(vii). Repeat Finding No. Recommendation The District should review the requirements stated in Title 2, Code of Federal Regulations, Subtitle A, Part 200, Subpart E, Section 200.403(a) and Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430(i)(1)(vii) and implement a procedure to address the control deficiency currently identified with the District?s time accounting documentation as it relates to employees working on multiple activities or cost objectives.