[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR226.8]



[Page 205-206]

 

                          TITLE 7--AGRICULTURE

 

    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 226_CHILD AND ADULT CARE FOOD PROGRAM--Table of Contents

 

                    Subpart C_State Agency Provisions

 

Sec. 226.8  Audits.



    (a) Unless otherwise exempt, audits at the State and institution 

levels must be conducted in accordance with Office of Management and 

Budget circular A-133 and the Department's implementing regulations at 

part 3052 of this title. State agencies must establish audit policy for 

for-profit institutions. However, the audit policy established by the 

State agency must not conflict with the authority of the State agency or 

the Department to perform, or cause to be performed, audits, reviews, 

agreed-upon procedures engagements, or other monitoring activities.

    (b) The funds provided to the State agency under Sec. 226.4(h) may 

be made available to institutions to fund a portion of organization-wide 

audits made



[[Page 206]]



in accordance with part 3052 of this title. The funds provided to an 

institution for an organization-wide audit must be determined in 

accordance with Sec. 3052.230(a) of this title.

    (c) Funds provided under Sec. 226.4(h) may be used by the State 

agency to conduct program-specific audits of institutions not subject to 

organization-wide audits, or for which the State agency considers 

program specific audits to be needed. The State agency may use any funds 

remaining after all required program-specific audits have been performed 

to conduct administrative reviews or agreed-upon procedures engagements 

of institutions.

    (d) Funds provided under Sec. 226.4(h) may only be obligated during 

the fiscal year for which those funds are allocated. If funds provided 

under Sec. 226.4(h) are not sufficient to meet the requirements of this 

section, the State agency may then use available State administrative 

expense funds to conduct audits, provided that the State agency is 

arranging for the audits and has not passed the responsibility down to 

the institution.

    (e) In conducting management evaluations or audits for any fiscal 

year, FNS or OIG may disregard any overpayment which does not exceed 

$100. In conducting State agency sponsored audits in State administered 

programs, the State agency may disregard any overpayment which does not 

exceed the amount established by State law, regulations or procedures as 

a minimum for which claims will be made for State losses generally. No 

overpayment shall be disregarded, however, where there are unpaid claims 

of the same fiscal year from which the overpayment can be deducted, or 

where there is evidence of violation of criminal law or civil fraud 

statutes.

    (f) While OIG shall rely to the fullest extent feasible upon State 

sponsored audits, OIG may, whenever it considers necessary:

    (1) Make audits on a statewide basis;

    (2) Perform on-site test audits;

    (3) Review audit reports and related working papers of audits 

performed by or for State agencies.

    (g) State agencies are not required to provide a hearing to an 

institution for State actions taken on the basis of a Federal audit 

determination. If a State agency does not provide a hearing in such 

situations, FNS will provide a hearing, upon request, in accordance with 

procedures set forth in Sec. 226.6(k).



[47 FR 36527, Aug. 20, 1982, as amended at 50 FR 8580, Mar. 4, 1985; 51 

FR 4295, Feb. 4, 1986; 52 FR 5526, Feb. 25, 1987; 53 FR 52590, Dec. 28, 

1988; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 67 FR 43490, June 27, 2002; 

69 FR 53543, Sept. 1, 2004; 70 FR 43261, July 27, 2005]