KINGMAN UNIFIED SCHOOL DISTRICT NO.20

Finding Number 2021-002 CFDA Number 10.553, 10.555, 10.559 Program Title Child Nutrition Cluster Federal Agency U.S. Department of Agriculture Pass-Through Agency Arizona Department of Education Compliance Requirement C. Cash Management Finding Type Noncompliance, Significant Deficiency Questioned Costs N/A CONDITION The District exceeded the allowable cash balance for its nonprofit school food service program. The District had an available cash balance of $1,346,665 as of June 30, 2021, and total expenditures of $3,023,369 for fiscal year 2020-21. Per federal regulations, the District is limited to a cash balance not to exceed three months of average expenditures or $907,011, resulting in an excess cash balance of $439,654. CRITERIA Federal Regulation 7 CFR 210.14(b) provides: "Net cash resources. The school food authority shall limit its net cash resources to an amount that does not exceed three months average expenditures for its nonprofit school food service or such other amount as may be approved by the State agency in accordance with ?210.19(a)." CAUSE The District has accumulated excess balance due to the carry forward of revenues in excess of expenditures from prior years. Federal Regulation 7 CFR 210.14(b) provides: "In the event that net cash resources exceed 3 months' average expenditures for the school food authority's nonprofit school food service or such other amount as may be approved in accordance with this paragraph, the State agency may require the school food authority to reduce the price children are charged for lunches, in a manner that is consistent with the paid lunch equity provision in ?210.14(e) and corresponding FNS guidance, improve food quality or take other action designed to improve the nonprofit school food service. In the absence of any such action, the State agency shall make adjustments in the rate of reimbursement under the Program." EFFECT The District has an excess cash balance of $439,654 for its nonprofit school food service program as of June 30, 2021. RECOMMENDATION We recommend that the District establish proper monitoring procedures to ensure that the cash balance for the food service program does not exceed three months of average expenditures.

CORRECTIVE ACTION PLAN - FINDING 2021-002 We have prepared the accompanying corrective action plan as required by the standards applicable to financial audit contained in Government Auditing Standards and by the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). CFDA Number 10.553, 10.555, 10.559 Program Title Child Nutrition Cluster Federal Agency U.S. Department of Education Condition The District had $439,654 cash in excess of the federal limit in the food service fund as of the year ending June 30, 2021. Corrective Action Plan The district is reducing excess cash by replacing food service equipment and furniture district wide. With the help of the food service department, the district has a running expenditure capital replacement plan to keep excess cash below the threshold while refreshing the district?s food service infrastructure. The district will also make an indirect cost transfer and look to increase operational expenses to account for the excess cash issue, which is expected to continue. District Contact Ahron Sherman, Finance Director Completion Date June 30, 2022

2020-001

CONDITION The District exceeded the allowable cash balance for its nonprofit school food service program. The District had an available cash balance of $631,244 as of June 30, 2020, and total expenditures of $1,973,873 for fiscal year 2019-20. Per federal regulations, the District is limited to a cash balance not to exceed three months of average expenditures or $592,162, resulting in an excess cash balance of $39,082. CRITERIA Federal Regulation 7 CFR 210.14(b) provides: "Net cash resources. The school food authority shall limit its net cash resources to an amount that does not exceed three months average expenditures for its nonprofit school food service or such other amount as may be approved by the State agency in accordance with ?210.19(a)." CAUSE The District has accumulated excess balance due to the carry forward of revenues in excess of expenditures from prior years. Federal Regulation 7 CFR 210.14(b) provides: "In the event that net cash resources exceed 3 months' average expenditures for the school food authority's nonprofit school food service or such other amount as may be approved in accordance with this paragraph, the State agency may require the school food authority to reduce the price children are charged for lunches, in a manner that is consistent with the paid lunch equity provision in ?210.14(e) and corresponding FNS guidance, improve food quality or take other action designed to improve the nonprofit school food service. In the absence of any such action, the State agency shall make adjustments in the rate of reimbursement under the Program." EFFECT The District has an excess cash balance of $39,082 for its nonprofit school food service program as of June 30, 2020. RECOMMENDATION We recommend that the District establish proper monitoring procedures to ensure that the cash balance for the food service program does not exceed three months of average expenditures.

CORRECTIVE ACTION PLAN - FINDING 2020-001 We have prepared the accompanying corrective action plan as required by the standards applicable to financial audit contained in Government Auditing Standards and by the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). CFDA Number 10.553, 10.555, 10.559 Program Title Child Nutrition Cluster Federal Agency U.S. Department of Education Condition The District had $39,082 cash in excess of the federal limit in the food service fund as of the year ending June 30, 2020. Corrective Action Plan The District will decrease the excess cash by making an optional indirect cost transfer and/or an increase in expenditures for food services. District Contact Ahron Sherman, Finance Director