Appendix E10 Monitoring Handbook for State Agencies - A CACFP Handbook

OMB #0584-0055
Expiration Date xx/xx/20xx

Appendix E10. Monitoring Handbook for State Agencies
– A CACFP Handbook

This information is being collected from local government agencies and businesses (institutions)
to enable institutions wishing to participate in the Child and Adult Care Food Program (CACFP)
to submit applications to the administering agencies, execute agreements with those agencies,
and claim the reimbursement to which they are entitled by law. Section 17 of the National School
Lunch Act, as amended (42 U.S.C. 1766), authorizes the CACFP. This collection is required to
obtain or retain a benefit and the Food and Nutrition Service (FNS) uses the information
collected to conduct reviews that determine whether or not institutions are observing the
requirements of the Program established by regulations and statute. In addition, the information
collection is necessary for administering agencies to monitor Program operations to ensure
compliance with legislative and regulatory requirements. Under the Privacy Act of 1974, any
personally identifying information obtained will be kept private to the extent of the law.
According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and
a person is not required to respond to, a collection of information unless it displays a valid Office
of Management and Budget (OMB) control number. The valid OMB control number for this
information collection is 0584-0055. The time required to complete this information collection is
estimated to average 36 hours per response. This burden consists of the time it takes to review
all instructions and handbooks issued by FNS and the Department to clarify or explain existing
regulations. Send comments regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing this burden, to: U.S. Department of
Agriculture, Food and Nutrition Services, Office of Policy Support, 1320 Braddock Place,
Alexandria, VA 22314, ATTN: PRA (0584-0055). Do not return a completed form to this
address.

OMB
#0584-0055
Expiration Date
xx/xx/20xx

Policy Memoranda
Throughout the text, references have been made to
numbered memoranda issued by the Food and Nutrition
Service National office. The numbering system may differ
from your State agency or FNS Regional Office.

The U.S. Department of Agriculture prohibits discrimination against its customers, employees,
and applicants for employment on the bases of race, color, national origin, age, disability, sex,
gender identify, religion, reprisal, and where applicable, political beliefs, marital status, familial
or parental status, sexual orientation, or all or part of an individual’s income is derived from any
public assistance program, or protected genetic information in employment or in any program or
activity conducted or funded by the Department (Not all prohibited bases will apply to all
programs and/or employment activities.)
If you wish to file a Civil Rights program complaint of discrimination, complete the USDA
Program Discrimination Complain Form, found online at
http://www.ascr.usda.gov/complaint_filing_cust.html
or at any USDA office, or call (866) 632-9992 to request the form. You may also write a letter
containing all of the information requested in the form. Send your completed complaint form or
letter to us by mail at U.S. Department of Agriculture, Director, Office of Adjudication, 1400
Independence Avenue, S.W., Washington, D.C. 20250-9410, by fax (202) 690-7442 or email at
program.intake@usda.gov.
Individuals who are deaf, hard of hearing, or have speech disabilities may contact USDA
through the Federal Relay Service at (800) 877-8339; or (800) 845-6136 (Spanish).
USDA is an equal opportunity provider and employer.
*Updates are highlighted in yellow.

Contents
Introduction ................................................................................................................................... 5
Background of Monitoring ............................................................................................................. 5
Who Administers the Program? .................................................................................................... 7
About this Guidance...................................................................................................................... 7
Part 1. State Agency Review Requirements ................................................................................ 8
A. Types of Care Centers/DCHs .............................................................................................. 8
B. Frequency and Number of Required Institution Reviews .................................................... 8
Part 2. State Agency Review Team ........................................................................................... 11
Part 3. The Review .................................................................................................................... 13
A. Preparation ........................................................................................................................ 13
B. Review Period ................................................................................................................... 15
C. Entrance Conference ........................................................................................................ 15
D. Records Review ................................................................................................................ 16
1)

Records Retention ....................................................................................................... 16

2)

Application for Institution Participation ......................................................................... 17

3)

Participant Records...................................................................................................... 20

4) Enrollment ‘Rosters’ (Institutions) ................................................................................. 21
5) Verification of Free and Reduced-price Meal Applications Requirement ...................... 22
6) Meal Service Records ................................................................................................... 24
7) Meal Counts - Requirements ........................................................................................ 26
8) Meal Counts by Center Type - Requirement ................................................................ 26
9) Meals Served to Adults - Requirement ......................................................................... 27
10) Other Food Service Records - Requirements .............................................................. 27
11)

