Kyrene Elementary School District No. 28

Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $609,000 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria According to the Memo SP60‐2016, Indirect Costs Guidance for State Agencies and School Food Authorities, issued by the United States Department of Agriculture (USDA), a District may recover indirect costs of services rendered to school food service at a total value not to exceed $25,000 for contracted expenses. Condition Indirect Cost Guidance for the Child Nutrition Program was not followed correctly. Cause The District was unaware of the limitations that were imposed on indirect cost charges to the Child Nutrition Program. Effect Indirect costs of $609,000 were overcharged to the Child Nutrition Cluster program. Context When recording indirect costs, the District did not charge the maximum allowable amount of $25,000 for contracted expenses. Therefore, the District overcharged $609,000 to the Child Nutrition Cluster program as reported in the Food Service Fund. Recommendation The District should ensure indirect costs are calculated in accordance with the formula set forth in the guidance issued by USDA. Views of Responsible Officials See Corrective Action Plan. Page 11