FAV - Healthy Hunger Free Kids Act of 2010 - Controls over Food Service Account Revenue

Published by the Department of Agriculture, Office of Inspector General on 2020-02-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

     United States Department of Agriculture

FAV—Healthy Hunger Free Kids Act
of 2010—Controls over Food
Service Account Revenue

Report 27026-0001-24
February 2020
                                               OFFICE OF INSPECTOR GENERAL
                              United States Department of Agriculture
                                    Office of Inspector General
                                     Washington, D.C. 20250

    DATE:         February 12, 2020

    NUMBER:       27026-0001-24

    TO:           Stanley McMichael
                  Associate Chief Financial Officer
                  Office of the Chief Financial Officer

    FROM:         Gil H. Harden
                  Assistant Inspector General for Audit

    SUBJECT:      FAV—Healthy Hunger-Free Kids Act of 2010—Controls over Food Service
                  Account Revenue

    The Office of Inspector General (OIG) completed a final action verification (FAV) of all four
    recommendations in our September 28, 2015 report, Healthy Hunger-Free Kids Act of 2010—
    Controls over Food Service Account Revenue (Audit Report 27601-0001-22). An FAV
    determines whether the final action documentation the agency provided to the Office of the
    Chief Financial Officer (OCFO) supports the agency’s management decision reached with
    OIG.1, 2 Our objective was to determine whether the documentation the Food and Nutrition
    Service (FNS) provided to OCFO was sufficient to close the recommendations made in Audit
    Report 27601-0001-22.

    In a memorandum dated July 5, 2018, OCFO reported to FNS that it closed all of the
    recommendations, and we concur with this decision.

  “Final action is the completion of all actions that management has concluded, in its management decision, are
necessary with respect to the finding and recommendations included in an audit report.” USDA OCFO, DR1720-
001, 6g(1), Audit Follow-up and Management Decision (Nov. 2, 2011).
  “Management decision is an agreement between agency management and OIG on the action(s) taken or to be taken
to address a finding and recommendations cited in an audit report. The management decision must include the
agreed-upon dollar amount affecting the recommendations and an estimated completion date unless all corrective
action is completed by the time agreement is reached.” USDA OCFO, DR1720-001, Audit Follow-up and
Management Decision, 6i, (Nov. 2, 2011).
Stanley McMichael                                                                                       2


Our report, Healthy Hunger-Free Kids Act of 2010—Controls over Food Service Account
Revenue,3 made four recommendations to provide reasonable assurance that school food
authorities (SFA) complied with the paid lunch equity and nonprogram foods revenue
requirements (Sections 205 and 206) of the Healthy, Hunger-Free Kids Act of 2010. In addition,
FNS needed to supply SFAs with updated guidance regarding indirect costs and needed to
establish a date for publishing the annual paid lunch price report.

OIG and FNS reached management decision on all four recommendations on September 28,
2015. A memorandum, dated September 30, 2015, detailed what FNS needed to implement in
order to achieve final action on all recommendations.

In accordance with Departmental Regulation 1720-001,4 OCFO has the responsibility to
determine final action for recommendations where OIG has agreed to management decision. As
such, OCFO evaluates agency-provided documentation to support planned corrective actions and
to determine if final action has occurred.

Scope and Methodology

The scope of this final action verification was limited to determining whether FNS’ plan of
action for all of the recommendations in the subject report was completed in accordance with the
management decisions reached on September 28, 2015. To accomplish our objective, we
reviewed documentation FNS submitted to OCFO. We did not perform internal control testing
or make site visits to determine whether the underlying deficiencies that were initially identified
had been corrected. In addition, we did not provide an opinion on the results of the
implementation or effectiveness of each recommendation. This FAV was conducted in
accordance with our internal guidance IG-7710, Nonaudit Work and Final Action Verification
Guidance and Procedures. As a result, this FAV was not conducted in accordance with
Generally Accepted Government Auditing Standards, issued by the Comptroller General of the
United States or the Quality Standards for Inspection and Evaluation, issued by the Council of
the Inspectors General for Integrity and Efficiency. However, before we performed the nonaudit
service, we determined that it would not impair our independence to perform audits, inspections,
attestation engagements, or any other future or ongoing reviews of the subject.

Results of the Final Action Verification

We determined that FNS provided sufficient documentation to OCFO to close the four
recommendations we made in our September 2015 audit report, Healthy Hunger-Free Kids Act
of 2010—Controls over Food Service Account Revenue. The table summarizes the action FNS
took with respect to each recommendation. We informed FNS officials of the results of this final
action verification.

  Audit Report 27601-0001-22, Healthy Hunger-Free Kids Act of 2010—Controls over Food Service Account
Revenue, Sept. 2015.
  USDA OCFO, DR 1720-001, 7d (1-9), Audit Follow-up and Management Decision (Nov 2, 2011).
Stanley McMichael                                                                                      3

Table 1. FNS’ Implemented Corrective Actions Sufficient to Achieve Final Action

         Recommendation                                     Action Taken
                                                            FNS provided the revised Resource
         Redesign controls to provide reasonable            Management Risk Indicator tool for
         assurance that SFAs comply with paid               identifying whether SFAs have properly
         lunch equity and nonprogram food revenue           used the PLE and NFR tools. On
         requirements. At a minimum, FNS should             July 29, 2016, FNS published the
         revise the Resource Management Risk                Administrative Reviews in the School
         Indicator Tool to include sufficient detail        Nutrition Program Final Rule, which
         for identifying whether SFAs have                  outlines changes that are expected to
         properly used the Paid Lunch Equity (PLE)          strengthen program integrity through a
         and Nonprogram Food Revenue (NFR)                  more robust, effective, and transparent
         tools.                                             process for monitoring school nutrition
                                                            program operations.
                                                            FNS announced a permanent change to
                                                            the reporting due date for the School
         Establish a date for publishing the annual         Food Authority Paid Lunch Report.
         paid lunch price report.                           These reports are now due to FNS on the
                                                            last operating day of January during the
                                                            school year.
                                                            FNS issued policy memo SP 10-2016
                                                            FNS-828 Paid Lunch Price-Report: New
                                                            Submission Date and Reporting
         Develop and implement controls to ensure
                                                            Template, on November 16, 2015. This
   3     the paid lunch price reports are complete
                                                            memorandum announced the permanent
         and submitted timely by State agencies.
                                                            change to the reporting due date to
                                                            facilitate more timely and accurate
                                                            FNS issued guidance on indirect costs on
         Provide updated guidance for indirect costs        September 30, 2016, through policy
         to SFAs.                                           memo SP 60-2016, Indirect Cost

cc: Director, Office of Internal Controls, Audits and Investigations, FNS
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