Meal Service Observation .......................................................................................... 28

12) Meal Service Times – Requirement ............................................................................ 29
13) Menus and Foods – Requirements ............................................................................. 29
14) Training Records......................................................................................................... 29
15) Claims for Reimbursement ......................................................................................... 30
16) Financial Management Requirements ........................................................................ 30
17) All other Program - Requirements .............................................................................. 36
E. Additional Requirements When Reviewing Sponsoring Organizations ............................. 36
1)

Training ....................................................................................................................... 36

2)

Tiering ......................................................................................................................... 36

3)

Additional Financial Management Review Requirements ........................................... 37

4)

Implementation of the Household Contact System ..................................................... 39

5)

Monitor Staffing Standards ......................................................................................... 39

Monitoring for State Agencies

Page 3

6)

Monitoring Frequency ................................................................................................. 40

7)

Review Content - Requirement ................................................................................... 41

8)

Five-day Reconciliations ............................................................................................. 42

9)

Implementation of the Serious Deficiency Process ..................................................... 45

10)

Analyze Observations of Sponsoring Organization’s Operation ................................ 45

F. Analyze Observations, Determine Corrective and Fiscal Action, and Identify Serious
Deficiencies ............................................................................................................................. 46
1)

Analyze Observations ................................................................................................ 46

2)

Corrective Action........................................................................................................ 46

3)

Fiscal Action............................................................................................................... 47

4)

Common reasons for disallowing meals and snacks ................................................. 47

5)

Assessment and Accrual of Interest ......................................................................... 49

6)

Questions and Answers ............................................................................................. 50

G. Technical Assistance.......................................................................................................... 51
H. Exit Conference ................................................................................................................. 51
I.

Questions & Answers ........................................................................................................ 52

Part 4. Writing a Review Report ................................................................................................. 55
Part 5. Corrective Action Response ........................................................................................... 56
Part 6. Follow-Up Reviews ......................................................................................................... 57
Part 7. Closing the Review ......................................................................................................... 58
Part 8. Complaints ..................................................................................................................... 59
A. Program Complaints .......................................................................................................... 59
B. Civil Rights Complaints (Discrimination in Program Participation) .................................... 59
C. Questions & Answers ........................................................................................................ 60
Part 9. Acronyms and Glossary ................................................................................................. 61
Part 10. Resources .................................................................................................................... 62
A. General .............................................................................................................................. 62
B. FNS CACFP Handbooks ................................................................................................... 63
C. Financial Management Resources .................................................................................... 63
D. Memoranda Issued by FNS Relating to Monitoring the CACFP........................................ 64
Part 11. Attachments ................................................................................................................. 66 

Monitoring Handbook for State Agencies

Page 4

Introduction
This handbook is for State agency monitoring staff and provides detail for administering the
Child and Adult Care Food Program (CACFP).
The CACFP is a Federally-funded Program that provides payments for eligible meals served to
participants who meet age and income requirements. Meals served by participating institutions
and facilities must meet minimum guidelines set by the U.S. Department of Agriculture (USDA).
The CACFP helps institutions and facilities serve well-balanced, nutritious meals to the
participants in their care. Serving nutritious meals helps improve and maintain the health and
nutritional status of participants in a day care environment and can help them develop and
maintain good eating habits.

Background of Monitoring
State agencies are required to monitor Program operations and use of Program funds in
institutions and facilities to ensure CACFP requirements are met. Reviews and audits have also
been conducted periodically by the Food and Nutrition Service (FNS) and the USDA Office of
Inspector General (OIG).
1995: USDA, OIG Audit #27600-6-AT


OIC audited the day care home (DCH) component of CACFP due to the results of State
and Federal Program reviews. OIG selected five States for inclusion in the audit. The
audit found serious types of regulatory noncompliance and inadequate internal controls
by both sponsoring organizations and homes, OIG recommended changes to CACFP
review requirements and management controls.

