Nutritional Development ServicesNon-Profit

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2025-002 - Eligibility Federal Program: Child and Adult Care Food Program ALN: 10.558 Federal Agency: U.S. Department of Agriculture Pass-Through Entity: Pennsylvania Department of Education Criteria: Under 7 CFR 226.23(e), institutions must accurately determine and classify participant eligibility (Free, Reduced Price, or Paid) based on properly completed household income eligibility forms. Institutions must claim reimbursement based on the correct eligibility category. Condition: Our testing identified that NDS incorrectly submitted reimbursement information of certain program participants resulting in underclaiming of reimbursements. Although the incorrect reporting did not result in overpayments, the institution did not comply with the requirements under the federal program. Cause: Staff responsible for entering student eligibility information into the NDS database incorrectly coded participants as free, reduced price, or paid. Additionally, no review control exists to ensure that participant eligibility data is entered correctly. Effect: During our testing of participant eligibility, we noted that four out of 90 sampled participants were incorrectly submitted for reimbursement as “Reduced Price” when income documentation supported a “Free” eligibility classification. As a result, the institution claimed reimbursement at the reduced price rate rather than the higher free rate, resulting in lower reimbursement than what the institution was entitled to receive. There was no impact on participants’ access to or cost of meals, as participant eligibility was appropriately determined, and the misclassification did not result in the receipt of unallowable federal funds. Questioned Costs: Because the error resulted in lower reimbursements, there were no questioned costs, as defined under 2 CFR 200.1, identified as a result of this finding. Repeat Finding: No. Recommendation: We recommend that NDS reiterate the importance of eligibility classification and implement a periodic review of student eligibility information in the database to ensure accurate reimbursements. Views of Responsible Officials: Management has acknowledged the errors identified and has taken action to strengthen controls surrounding these processes.

SECTION III - FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS Finding 2022-001: Procurement Suspension & Debarment Federal Agency and Programs: AL numbers 10.553/10.555/10.556/10.558 U.S. Department of Education Child Nutrition Cluster and Child and Adult Care Program Award Period: July 1, 2021 ? June 30, 2022 Criteria: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. Condition and Context: Management had procurement policies in place in accordance with the Federal requirements as noted above, however, the entity did not follow these policies during the year ended June 30, 2022. Cause: While management has an established control in place to evaluate significant vendors, it was not followed in all instances due to employee turnover. Effect: Evaluation of vendors was not completed in all required instances. Questioned costs: None. Repeat Finding: No. Recommendation: While noncompliance was not identified, we recommend that management adheres consistently to its policies around the evaluation of all vendors to determine whether they are suspended or debarred before entering into covered transactions to mitigate the risk of noncompliance. Views of Responsible Officials: Management followed the procurement policies that were in place in circumstances where the vendor was determined to be significant relative to the operations of the entity, but they were not followed in all circumstances where required. Management will ensure the procurement policies in place are followed.