Finding 2025-002
significant deficiency
- Program
- CHILD NUTRITION CLUSTER (10.553, 10.555, 10.582); HEAD START CLUSTER (93.600)
- Compliance requirement
- Activities allowed or unallowed; Allowable costs/cost principles
- FAC record
- FY2025 audit on fac.gov
Finding text from the filing
Recommendation: To ensure compliance with federal cost principles and documentationrequirements, the District should take the following actions:1. Documentation Process: Implement a mandatory, documented process to ensure that allrequired semi-annual certifications (or monthly PARs, depending on the employee’s duties)for employees charging time to federal programs are completed, reviewed, and filed timely,in strict compliance with 2 CFR § 200.430.2. Cost Allocation Policy: Cease charging salaries deemed administrative (e.g., procurement,human resources, superintendent, CFO) directly to grants that receive an indirect costrecovery rate. These costs should be properly included in the indirect cost pool.
Condition: The District did not maintain adequate time and effort documentation as required byfederal regulations for employees charging time to federal programs. Two specific issues werenoted:1. Missing Certifications (Head Start): Employees charging 100% of their time to the HeadStart program lacked the required semi-annual certifications confirming their dedicatedeffort. Although a review of job titles and professional certificates suggested the chargeswere appropriate, the required federal documentation was missing.2. Improper Cost Allocation (Child Nutrition): A review identified that a portion of the salariesfor the chief financial officer and procurement director were charged to the Child NutritionProgram without proper time and effort documentation. Given the administrative nature ofthese positions, the costs should have been included in the District’s indirect cost pool ratherthan charged directly to the grant. These costs were subsequently moved to the generalfund as part of the audit process.
Cause: The underlying causes for these conditions include:1. Insufficient Internal Controls: Controls failed to ensure that required semi-annual time andeffort certifications were completed, collected, and reviewed for employees charging 100%of their time to federal programs.2. Misunderstanding of Cost Principles: District management lacked clarity regarding thedefinition and proper allocation of administrative salaries (indirect costs) versusprogrammatic salaries (direct costs) under the Uniform Guidance.
Effect: The failure to maintain required time and effort documentation places the associated costsat high risk of disallowance by the grantor agency, which could require the District to repay thefederal funds. The improper direct charging of the administrative chief financial officer andprocurement director salaries resulted in a misstatement of the Child Nutrition Program'sexpenditures and required an adjustment during the audit process to move the expenses to thegeneral fund.
Questioned Costs: No questioned costs as amounts charged to the Child Nutrition Program wereremoved, and all those charging time to Head Start had appropriate job descriptions and titles.
View of Responsible Officials: See Corrective Action Plan.
Criteria: Federal regulations, specifically 2 CFR § 200.430 (Compensation—Personal Services),require non-Federal entities to maintain personnel activity reports (PARs) or equivalentdocumentation, such as semi-annual certifications, for employees charging all or a portion of theirtime to federal awards. Furthermore, administrative costs that benefit multiple programs must beallocated through an approved indirect cost rate pursuant to 2 CFR § 200.416 (Cost AllocationPlans and Indirect Cost Proposals) and should not be directly charged to grants that receive indirectcost recovery unless specifically allowable and properly documented.
Programs: 93.600 – Head Start10.553/10.555/10.582 – Child Nutrition Cluster