1999: OIG Audit Report #27601-0007-SF or 27601-3-SF
The OIG conducted targeted audits and were referred to collectively as ‘‘Operation
Kiddie Care’’. These audits confirmed the findings of the 1995 audits and developed
additional findings as well. Findings of State agencies and sponsoring organizations
included the conduct of inadequate reviews, failing to document required monitoring
visits, misuse of administrative funds, and claiming homes that were nonexistent. FNS
was required to strengthen requirements of the Program in most areas of the CACFP.
2002: Child and Adult Care Food Program: Improving Management and Program Integrity (1st
Interim rule) based on the Agricultural Risk Protection Action of 2000 [Public Law 106224] and the Grain Standards and Warehouse Act of 2000 [Public Law 106-472].






Required sponsoring organizations to conduct at least two unscheduled (unannounced)
reviews of each facility they sponsor.
Required sponsoring organizations to employ an appropriate number of monitoring
personnel based on the number and characteristics of their facilities.
State agencies review cycle of institutions changed to no less frequently than once every
three years and they are given authority to conduct unannounced reviews of institutions.
Required State agencies to conduct unannounced facility reviews in a 15 percent of
sample of all facility reviews completed.
Required institutions to meet the viability, capability, and accountability performance
standards.

Monitoring Handbook for State Agencies

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

Afforded due process for institutions and facilities found seriously deficient in one or
more areas of their administration of the Program before being placed on the newlyestablished National Disqualified List (NDL).

2004: Child and Adult Care Food Program: Improving Management and Program Integrity
(2nd Interim rule)




Required State agencies to develop a household contact system for sponsoring
organizations to use as part of their review and oversight of facilities.
Minimum elements for sponsoring organization review of facilities were established.
Minimum elements for State agency review of institutions and minimum elements for
sponsoring organization review of facilities were established.

2011: Child and Adult Care Food Program: Improving Management and Program
Integrity (Final rule)





Amended 7 Code of Federal Regulations (CFR) 226.16(d)(4)(ii) to substitute the word
“participants” for the word “children” both times it occurs.
Clarified that five-day reconciliations must include a comparison of meal counts to both
attendance and enrollment records, except when enrollment is not a requirement.
Amended 7 CFR 226.11(c)(1) to clarify that reimbursements to DCH providers are
calculated based on daily meal counts, as opposed to time of service meal counts.
All references to block claims and unannounced follow-up reviews at 7 CFR 226.2; 7
CFR 226.10(c)(3) were eliminated.

2011: USDA, OIG Audit Report #14-2012 Review of Management Controls (#27601-0012-SF).






Verify a selected month (or more as warranted) of a sponsor’s CACFP bank account
activity to document adequate to support that the transactions meet Program
requirements.
Center sponsors will report, no less often than annually, their actual expenditures of
Program funds and the amount of meal reimbursement funds retained from centers (if
any) for administrative costs.
Required development of standardized procedures for conducting reconciliation reviews
in DCHs, which (1) clearly define the records to be reconciled, (2) describe follow-up
action to be taken when discrepancies are noted, and (3) describe appropriate corrective
actions to be taken for deficiencies that cannot be reconciled or explained.
Required development of NDL submission forms for State agencies including edit
checks ensuring entries are complete.

2012: USDA, OIG Audit Report #27099-01-DA, Identifying Areas of Risk in the Child and Adult
Care Food Program Using Automated Data Analysis Tools.




Design inexpensive data analysis techniques for sponsoring organization monitors to
target error-prone facilities more frequently.
Sponsors should visit sites early in the month and schedule their visits more randomly.
Issue guidance for the five-day reconciliation, so that monitors will perform the
reconciliation consistently, using standardized procedures to identify anomalies and
specify action necessary to correct and/or resolve common discrepancies.

Monitoring Handbook for State Agencies

Page 6

Who Administers the Program?
USDA’s FNS administers the CACFP at the national level. The Program is administered within
most States by the State’s educational agency or another agency designated by the State.
States are required to monitor all institutions participating in the CACFP to ensure compliance
with meal pattern, recordkeeping, and other Program requirements.

About this Guidance
In this handbook, you will find information on:




Review responsibilities as a State agency;
The required regulatory review elements; and
Tools needed to have a successful monitoring system.

