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FINANCIAL MANAGEMENT REPORT
District of Columbia Child Nutrition Programs

District of Columbia
Fiscal Year 2003
Special Nutrition Programs 
Financial Management Review

Table of Contents

Cover Letter
Executive Summary
Findings
Acronyms [not available online]
Definitions [not available online]

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August 15, 2003

AUG 21 2003

C. Vanessa Spinner
Director
Special Nutrition and Commodities 
State Education Office 
441 4th Street, NW, Suite 350N 
Washington, DC 20001-2714

Dear Ms. Spinner:

Enclosed is the report addressing the results of our Fiscal Year 2003 Financial Review of your agency's operation of the Special Nutrition Program. The report reflects eight (8) findings and recommended corrective actions. Our findings are discussed in detail in the body of the report.

Please review the enclosed report and provide us with a response within 60 days of this letter. Please do not hesitate to contact me or Howard Lockstein at (609) 259-5170 if you have any questions or concerns regarding the enclosed report.

Sincerely,
CATHERINE LUECK 
Regional Director 
Financial Management

cc: Dr. Cynthia Bell
Cassandra Johnson
R Freiler

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District of Columbia
Financial Review of the Special Nutrition Programs

June 2003

Executive Summary

During the week of June 2, 2003, Howard Lockstein and David Gagliardi of the Mid-Atlantic Region and Bill Jenkins of the Pittsburgh Field Office conducted a Financial Management Review of the District's Special Nutrition Programs. Reviewers examined documentation and conducted interviews with Budget and Accounting staff and Child Nutrition personnel. The review focused on the School Lunch Program (SLP), School Breakfast Program (SBP) Child and Adult Care Food Program (CACFP), State Administrative Expense (SAE) and the Annual Report of State Revenue Matching (FNS13) for school year 2003. We also reviewed procedures for reporting meal counts and estimated meal counts on the participation reports for the National School Lunch and School Breakfast Programs (FNS-10) and for the Child and Adult Care Food Program (FNS-44). The review was conducted at the State Education Office in the District of Columbia.

Enclosed are the findings and observations identified during the review. A finding is defined as an identification of non-compliance with program regulations, policies and procedures that will require corrective actions. An observation is the identification of .a weakness involving management practices or unregulated activities. We will provide suggestions to address these observations.

To summarize, the most significant review findings are: FNS-269 not reporting intradistrict transfers as outlays; allocation of costs for employees working on more than one program and supplies that were shared among programs were not adequately supported; FY 2002 claims were paid with FY 2003 funds; Child and Adult Food Care Program meal counts reported to FNS did not match the meal counts reported by . sponsors; claims lacked supporting documentation; payments to sponsors were misclassified and charged to the incorrect accounts; FY02 outlays and unliquidated obligations were not reported correctly.

The following report will describe in greater detail the above referenced findings and the required actions to be taken by the District of Columbia State Education Office.

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Finding 1

The State agency was not reporting all of their outlays on the quarterly SF-269 report. 

Background

While comparing the second quarter SF-269 to the State agencies accounting records, our reviewers noted that infra-district transfer of funds from the state agency to the District of Columbia Public Schools (DCPS) was not treated as an outlay at the-time of the transfer. State agency staff explained that the transfers are not considered to be outlays until the DCPS draws the funds from their account. This results in the appearance that the state agency is overdrawing funds.

Corrective Action

The intra-district transfers to the DCPS must be reported as an outlay at the time of the transfer from the state agency to the DCPS account. In response to this letter, please provide a description of the process used to report the infra-district transfers to the DCPS on the quarterly SF-269 reports.

Finding 2

Due to numerous payroll adjusting entries and lack of supporting documentation provided, reviewers were unable to verify salaries charged to SNP and TEFAP through the second quarter FY03. ii also appeared that two employees' salaries were charged twice under different accounts.

Background

Our reviewers were provided with a Year to Date Accrual Report as of the pay period ending 05/03/03. This report listed employees' year to date salary and fringe benefits amounts through 05/03/03 and the accounts to be charged. According to this report some employees' salaries and fringe benefits were to be divided between the SNP program and TEFAP. We were not able to obtain the basis for the percentages that were to be charged for each program at the time of the review.

Our reviewer's analysis also indicated that Diedre Bell's salary for pay periods October 5th through November 30th (salary $7,061.12, fringe $1,342_40) were charged twice, once under PBGD109B and charged again under PBGDO129. Lillie Tinsley's salary for pay periods October 19th through November 30th (salary $7,244.80, fringe $721.53) was also charged twice, once under PBGD109B and charged again under PBODOI29.

Corrective Action

In response to this letter, please verify that the two employees stated above have not been charged twice. In addition, please provide the method for allocating employees' salaries between programs and the justification for selecting the method.

