Finding Text
50000 – Child Nutrition Cluster – Indirect Costs (Significant Deficiency in Internal Controls Over Compliance, Noncompliance)
Federal Agency: U.S. Department of Agriculture
Pass-Through Entity: California Department of Education
Program Name: Child Nutrition Cluster
Federal Financial Assistance Listing: 10.553, 10.555, 10.582
Compliance Requirement: A/B – Allowed or Unallowed & Allowable Costs/Cost Principles
Type of Finding: Significant deficiency and noncompliance
Criteria or Specific Requirements
The United States Department of Education has approved a delegation agreement with the California Department of Education (CDE) that authorizes the CDE to establish indirect cost rates for California local education agencies (LEAs). The CDE has been delegated authority to calculate and approve indirect cost rates annually for LEAs. For the Child Nutrition Cluster in fiscal year 2023-2024, California Education Code Section 38101(c) limits school district indirect costs to the lesser of the District’s individual CDE approved indirect cost rate or the statewide average
indirect rate.
Condition
The District charged unallowable indirect costs totaling $67,037 to the Child Nutrition Cluster.
Cause
The condition identified appears to be due to the District not properly excluding food costs when performing the indirect costs calculations for the federal program.
Effect
The District has charged unallowable expenditures to the federal programs.
Questioned Costs
The condition identified above resulted in $67,037 of questioned costs for unallowable indirect costs charged to the grant funds.
Context/Sampling
The condition was identified through recalculation of the indirect costs charged to the federal programs.
Repeat Finding
No.
Recommendation
It is recommended that the District implements a review process for indirect costs, which should include review of relevant grant agreements and relevant federal guidance.