This guidance is meant to give a State agency monitor (review staff) a general working
knowledge of the CACFP and duties and responsibilities as the State agency’s representative.
Because the CACFP is administered at the State level, this means that there might be
differences in how the Program is administered from State to State. There also might be
differences in the forms that States use, so the ones included in this handbook are samples
only.
FNS develops Program regulations and policy that State agencies and Program participants are
required to follow. Program regulations are published in 7 CFR Part 226. Regulatory citations
have been included throughout this handbook.
Citations from CACFP policy memoranda also provide additional guidance on Program
requirements.

Monitoring Handbook for State Agencies

Page 7

Part 1. State Agency Review Requirements
The State agency must provide sufficient consultative, technical, and supervisory assistance to
institutions and facilities to ensure effective Program operations, monitor progress toward
achieving Program goals and ensure compliance with all civil rights requirements. The State
agency must maintain documentation of supervisory assistance activities, including reviews
conducted, corrective actions prescribed, and follow-up efforts [7 CFR 226.6(a)].

A. Types of Care Centers/DCHs


The CACFP defines an institution as a sponsoring
organization or independent child care center;
such as a sponsoring organization, child care
center, at-risk after-school care center, outsideschool-hours care center (OSHCC), emergency
shelter or adult day care center which enters into
an agreement with the State agency to assume
final administrative and financial responsibility for
Program operations.



Facility means a sponsored center or a DCH.
Group DCHs are also referenced in FNS guidance
as DCHs.



Participants mean “children” in a child care setting
or “adult participants” in an adult day care center
(see 7 CFR 226.2 for details].

Definition
An ‘institution’ enters into an
agreement directly with the
State agency.
A ‘facility’ enters into an
agreement with an
organization that sponsors
the facility. A facility may be a
child care center, at-risk
afterschool care center,
OSHCC, emergency shelter,
adult day care center, or
DCH provider.

Effective monitoring of institutions and facilities ensures
they comply with Program guidelines, confirms their viability, accountability, and capability in
operating the CACFP, and determines that records are available to justify reimbursement for
meals served to participants.
During the review, the State agency monitor (i.e., review staff) will evaluate the fiscal integrity
and management of the Program. It is equally important for the monitors to be a resource for
participants to help them improve their operations. Technical assistance provided during the
review and throughout any corrective action process will help ensure corrections are made
expediently and future errors are avoided.

B. Frequency and Number of Required Institution Reviews
The State agency must annually review at least 33.3 percent of all institutions. Round up to the
next whole number to determine the total number of reviews.

October

Total # of independent centers plus # of
sponsoring organizations

33.3% of total

64 + 12 = 78

78 x .333 = 26

Monitoring Handbook for State Agencies

Page 8

Reviews of institutions must be conducted according to the following schedule:


Small, independent centers and sponsoring organizations of 1 to 100 facilities must be
reviewed at least once every three years;



Large, sponsoring organizations with more than 100 facilities must be reviewed at least
once every two years; and



New sponsoring organizations of five or more facilities must be reviewed within the first
90 days of Program operations.

As part of the State agency’s review of institutions, it must review:


10 percent of small sponsoring organizations’ facilities; and



5 percent of large sponsoring organizations’ first 1000 facilities plus 2.5 percent of the
number of homes over the first 1000.

FNS evaluates the State’s use of State Administrative Expense funds to conduct the required
number and types of reviews [7 CFR 226.6(m)]. The State agency should establish a system to
schedule and track reviews to ensure it remains in compliance with the requirements. The State
system should allow it to know at a glance, anytime during the review year, that it is meeting the
number and type of reviews required or whether modifications need to be made in the schedule
or caseload.
Determining Review Priorities using Risk Analysis
State agencies are encouraged to develop risk factors to determine the high risk institutions or
facilities in their field work. Identifying institutions and facilities with a high number of risk factors
does not mean that noncompliance is occurring. It simply means that they may need a closer
look, either by an on-site review conducted by the State agency or by a sponsoring
organization’s review of its facilities.
The OIG conducted an audit, Identifying Areas of Risk in the CACFP Using Automated Data
Analysis Tools, which recommended that FNS and State agencies develop data analysis tools
to identify higher risk institutions and facilities for additional review. Establishing a set of
characteristics shared by institutions with Program irregularities or which have frequently been
problematic is one way to concentrate a State agency’s resources where they are most needed.
Risk is sometimes associated with the size of the institution or facility. An instance of
noncompliance at a large institution puts more money at risk than the same issue at a smaller
institution or facility. A high volume of meal counts would result in a comparatively high
overclaim if these meals are disallowed. During OIG’s field work, high risk institutions and
facilities were visited to determine if more meals were being claimed than the actual number of
meals being served. High risk institutions and facilities were determined by analyzing State data
to identify:


