Finding 498525 (2023-003)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2024-09-26

Audit: 321255

Organization: Big Apple Institute INC (NY)

Auditor: Kotulak & Company CPA PC

AI Summary

Core Issue: Food purchases for program and non-program use were not properly separated, leading to necessary journal corrections.
Impacted Requirements: CFR regulations mandate that program food purchases must be distinct from other food programs and non-funded refreshments.
Recommended Follow-Up: Ensure all non-program food purchases are on separate invoices and improve management oversight on program food approvals, using dedicated program bank accounts for payments.

Finding Text

CFDA 10.553 and 10.555—United States Department of Agriculture, NutritionCluster passed through the New York State Dept. of Education, Child Nutrition Administration Condition: Food purchasing for program and non-programmatic purposes was not appropriately segregated. Journal entries were required to correct for these errors. Criteria: According to CFR regulations, the purchasing of program food must be separated from both other food programs and non-funded school refreshments. Cause: Lack of proper scrutiny of the use of food purchases in relation to the menu requirements. Effect: While excess costs were not charged to the program, the error is indicative of deficiencies in the relation of program purchases to menu requirements. Perspective: Applicable to the Breakfast and Lunch programs. Auditor Recommendation: All purchases for non-program foods should be on separate invoices and management must be more careful in the approval process for program food purchases. All program foods should be paid for separately using program bank accounts. Reviews of Responsible Officials: Response per corrective action plan on page 25-26.

Corrective Action Plan

On behalf of the finding 23-03-the following changes will be implemented: The Food Program Directors will ensure that the separation of Food Purchases will be reinforced. 1) Establish a strict policy mandating that all program food purchases for the USDA Nutrition Cluster (Breakfast and Lunch programs/ CACFP) be processed separately from non-programmatic food purchases. 2) Implement a clear process where program-related food purchases are charged directly to the respective program bank accounts and non-programmatic items are billed separately to non-program accounts. 3) Require management to review and approve all food purchase orders before submission to vendors, ensuring that food intended for program use is properly categorized and separated from other purchases. 4) Ensure that only approved program foods are charged to the USDA Nutrition Cluster, with regular cross-checks against menu requirements. 5) Require separate invoices for non-programmatic food purchases to ensure clean and distinct accounting entries, minimizing the need for corrections through journal entries. The enforcement of the procedures for food purchases will be in effect starting October 2024.

Other Findings in this Audit

498526 2023-003

Significant Deficiency Repeat
1074967 2023-003

Significant Deficiency Repeat
1074968 2023-003

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
10.555	National School Lunch Program	$563,589
10.558	Child and Adult Care Food Program	$510,354
10.553	School Breakfast Program	$203,623
97.036	Disaster Grants - Public Assistance (presidentially Declared Disasters)	$26,130