Value of USDA Foods for Audits

This Management Bulletin (MB) explains the options available to a recipient agency (RA) when assigning value to U.S. Department of Agriculture (USDA) Foods for audit purposes, and explains when an audit must be conducted for a given fiscal year. This MB clarifies the revised USDA Policy Memo FD-104: Value of USDA Donated Foods for Audits dated December 2, 2016, that is located on the USDA Food Distribution Policy Web page at https://www.fns.usda.gov/value-usda-donated-foods-audits. This MB supersedes MB USDA-FDP-01-2010: Value of USDA Donated Foods for Audits dated April 2010.

Background

In accordance with the Office of Management and Budget Uniform Guidance, Title 2, Code of Federal Regulations (2 CFR), Section 200.501, agencies that spend $750,000 or more in federal awards in a given school or fiscal year must obtain an audit for that year. RAs participating in the National School Lunch Program, Summer Food Service Program, Child and Adult Care Food Program, or charitable institution that receives USDA Foods in accordance with Title 7, Code of Federal Regulations (7 CFR), Section 250.67, must consider the value of USDA Foods received in a fiscal year as dollars spent, and include that amount in their total calculated federal awards.

Audit requirements for local government agencies and nonprofit organizations that receive federal awards or grants are found in 2 CFR, Part 200, Subpart F, and Appendix XI, Compliance Supplement, and 2 CFR, Part 400.

Assigning Value to USDA Foods

In accordance with 2 CFR, Section 200.502(g), USDA Foods must be valued at either fair market value at the time of receipt (excluding nonfood items) or by using one of the following USDA Foods valuation methods included in 7 CFR, Section 250.58(e):

• The cost-per-pound of USDA Foods using the annual prices posted by the USDA, which are found on the USDA Food Distribution Processor Material Prices Web page at https://www.fns.usda.gov/usda-fis/processor-material-prices.
  
  
• The most recently published cost-per-pound price in the USDA Foods catalog at the time of an order found in the Food and Nutrition Service electronic USDA Web-based Supply Chain Management (WBSCM) system.
  
  
• The average of each USDA Foods price based on the state’s USDA Foods orders in WBSCM. To calculate the average, all prices for a particular USDA Foods are averaged together to get an average cost per pound for the item for the current fiscal year. The California Department of Education uses this valuation method for USDA Foods prices in the Child Nutrition Information and Payment System, which can be accessed from the Statement of Commodities Shipped Report.

Each RA must choose a method of valuing USDA Foods for audit purposes. Once an RA selects a method of assigning value to USDA Foods, it must use that method consistently in all audit activities and maintain a record of the means of valuing USDA Foods for such purpose.

The guidance provided in this MB is intended for assessing value of USDA Foods for audit purposes only and must not be used for other purposes, such as valuing USDA Foods when determining and pursuing claims for food losses.

Contact Information

If you have any questions regarding this subject, please contact Amy Bell, Child Nutrition Consultant, Food Administration Unit, by phone at 916-322-5051 or by e-mail at abell@cde.ca.gov. (If you have any questions regarding this subject, please contact the Food Distribution Program by email at FoodDistribution@cde.ca.gov.)