Institutions and facilities with high meal claims compared with the others in the State,
based on enrollment and dollar volume (larger claims mean a larger risk if there is a
problem);

Monitoring Handbook for State Agencies

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

Institutions and facilities with higher average daily participation than enrollment (if the
State agency has location-specific information). Shift care allows for this, but
documentation must be carefully kept and evaluated;



Institutions and facilities that were claiming more than 90 percent attendance every
month. A high regularity of attendance is unusual in some centers. A trend analysis over
a period of years may help State agencies identify which types or locations tend to have
higher or lower regularity of attendance; and



Institutions and facilities that are obviously out of compliance (e.g. sites that are claiming
more than two meals and one snack or one meal and two snacks per participant per
day). If there are preliminary records that the State has access to when determining
which facilities to review, this facility and the sponsoring organization that is allowing this
to occur would be an immediate choice for review.

Monitoring Handbook for State Agencies

Page 10

Part 2. State Agency Review Team
CACFP monitoring reviews encompass a wide variety of institution types, from single-site
institutions to multi-site sponsoring organizations. Although the reviews may require different
approaches for different institution types, the review team contributes to the overall success of
the review process. Whether a multi-member team or a team of one, each team member plays
an important role in the review process. In general, the team leader takes responsibility for
coordinating the review process, and each member of the team is responsible for completing his
or her section of the review and for contributing to the written review report. The following
guidance will assist State agencies in developing increasingly-knowledgeable team leaders and
team members.
Responsibilities – These activities are only suggested practices since they will vary widely
from State to State.
Team Lead/Lead Reviewer:


Negotiates and schedules dates with team members and institution personnel. Identifies
the number of days needed for on-site review at the institution and facilities, if applicable.
Identifies the normal hours of operations for institutions and facilities so reviewers can
estimate schedules. Note for planning: If facilities are permitted to claim meals on
weekends, evenings, and/or holidays, the State agency must conduct some monitoring
reviews during those meal times;



Contacts team members to confirm dates, lodging information, transportation plans, and
directions if necessary;



Informs review team of issues and concerns with the institution, based on an
examination of the previous review report(s), technical assistance documents, claims,
one-time exceptions, and any other information collected by the State agency relevant to
the institution’s operation;



Discusses which area of the review each team member will be completing;



Develops letters to institutions (e.g. notification of review and review closure);



Takes the lead in conducting the entrance and exit conference;



Takes the lead in conducting team discussion prior to the exit conference to coordinate
findings and action items;



Ensures appropriate personnel sign the State agency review form;



Determines whether corrective action is sufficient;



Follows up with institution to determine if corrective action has been fully implemented
and requests assistance with follow-up from team members as needed; and



Closes out review or submits it for further action (e.g. serious deficiency determination,
second-party review, etc.).

Monitoring Handbook for State Agencies

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Team Members:


Prepare for and complete the portion of the review assigned by the lead reviewer;



Assist in determining whether Program operations are in compliance with CACFP
requirements or if corrective action is needed;



Participate as requested in review follow-up to determine if corrective action has been
fully implemented; and



Contribute to the written portion of the review as necessary.
Note: Depending on the number of findings identified during the review, some completed
review reports may be provided to the institution during the exit conference. However, for
more complex reviews a more extensive review report may be prepared and sent to the
institution following the exit conference.

Monitoring Handbook for State Agencies

Page 12

Part 3. The Review
Prior to beginning the review of an institution or a facility, the State agency monitor must be
knowledgeable of the institution’s or facility’s claim history as well as any past Program
violations. If Program violations were identified on the previous review, the State agency monitor
must also determine whether the previous corrective action was implemented and effective.
The review must take place at the intuition’s or facility’s location, though portions may be
conducted at the State office, informally known as the ‘desk review’ portion, or there may be a
combination of reviews conducted to complete the Program review. For instance, the State
agency monitor may evaluate the institution’s audit, budget, and training attendance via desk
review and conduct the balance of the evaluation of the institution’s Program on-site.

