Policy Memo 140
DOH-CACFP: Number 140 (04/10)
TO: All CACFP Sponsoring Organizations
FROM: Lynne Oudekerk, Acting State Director, Child and Adult Care Food Program
SUBJECT: Value of USDA Donated Foods for Audits
I. Purpose and Scope
The purpose of this policy memorandum is to clarify the options available to CACFP Sponsoring Organizations in assigning value to USDA donated foods for audit purposes. The significance of this matter is its relevance to determining;
- If an audit must be obtained for a given fiscal year; and
- Whether the Sponsoring Organization that receives donated foods qualifies as a major program that auditors must test for programmatic compliance.
II. Background Information
Audit requirements for government agencies and nonprofit organizations that receive Federal awards or grants are included in OMB Circular A-133, and are codified in Departmental Regulations in 7 CFR 3052. In accordance with Section 200 of OMB Circular A-133 (7 CFR 3052.200), government agencies and nonprofit organizations that expend $500,000 or more in Federal grants in a given fiscal year must obtain an audit for that year. In determining whether $500,000 in Federal grants were expended, a Sponsoring Organization must consider the value of USDA donated foods as part of such grants. There are two steps in accomplishing this:
Step 1: Determining the quantity of each USDA donated food "expended".
- A Sponsoring Organization that receives donated foods in accordance with § 250.67, must consider all USDA donated foods received in a fiscal year as expended.
Step 2: Assigning value to the quantity of each USDA donated food "expended".
In accordance with Section 205(g) of OMB Circular A-133 (7 CFR 3052.205(g)), Federal non-cash assistance, such as USDA donated foods, must be valued at either fair market value (FMV) at the time of receipt, or at the value determined by the Federal agency. Accordingly, for audit purposes, a Sponsoring Organization may use either the FMV of donated foods at the time of their receipt or one of the following donated food valuation methods included in 7 CFR 250.58(e):
- The USDA purchase price (cost-per-pound);
- The estimated cost-per-pound data provided by the Department; or
- The USDA commodity file cost as of a date specified by the distributing agency.
Each Sponsoring Organization must choose a method of valuing donated foods for audit purposes. In most cases, it will be easier for a Sponsoring Organization to use one of the options listed in 7 CFR 250.58(e), rather than having to determine the FMV at the time of their receipt. However, in some cases it may be easier to use the FMV. For example, a food bank may provide the FMV of foods (including donated foods) it provides to other food banks or food pantries for distribution, in order to assist them in their audit activities. The use of the FMV for all foods received by food banks or food pantries would provide a measure of accounting consistency for such organizations in conducting audit activities. Once a Sponsoring Organization has selected a method of assigning value to donated foods, it must use that method consistently in all of its audit activities, and must maintain a record of the means of valuing donated foods for such purpose.
III. Summary of Changes
The guidance provided in this policy memorandum applies only to the value of donated foods to be used for audit purposes, and not to the value that must be used for other purposes. For example, in determining and pursuing claims for donated food losses, distributing and recipient agencies must determine the value of lost donated foods in accordance with FNS Instruction 410-1.