School nutrition programs play a crucial role in providing meals to students. However, managing these programs involves tracking, financial reporting, and meeting audit requirements to ensure compliance with federal and state regulations. This article will explore key compliance and audit considerations for school nutrition programs.
Internal Controls and Compliance
Maintaining robust internal controls is essential for compliance. Organizations should establish strong internal controls to mitigate risks, ensuring compliance through systematic processes rather than relying on chance. Your auditors will conduct comprehensive sample tests to verify compliance with allowable costs, eligibility, and procurement procedures, including disbursements, payroll, and indirect cost calculations.
It is recommended to review your controls periodically to avoid surprises when your auditors conduct their tests. Additionally, keep detailed records of procedures, invoices, timesheets, meal counts, and other relevant documents to substantiate compliance.
Allowable Cost Principles
School districts must ensure funds are used solely for allowable operating and administrative costs. Consider the following:
- Direct Costs: Verify that the controls properly identify which costs are specifically related to the nutrition program. Auditors will test disbursements and payroll to confirm they are directly related to the program and not a component of indirect costs.
- Indirect Costs: Verify calculations and that transfers out of the food service fund comply with regulations.
Eligibility Requirements
Retaining proper documentation of eligibility determination and testing of eligibility are critical. Verify the accuracy of eligibility determinations and procedures during the annual certification/application process, and ensure accurate procedures for direct certification reports.
Procurement, Suspension, and Debarment
Adhere to purchasing policies aligned with federal compliance requirements. Your auditors will test policies and procedures for compliance, including disbursements.
Reporting
Accurate and timely reporting is crucial. Ensure accurate claims are submitted promptly for reimbursement requests, and ensure compliance with regulations to verify free and reduced-price applications.
Navigating Audit Findings
When audit findings occur, consider the following:
- Single Audit Report: Provides reports on financial statements, internal control over financial reporting, and compliance with major programs. A description of any material noncompliance, internal control deficiencies, or material weaknesses will be included within this report if the district is over the federal award threshold requiring a single audit.
- Corrective Action Plans: Lists management’s plans to address deficiencies, including explanations, responsible parties, and completion dates.
- Responding to MDE Requests: Proactively address requests from the Michigan Department of Education (MDE) if internal controls, policies, or procedures need to be updated or additional information is requested.
Annual Financial Reporting Requirements
Adhere to the following for annual financial reporting:
- Financial Information Database (FID): Local Education Agencies, Intermediate School Districts, and Public-School Academies must report using proper coding to avoid issues with submitting the FID.
- Consistent Method for Recording: Utilize the Michigan Public School Accounting Manual for consistent financial accounting.
Ensuring Successful Management of Your School Nutrition Programs
Managing the financial aspects of school nutrition programs can be complex but essential for compliance and program success. By maintaining robust internal controls, accurate documentation, and proactive responses to audit findings, districts can ensure the continued success of these vital programs.