A. Preparation
The State agency monitor may prepare a packet for conducting the review which may consist of
the following documents (these documents may vary from State to State):


Review forms and instructions;



Management plan and budget;



The State agency’s last review
report on the institution and
copies of most recent facility
reviews (if applicable);






Claim for the review period;
Prior review reports (audits and
agreed upon procedures), if
applicable;
Correspondence with all State
agency staff (State director,
Program managers, auditors,
claims processors, etc.);



Documentation of technical
assistance provided by the State
agency, if applicable;



State agency’s policies and
procedures for reviews;



State agency’s disallowance
policies and procedures;



State agencies’ and sponsor’s
household contact policies;



Income Eligibility Guidelines;



Reimbursement rates for the
fiscal year being reviewed; and



Complaints (written or call-ins), if
applicable

If the review will be conducted by a team of monitors, the team leader may wish to
prepare a packet for each team member with relevant documents from the above list.
Resource Materials
State agency monitors may wish to have available, (hard copy or via computer) the
reference materials identified in Part 10 of this guidance.
Review Forms and Instructions
When a State agency monitor conducts a CACFP review of an institution, the forms
must include all required areas of review and must be fully completed to be considered
as a review. Monitors should be familiar with the review forms and the instructions the

Monitoring Handbook for State Agencies

Page 13

State agency uses to conduct reviews. The monitors will also have copies of the review
forms and all other review with them in either electronic or printed form. Reviews must,
at a minimum, contain questions pertaining to the required elements (see Part 3, D of
this guidance).
Miscellaneous Tools
In addition to review forms and Program guidance resources, it might be helpful to have
additional materials/tools when conducting a review. These could include following
items.
“And Justice for All” posters
(Reminder: The poster is not
required in DCHs)



Note pad and/or sticky notes



Calculator with extra battery



Building for the Future flyers



Laptop and/or tablet with plug



Women, Infants and Children
(WIC) Brochures



Paper





Power strip with multiple outlets

Thermometers for food safety




Pens, pencils, erasers, and
highlighters

A calendar with holidays
indicated




Clipboard



Portable printer for laptop or
tablet, including cables, power
cord, extra cartridge, etc.

Stapler and staples



Notifying Institution of the Review
State agency reviews may be announced or unannounced. For announced reviews,
State agency may initiate the formal review in a professional manner by sending written
notification to the director of the institution or sponsoring organization informing them of
the date of the review one month prior to the review. A copy of the written notification
should also be sent to the board chair and/or owner. When the reviewed institution is a
school, the school administrator who signed the Program agreement and/or application
materials is the person that the State agency will notify.
If a written notice is sent, it will convey the scope and areas to be covered during the
review. The State agency may choose to vary the scope of an institution’s review based
on factors such as the result of prior reviews and audits, etc. This variance in scope
could result in changes to the sample size or a decision to conduct a desk review
instead of an on-site review. While the scope of a review may vary, it must include, at a
minimum, the Program specific monitoring requirements.
EXAMPLE: If there were a number of informal complaints from providers that
the sponsoring organization is not responsive to questions and the State agency
staff has noticed the same trend via its communication logs, the State agency
would want to include in the scope of its review, investigation of the complaints

Monitoring Handbook for State Agencies

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cause, consequences, and possible solutions. It could be that DCH providers
were poorly trained on the Program requirements, so are making a high number
of calls for additional assistance and are overwhelming the sponsoring
organization.
Review procedures may vary widely from State to State. The following timeframes are
suggested:


About 4 weeks prior to review, send letter to institution identifying the test month
and records to be reviewed (for announced reviews only);



About 2 to 4 weeks prior to the review, pull claim data and management reports
that pertain to the test month being reviewed; and



About 1 to 2 weeks prior to the review, provide review packets to each team
member, as applicable.

B. Review Period
Generally, the review period will be the most recent month for which a claim for
reimbursement has been filed by the institution. However, the State agency could
choose another month(s). If this is an announced review, the confirmation letter will
include the timeframe or period that will be reviewed. Additionally, if the State agency
determines it warrants additional review, the State agency may review the institution’s
records beyond the claim month to determine the extent of the noncompliance.

