Policy Memo 107
DOH-CACFP: Number 107 (07/05); Supersedes Number 65 (02/02)
TO: For-Profit Sponsoring Institutions and Organizations
FROM: Jeanne Culver, State Director - Child and Adult Care Food Program
SUBJECT: Audit Procedures for For-Profit Sub-Recipients
DATE: July 26, 2005
New York State Department of Health Child and Adult Care Food Program (CACFP) is required to institute audit procedures for for-profit Sponsoring Organizations participating in CACFP. As per 7 CFR 3052.210(e), each State Agency has the authority to establish audit policy for Proprietary Title XIX and XX institutions with regard to the receipt of Federal funds.
To maintain continuity between the "non-profit" and "for-profit" institutions, CACFP has used the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, as a guide for establishing the audit policies with regard to for-profit Institutions and Sponsoring Organizations.
The audit policies and procedures for for-profit organizations participating in CACFP are as follows:
- For-profit sponsors expending $500,000 or more in Federal funds per year will be required to have an annual organizational wide audit. Federal funds include the CACFP meal reimbursement, ACS or DSS tuition, and any other Federal funds expended by the sponsor;
- For-profit sponsors expending less than $500,000 in Federal funds per year will be required to have a biennial organizational wide audit. Federal funds include the CACFP meal reimbursement, ACS or DSS tuition, and any other Federal funds expended by the sponsor;
- Non-profit sponsors with for-profit centers are required to include these for-profit centers in their A-133 audit;
- The organizational wide audit must be conducted by a Certified Public Accountant (CPA) in accordance with the Circular A-133 Compliance Supplement for CACFP, CFDA 10.558;
- Cost principles and procedures for the audit will fall under the guidance in Title 48, Federal Acquisition Regulation, Chapter 1, Part 31 Contract Cost Principles and Procedures;
- The organizational wide audit must be submitted to the New York State Department of Health's Audit Clearinghouse within nine months from the end of the sponsor's fiscal year. The mailing address is as follows:
New York State Department of Health Audit Unit
Room 1341 Corning Tower
Albany, New York 12237-0041
- The cost of the audit is an allowable cost to CACFP if the for-profit sponsor expends $500,000 or more in Federal funds per year. Those sponsors can amend their approved budgets to include the cost of conducting the audit;
- The Federal Regulations (3052.225) and Circular A-133 require State agencies to take immediate corrective action when CACFP Sponsoring Organizations do not submit required audits in a timely manner. The steps NY CACFP will take are to: not pay for the audit costs; withhold a percentage of the Federal award until the audit is satisfactorily conducted; withhold or disallow overhead costs; suspend Federal awards until the audit is conducted; terminate the Federal award; Effective April 1, 2003, any participating CACFP sponsoring organization having outstanding audit reports will be found to be seriously deficient as described in CACFP Policy Memorandum 79 (12/02.)
- For-profit sponsors who do not expend more than $500,000 per year in Federal funds must complete an organizational wide audit every other year. In alternate years, they must complete the attached affidavit and return the form to CACFP. Failure to return the form may result in any one of the aforementioned corrective actions. CACFP will issue affidavits annually to all for-profit sponsors;
- If, in the future, a for-profit sponsor expends more than $500,000 in Federal funds during their fiscal year, the Sponsoring Organization will need to conduct an annual organizational wide audit.
Questions regarding these audit procedures or the requirements should be directed to the Fiscal Unit Director at (800) 942-3858, extension 27106.