Finding 3

No supporting documentation was provided for the allocation methodology used to allocate some SAE expenditures.

Background

Our reviewers traced a sample of reported second quarter FY03 SAE costs back to source documentation. We traced the $6,000.00 in Intra-District charges to SAE back to source documentation_.One was for a total telephone expenditure of $47,839.00, of which the SAE portion was determined to be $3,500.00. We arc unsure about the correct total amount and the allocation amount charged SAE. The second charge was for the SAE portion of financial services provided the agency through a memorandum of understanding. The portion of the charge allocated to SAE was 25% ($2,500.00).

We also traced a SAE charge of $13,135.00 to the source documentation. The charge was for a share of 19 computers purchased for a total cost of $60,125.60. Our reviewers were told that 13 staff members working for SNAC received one of these computers. However, SAE was charged approximately 25 % of the total.

Corrective Action

In response to this letter, please provide us with the method and the rationale for the process used to allocate costs to the SAE account.

Finding 4

FY02 claims for reimbursement were paid from the FY03 account and reported on the SF-269 as FY03 expenditures

Background

While comparing expenditures reported in the 2nd quarter SF-269 to support documents,. we discovered claims from the previous FY that were paid with current year funds. There were 15 CACFP claims totaling $33,937.96, and four NSLP claims totaling $25,010.50 that were charged to the FY 03 account but were FY 02 claims. CFR 3016.23(a) states where a funding period is specified, a grantee may charge to the award only costs resulting from obligations of the funding period unless carryover balances may be charged for costs resulting from obligations of the subsequent funding period. A list of these claims is attached to this letter.

Corrective Action

In response to this letter, please include the method to be used that will ensure that claims are charged to the proper fiscal year. In addition, all expenditures that were reported on the first and third quarter SF-269s for FY03 must be examined to ensure that claims from the previous fiscal year were not reported as paid in FY03. Please include in your response the results of this analysis.

Finding 5

The meal counts reported on the FNS 44 did not match the total meals reported by CACFP sponsors.

Background

Our reviewers compared the number of meals reported by sponsors for the month of December 2002 and compared them to the spreadsheet used to consolidate the meal counts to be reported on the FNS 44. It was noted that eight of the sponsor's meal counts were not recorded properly on the spreadsheet and two sponsors with valid claims on file were missing from the spreadsheet.

Corrective Action

In response to this letter, please submit a revised FNS 44 for the month of December, which accurately reflects the meal counts reported by all sponsors. Also, please review all other months by comparing the claims submitted by the sponsors to the numbers reported on the FNS 44 reports. If any discrepancies are found, revise the reports for those months as well. In addition, please provide to this office a description of the actions taken to prevent these errors occurring in the future.

Finding 6

One payment to a CACFP sponsor and two payments to NSLP sponsors did not have supporting documentation.

Background

During the review of claim payments, it was noted that the supporting claims for reimbursement were not on file for three of the payments. The following table lists the missing claims:

Payments missing support

Fiscal Year 2002 Claims Paid From FY 2003 Account

Corrective Action

In response to this letter, please submit copies of these claims for reimbursement.

Finding 7

Payments to sponsors were paid and reported under the wrong account.

Background

While comparing the payments made to the supporting documentation, our reviewers noted that four sponsor payments were made from the Cash in Lieu account but should have been under sponsor administration. Also one sponsor payment was made from the Cash in Lieu account but should have been from the CACFP Food account. The following table lists these payments:

Corrective Action

After making the accounting corrections, please include in your response how the correction was made to the most current SF-269 report.

Finding 8

The outlays reported on the final SF-269 for FY02 does not match the expenditures on the Vendor Payment List provided by the State agency.

Background

During the FY02 closeout process, the S/A appeared to be overdrawn by $97,024.01. In addition the maximum earnings did not coincide with the outlays plus unliquidated obligations by a large margin especially in the CACFP and SFSP categories. To help resolve these issues, our reviewers compared the expenditures in the S/A's accounting system to what was reported on the final FY02 SF-269. The following table shows the discrepancies that were found.

Corrective Action

The FY 02 expenditures must be reviewed and compared with supporting documentation. Once the review is complete a revised SF-269 must be submitted. Given the discrepancies between earnings and outlays, the closeout of FY02 indicating an overdraw of $97,024.0], and the review of FY03 showing discrepancies between sponsor's claims and payments, we suggest that a thorough review be performed of claims and payments and the reported expenditures for the entire FY02. In response to this letter please explain the procedure that will be used to perform this reconciliation or if this process was completed please submit the results.

Fiscal Year 2002 Claims Paid From FY 2003 Account