C. Entrance Conference
Tip
An entrance conference gives the State agency monitors
an opportunity to meet with the institution staff to discuss
the review process, gather information on internal policies
and procedures, and to set up a work schedule conducive
to accomplishing the review. The entrance conference will
allow for introductions to be made of all team members
and to find out who is the institution’s contact for each
review area.

For a more efficient and
effective review,
provide the institution
with a list of records the
monitors will need
access to, either before
the review (for
announced reviews), or
as soon as possible
after arrival.



If time permits, the State agency monitor may
schedule interviews or obtain relevant documents
and records.



Explain that an exit conference will be held to discuss any findings or
observations and to provide technical assistance. Provide an approximate date
and time for the exit and update the institution’s staff as you get closer to the end
of the review.



Ask if the institution prefers a daily update on any findings or concerns or to
provide clarification on issues.

Monitoring Handbook for State Agencies

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

Arrange for workspace for the team and determine whether records will need to
be put away each day.



Identify the hours the team will be working and confirm work and interview
schedules for the week.



Thank them for their time and proceed with the review.

D. Records Review
The State agency is evaluating not simply that the records are available, but that they
support the institution’s claim for reimbursement. For each element, this handbook will
outline the requirement(s) followed by the review step(s). When applicable, this
handbook will also address corrective and fiscal action that needs to be taken.
1)

Records Retention
Requirements
During a review, the State agency monitor evaluates the institution’s
compliance with collection and maintenance of records relating to the
following: applications; enrollment and eligibility; attendance; meal counts;
invoices and receipts; claims submitted to the State agency; if applicable,
dates and amounts of disbursement to each sponsored facility; copies of
menus and any other food service records required by the State agency;
if applicable, documentation of reviews of sponsored facilities; training;
documentation of nonprofit food service; and if a sponsoring organization,
documentation of annual training provided to each staff with monitoring
responsibilities.
Review step
 Records Retention - Verify that Program records are maintained
for three years (or the number of years on the Program, if less
than three years) plus the current fiscal year.
EXAMPLE: If an institution submitted a claim any month
in Federal fiscal year 2014, all records supporting the
claim(s) would have to be maintained until the end of
Federal fiscal year 2017 [7 CFR 226.10(d)].
There are a few notable exceptions to this requirement.
o

The first exception applies when there is an unresolved audit
finding. In such cases, the documents must be retained after
the three year period for as long as necessary for the audit to
be resolved.

o

The second exception applies to records pertaining to
disqualifications. These records must be retained for three full

Monitoring Handbook for State Agencies

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fiscal years after the individual or institution is removed from
the NDL [CACFP 01-2007 Retention of Records Relating to
Institutions, Responsible Principals or Responsible Individuals,
and Day Care Homes on the NDL; Retention of Records
Relating to Serious Deficiencies, January 26, 2007].
o

2)

State agencies may determine guidelines for their own and
their sponsoring organizations’ retention of records for
deferred serious deficiencies.

Application for Institution Participation
a. Application Requirement
Each institution is required to maintain copies of Program agreement
and the current year’s application and supporting documents
submitted to the State agency to support the institution’s eligibility and
approval to participate in the CACFP [7 CFR 226.15(e)(1)].
Review Steps
 Ensure that the institution is maintaining copies of its Program
agreement and application, as well as any supporting
documentation that was submitted to the State agency as part
of the application.
 During the review of a sponsoring organization, the State
agency monitor would also ensure DCH agreements with the
sponsoring organization have also been maintained.
b. License - Requirements
The location where child or adult care is provided (center or DCH)
must have a current license posted and may not have more children
or adults in care than stated on the license.


All participating child care centers, at-risk afterschool care centers,
OSHCCs, and DCHs can be licensed or approved by Federal,
State, or local authorities [7 CFR 226.6(d)(1)(i)].
At-risk afterschool care centers and OSHCCs, if State or
local licensing or approval is not otherwise required, must
meet State or local health and safety standards.
There is no Federal licensing requirement for emergency
shelters, but the shelter must meet State or local health
and safety standards.



Licenses issued by Indian Tribal Organizations are acceptable for
independent child care centers on reservations.

