[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR250.18]

[Page 497-498]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 250_DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS TERRITORIES AND 
 
                 Subpart B_General Operating Provisions
 
Sec.  250.18  Audits.

    (a) Right of inspection and audit. The Secretary, the Comptroller 
General of the United States, or any of their duly authorized 
representatives, may inspect and inventory donated foods in storage or 
the facilities used in the handling or storage of such donated foods, 
and may inspect and audit all records, including financial records, and 
reports pertaining to the distribution of donated foods and may review 
or audit the procedures and methods used in carrying out the 
requirements of this part at any reasonable time. Subdistributing 
agencies, recipient agencies, processors, food service management 
companies and warehouses shall be required to permit similar inspection 
and audit by such entities or their representatives. Fiscal matters 
shall continue to be reviewed in audits under the Single Audit Act (31 
U.S.C. 7501-07) and the Department's Uniform Federal Assistance 
Regulations (7 CFR part 3015).
    (b) Independent CPA audits of multi-State processors. (1) For any 
year in which a multi-State processor receives more than $250,000 in 
donated foods, the processor shall obtain an independent CPA (certified 
public accountant) audit for that year. Multi-State processors which 
receive $75,000 to $250,000 in donated food each year shall obtain an 
independent CPA audit every two years and those which receive less than 
$75,000 in donated foods each year shall obtain an independent CPA audit 
every three years. Those multi-State processors which are in the two or 
three-year audit cycle shall move into the next audit cycle at the point 
in time in which the value of donated foods received reaches $75,000 or 
$250,000 in any year. The total value of donated food received shall be 
computed by adding the value of food received under State and National 
Commodity Processing contracts. In instances in which the Department 
determines that the audit is not acceptable or that the audit has 
disclosed serious deficiencies, the processor shall be subject to 
additional audits at the request of FNS.
    (2) Audits shall be conducted in accordance with the auditing 
provisions set forth under the Uniform Federal Assistance Regulations (7 
CFR part 3015, subpart I) and the FNS Audit Guide for Multi-State 
Processors. At the discretion of FNS, auditors will be required to 
attend training sessions conducted by the Department.
    (3) The costs of the audits, including those costs associated with 
training, shall be borne by the processors.
    (4) Audit findings relative to those elements associated with the 
processing of donated food shall be submitted to the processor and to 
FNS concurrently.
    (5) Noncompliance with the audit requirements in paragraph (b)(1) of 
this section will render the processor ineligible to enter into another 
processing contract with any contracting agency until the required audit 
has been conducted and deficiencies corrected.
    (6) Processor response. Multi-State processors shall develop a 
written response to FNS addressing deficiencies which have been 
identified in the audit. Such responses shall include:
    (i) Corrective action which has already been taken to eliminate the 
deficiency;
    (ii) Corrective action which the processor proposes to take to 
eliminate the deficiency;
    (iii) The timeframes for the implementation and completion of the 
corrective action;
    (iv) A determination of what caused the deficiency; and

[[Page 498]]

    (v) Deficiencies which have been identified that the processor takes 
exception to and an explanation for the exception.

Multi-State processors shall submit a written response to FNS in 
accordance with timeframes established by FNS.

[53 FR 20426, June 3, 1988, as amended at 54 FR 7525, Feb. 22, 1989]