FNS-44 e-cfr reg citation

Electronic Code of Federal Regulations:
e-CFR Data is current as of August 17, 2011
Title 7: Agriculture
PART 226—CHILD AND ADULT CARE FOOD PROGRAM
Subpart C—State Agency Provisions
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§ 226.7 State agency responsibilities for financial management.
(a) This section prescribes standards of financial management systems in
administering Program funds by the State agency and institutions.
(b) Each State agency shall maintain an acceptable financial management
system, adhere to financial management standards and otherwise carry out
financial management policies in accordance with 7 CFR part 3015, 7 CFR
part 3016 and 7 CFR part 3019, as applicable. State agencies or FNSRO's,
where applicable, shall also have a system in place for monitoring and
reviewing the institutions' documentation of their nonprofit status to
ensure that all Program reimbursement funds are used: (1) Solely for the
conduct of the food service operation; or (2) to improve such food service
operations, principally for the benefit of the participants.
(c) Management evaluations and audits. State agencies shall provide FNS
with full opportunity to conduct management evaluations (including visits
to institutions and facilities) of all operations of the State agency
under the Program and shall provide OIG with full opportunity to conduct
audits (including visits to institutions and facilities) of all operations
of the State agency under the Program. Within 60 calendar days of receipt
of each management evaluation report, the State agency shall submit to
FNSRO a written plan for correcting serious deficiencies, including
specific timeframes for accomplishing corrective actions and initiating
follow-up efforts. If a State agency makes a showing of good cause,
however, FNS may allow more than 60 days in which to submit a plan. Each
State agency shall make available its records, including records of the
receipt and expenditure of funds, upon request by FNS or OIG. OIG shall
also have the right to make audits of the records and operation of any
institution.
(d) Reports. Each State agency shall submit to FNS the final Report of the
Child and Adult Care Food Program (FNS 44) for each month which shall be
limited to claims submitted in accordance with §226.10(e) and which shall
be postmarked and/or submitted no later than 90 days following the last
day of the month covered by the report. States shall not receive Program
funds for any month for which the final report is not submitted within
this time limit unless FNS grants an exception. Upward adjustments to a
State agency's report shall not be made after 90 days from the month
covered by the report unless authorized by FNS. Downward adjustments shall
always be made, without FNS authorization, regardless of when it is
determined that such adjustments are necessary. Adjustments shall be
reported to FNS in accordance with procedures established by FNS. Each
State agency shall also submit to FNS a quarterly Financial Status Report
(SF–269) on the use of Program funds. Such reports shall be postmarked
and/or submitted no later than 30 days after the end of each fiscal year
quarter. Obligations shall be reported only for the fiscal year in which

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they occur. A final Financial Status Report for each fiscal year shall be
postmarked and/or submitted to FNS within 120 days after the end of the
fiscal year. FNS shall not be responsible for reimbursing unpaid Program
obligations reported later than 120 days after the close of the fiscal
year in which they were incurred.
(e) Annual plan. Each State shall submit to the Secretary for approval by
August 15 of each year an annual plan for the use of State administrative
expense funds, including a staff formula for State personnel.
(f) Rate assignment. Each State agency must require institutions (other
than emergency shelters, at-risk afterschool care centers, and sponsoring
organizations of emergency shelters, at-risk afterschool care centers, or
day care homes) to submit, not less frequently than annually, information
necessary to assign rates of reimbursement as outlined in §226.9.
(g) Budget approval. The State agency must review institution budgets and
must limit allowable administrative claims by each sponsoring organization
to the administrative costs approved in its budget. The budget must
demonstrate the institution's ability to manage Program funds in
accordance with this part, FNS Instruction 796–2 (“Financial Management in
the Child and Adult Care Food Program”), parts 3015, 3016, and 3019 of
this title, and applicable Office of Management and Budget circulars.
