CACFP Policy Memo Number 79
DOH-CACFP: Number 79 (12/02)
TO: CACFP Sponsoring Organizations
FROM: Jeanne Culver, State Director, Child and Adult Care Food Program
SUBJECT: Department of Health Audit Policy Regarding the Timely Submission of Required Audits
- Purpose and Scope
The Department of Health (DOH) has issued new policy regarding the terms and conditions for the timely submission of required audit reports. The attached letter describes the policy, and the actions DOH will be implementing. Non-profit and governmental agencies, receiving and expending federal funds through DOH are affected by the new policy. The new policy becomes effective for audit reports due on or after April 1, 2003.
Although DOH has issued the new policy, the Child and Adult Care Food Program (CACFP) must also adhere to its own regulatory requirements. A federal interim rule for CACFP was published this summer and effects the CACFP implementation of the DOH policy. The rule became effective, for the most part, on July 29, 2002. This policy will outline the effect of the rule on the continued inability or unwillingness of an institution to have an audit conducted.
- Background Information
The interim rule supercedes the CACFP implementation of the DOH Audit Sanctions Policy and OMB Circular A-133. As stated in the attached letter, the OMB Circular A-133 states the consequence of not meeting the audit requirements as follows:
- Withholding a percentage of Federal awards until the audit is completed satisfactorily;
- Withholding or disallowing overhead costs;
- Suspending Federal awards until the audit is conducted, or
- Terminating the Federal award.
- CACFP Requirements
The interim rule requires DOH to implement the provisions for serious deficiencies when an institution fails to comply with the audit requirements, as follows:
- The institution will be declared Seriously Deficient. A notice of Serious Deficiency will be sent to the institution, including the Chairperson of the Board (or other designee signing the CACFP Agreement), the executive director, and any others named as responsible principals or responsible individuals.
- Submission of a corrective action plan will be required, with clear deadlines established for resolution of the serious deficiency. DOH may specify separate corrective action for institutions and individuals.
If corrective action is accepted, DOH will notify the institution and the responsible principals that the Serious Deficiency determination has been rescinded.
If the corrective action has not been successfully completed within the timeframe allowed, notification will be sent of proposed termination of the CACFP agreement and disqualification of the institution and, if appropriate the responsible principals and responsible individuals. Appeal rights will be offered in the notification.
- Appeal process:
If the DOH determination is not appealed, termination of the agreement occurs and payments are stopped. The institution, officers, responsible principals and responsible individuals are placed on the National Disqualified List and are not eligible to participate in CACFP for up to seven years.
If the DOH determination is appealed, and the DOH decision is upheld; termination of the agreement occurs and payments are stopped. The institution, officers, responsible principals and responsible individuals are placed on the National Disqualified List.
If the DOH determination is appealed and the institution is upheld, the Serious Deficiency determination is rescinded. Retroactive payment is made, if applicable.
- Final result:
The institution, officers, and responsible principals and responsible individuals remain on the National Disqualified List for up to seven years unless FNS or DOH concur earlier that the corrective action is complete; or for more than seven years if there is an unpaid debt owed to Program.
The DOH audit policy outlines three steps to be taken when required audit reports are more than one day late, through more than 180 days of delinquency. For CACFP funding, the serious deficiency process for CACFP institutions and responsible principals will be implemented when the required audit report is more than one day late. Any other serious deficiency by an institution or responsible principal will also result in use of the seriously deficient process, as described above. Additional assistance is available by contacting the CACFP Fiscal Unit at 1-800-942-3858.