Finding Text
U.S. Department of Agriculture
Pass-Through Iowa Department of Education
Child Nutrition Cluster Programs:
10.553 School Breakfast Program
10.555 National School Lunch Program
10.555 National School Lunch Program-Supply Chain Assistance
10.555 Commodities -DOD (Noncash)
10.555 Commodities (Noncash)
10.559 Summer Food Service Program for Children
10.582 Fresh Fruit and Vegetable Program
Federal Award Year: 2024
Finding: The District overcharged indirect costs to the Child Nutrition program.
Criteria: The 2 Code of Federal Regulation (CFR) Part 200, Subpart E provides guidance on the
provisions of indirect costs. Indirect cost rates are applied to modified total direct costs (MTDC). 2
CFR 200 defines MTDC as:
All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel,
and up to the first $25,000 of each subaward (regardless of the period of performance of the
subawards under the award). MTDC excludes equipment, capital expenditures, charges for
patient care, rental costs, tuition remission, scholarships and fellowships, participant support
costs and the portion of each subaward in excess of $25,000. Other items may only be excluded
when necessary to avoid a serious inequity in the distribution of indirect costs, and with the
approval of the cognizant agency for indirect costs.
Condition: The District applied the indirect cost rate to an estimated modified total direct cost
allocation base that was significantly higher than the actual modified total direct cost allocation base.
Cause: The District prepared a calculation using an estimate based on the prior fiscal year June
expenditures in order to have a transfer amount approved by the Board prior to year-end.
Effect: The District could overcharge federal awards for indirect costs.
Questioned costs: The District overcharged the program approximately $49,000 computed by
applying the unrestricted indirect cost rate provided by the Iowa Department of Education to an
estimated modified total direct cost allocation base.
Context: The overcharge represents approximately 0.9 percent of the program modified total direct
cost allocation base and approximately 0.5 percent of the total program expenditures on the Schedule
of Expenditures of Federal Awards.
Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District annually prepare the indirect cost worksheet based on
the actual fiscal year trial balance to compute the modified total direct cost allocation base for all
federal awards to apply indirect cost rates.