Sponsoring organizations must submit an administrative budget to the State
agency annually, and independent centers must submit budgets as frequently
as required by the State agency. Budget levels may be adjusted to reflect
changes in Program activities. If the institution does not intend to use
non-CACFP funds to support any required CACFP functions, the institution's
budget must identify a source of non-Program funds that could be used to
pay overclaims or other unallowable costs. If the institution intends to
use any non-Program resources to meet CACFP requirements, these
non-Program funds should be accounted for in the institution's budget, and
the institution's budget must identify a source of non-Program funds that
could be used to pay overclaims or other unallowable costs. For sponsoring
organizations of centers, the State agency is prohibited from approving
the sponsoring organization's administrative budget, or any amendments to
the budget, if the administrative budget shows the Program will be charged
for administrative costs in excess of 15 percent of the meal
reimbursements estimated to be earned during the budget year. However, the
State agency may waive this limit if the sponsoring organization provides
justification that it requires Program funds in excess of 15 percent to
pay its administrative costs and if the State agency is convinced that the
institution will have adequate funding to provide meals meeting the
requirements of §226.20. The State agency must document all waiver
approvals and denials in writing, and must provide a copy of all such
letters to the appropriate FNSRO.
(h) Start-up and expansion payments. Each State agency shall establish
procedures for evaluating requests for start-up and expansion payments,
issuing these payments to eligible sponsoring organizations, and
monitoring the use of these payments.
(i) Advance payments. Each State agency shall establish procedures for
issuing advance payments by the first day of each month and comparing
these payments with earned reimbursement on a monthly basis. The State
agency shall maintain on file a statement of the State's law and policy
governing the use of interest earned on advanced funds by sponsors,
institutions, child care facilities and adult day care facilities.
(j) Recovery of overpayments. Each State agency shall establish procedures
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to recover outstanding start-up, expansion and advance payments from
institutions which, in the opinion of the State agency, will not be able
to earn these payments.
(k) Claims processing. Each State agency shall establish procedures for
institutions to properly submit claims for reimbursement. Such procedures
must include State agency edit checks, including but not limited to
ensuring that payments are made only for approved meal types and that the
number of meals for which reimbursement is provided does not exceed the
product of the total enrollment times operating days times approved meal
types. All valid claims shall be paid within 45 calendar days of receipt.
Within 15 calendar days of receipt of any incomplete or incorrect claim
which must be revised for payment, the State agency shall notify the
institution as to why and how such claim must be revised. If the State
agency disallows partial or full payment for a claim for reimbursement, it
shall notify the institution which submitted the claim of its right to
appeal under §226.6(k). State agencies may permit disallowances to be
appealed separately from claims for reimbursement.
(l) Participation controls. The State agency may establish control
procedures to ensure that payment is not made for meals served to
participants attending in excess of the authorized capacity of each
independent center, adult day care facility or child care facility.
(m) Financial management system. Each State agency shall establish a
financial management system in accordance with 7 CFR part 3015, 7 CFR part
3016 and 7 CFR part 3019, as applicable, and FNS guidance to identify
allowable Program costs and establish standards for institutional
recordkeeping and reporting. These standards shall (1) prohibit claiming
reimbursement for meals provided by a participant's family, except as
authorized by §226.18(e) and (2) allow the cost of meals served to adults
who perform necessary food service labor under the Program, except in day
care homes. The State agency shall provide guidance on financial
management requirements to each institution.
[47 FR 36527, Aug. 20, 1982, as amended at 48 FR 21530, May 13, 1983;
Amdt. 5, 49 FR 18988, May 4, 1984; 50 FR 8580, Mar. 4, 1985; 50 FR 26975,
July 1, 1985; 53 FR 52589, Dec. 28, 1988; Amdt. 22, 55 FR 1378, Jan. 14,
1990; 63 FR 9728, Feb. 26, 1998; 67 FR 43490, June 27, 2002; 69 FR 53542,
Sept. 1, 2004; 71 FR 5, Jan. 3, 2006; 71 FR 39518, July 13, 2006; 72 FR
41606, July 31, 2007; 76 FR 34571, June 13, 2011]
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