Dixie County District School BoardLocal Government

U.S. DEPARTMENT OF AGRICULTURE Finding Number: 2020-001 CFDA Numbers: 10.553, 10.555, 10.559 Program Title: Child Nutrition Cluster (CNC) Compliance Requirement: Allowable Costs/Cost Principles ? Indirect Costs Pass-Through Entity: Florida Department of Agriculture and Consumer Services (FDACS) Federal Grant/Contract Number and Grant Year: Contract # 18113 - 2020 Statistically Valid Sample: No Finding Type: Noncompliance and Questioned Costs Greater Than $25,000 Questioned Costs: $52,790 Prior Year Finding: Not Applicable Finding: The District charged indirect costs to the CNC for food expenditures, which is not an allowed cost objective for incurring indirect costs, resulting in questioned costs totaling $52,790. Criteria: Title 2, Part 200, Code of Federal Regulations, provides principles for determining allowable costs, including indirect costs that may be allocated to a Federal program. Indirect costs are costs that are incurred for a common or joint purpose, are not readily identified with a particular final cost objective without effort disproportionate to the results achieved and are calculated by multiplying allowed costs by an approved indirect cost rate. To require consistent indirect cost rate calculations and application of the rate to allowable CNC expenditures, the U.S. Department of Agriculture (USDA) published USDA Indirect Costs Guidance for State Agencies and School Food Authorities. The guidance provides that food expenditures are excluded when calculating the indirect cost rate and the indirect cost charges because the activities require minimal administrative support. Condition: For the 2019-20 fiscal year, the District correctly excluded food expenditures from the indirect cost rate calculation; however, the District inadvertently charged indirect costs for some food expenditures to the CNC. Cause: The District was not aware of the USDA guidance that all food expenditures should be excluded when calculating indirect cost charges. Effect: The District overcharged CNC for indirect costs and incurred questioned costs totaling $52,790. Recommendation: The District should enhance procedures to ensure that CNC indirect cost charges are accurately calculated and charged to the food service program. Such enhancements should include indirect cost training for personnel responsible for the CNC. In addition, the District should provide documentation to the grantor (FDACS) supporting the allowability of the questioned costs, totaling $52,790, or restore this amount to the CNC. District Response: A prior period adjustment journal entry has been completed by the district to restore these questioned costs to the food service program. In addition, procedures have been enhanced and the proper personnel trained to ensure that only allowable indirect cost charges are included in the indirect cost calculation for the food service program.