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Review Steps
 Locate the posted license and verify it is current, for the
correct location and correct name of the center or DCH;
 Observe the number and age range of participants and the
number of caregivers present; compare your observations to
the institution’s or facility’s licensed capacity and report any
violations to the licensing authority; and
 If applicable, compare the State agency’s meal counts with
those of the institution’s or facility’s claim for that day.
c. Health, Safety, and Sanitation - Requirement
All institutions and facilities must have a food service operation that
complies with applicable State and local health and sanitation
requirements.
Review Step
 As appropriate, the following elements are reviewed: food
production permit, health inspection report, food storage, food
handling, and sanitation. If permits have expired, inspection
reports identified outstanding issues not yet corrected, or
storage/handling violations are identified, require corrective
action and consider declaring the center seriously deficient, or
possibly suspend the center’s CACFP participation if
appropriate. If the concerns are found in a DCH, require
appropriate action through the sponsoring organization.
d. Center Eligibility by Type - Requirements
Proprietary (for-profit) Centers
All for-profit centers must keep records for each month Program
reimbursement is claimed, documenting that at least 25 percent of the
enrollees or 25 percent of their licensed capacity, whichever was less,
were either Title XX or Title XIX beneficiaries or were eligible for free
or reduced price meal benefits [7 CFR 226.17(b)(4)].
At least once each year the center or sponsor is required to report to
the State agency the number of enrolled children whose meals are
currently eligible for free, reduced price, and paid rates of
reimbursement. This information may be requested more frequently
than annually in order to verify the center’s or sponsoring
organization’s eligibility for reimbursement.

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Review Step
 Compare the name of participants on the for-profit center’s
billing for the review month to the review month’s enrollment or
license capacity to verify that at least 25 percent of the
participants were Title XX or Title XIX recipients or eligible for
free or reduced-price meals.
Area Eligibility for At-Risk Afterschool Centers
At-risk afterschool centers must be located within the geographical
boundaries of an elementary, middle, or high school in which 50
percent or more of the enrolled participants are eligible for free or
reduced-price school meals.
Review step
 Review the appropriate school data to verify that the institution
or facility is eligible. In addition, verify that it has organized,
regularly scheduled, educational or enrichment activities.
Temporary Residential Settings (Emergency Shelters)
The Program can only be operated by a public or nonprofit
organization that provides support to homeless children in temporary
residential settings.
Review Step
 Observe the meal service and meal counting procedures to
determine whether they yield accurate meal counts for
children.
e. Posters and Flyers
Requirement – Civil Rights Poster
Each State agency, local agency, or other sub-recipient serving the
public must prominently display the USDA nondiscrimination poster
"And Justice for All," or an FNS approved substitute, except in DCHs
[FNS Instruction 113-1 Civil rights Guidance and Enforcement –
Nutrition Programs and Activities, IX, B.1].
Review Steps
 Verify that the “And Justice for All” Poster is displayed in a
conspicuous location (except for DCHs).
 Discuss with the staff any possible civil rights problems
identified and record any explanations provided.

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 If, in the opinion of the reviewer, any kind of discrimination is
present, alert the State agency’s CACFP Director and any
other appropriate State divisions and or the FNS Regional
Office immediately.
Requirement - WIC Program Information
State agencies must provide information on the importance and
benefits of the WIC and WIC income eligibility guidelines, to
participating institutions.
Review Steps
 Verify the WIC flyer is posted or distributed to parents; and
 Verify their WIC flyer informs parents or guardians of enrolled
children about the WIC Program and its benefits, and includes
the name and telephone number of the WIC State agency and
sponsoring organization, if applicable.
3)

Participant Records
a. Enrollment Records - Requirements
Institutions are required to maintain documentation of the enrollment
of each participant at centers (except for OSHCCs, emergency
shelters, and at-risk afterschool care centers).
Review Steps
 Verify the following information is captured on every
enrollment form:
o

Each child’s first name, last name, and date of birth;

o

Each child’s normal days and hours of care and the meals
normally received while in care; and

o

Annual documentation that the information has been
updated as needed and signed by a parent or legal
guardian.

b. Attendance - Requirement
Accurate daily attendance records of all enrollees must be maintained
separately from the center’s meal count records. Daily records
indicating the time of service, and meals served to center participants,
by type (breakfast, lunch, supper, and snacks) must be maintained as
well [7 CFR 226.15(e)(4)].

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Review Step
 Verify that the institution is maintaining attendance records
separately from the institution’s meal count records.
c. Claiming Status - Requirement
Participants in Head Start and Early Head Start may receive free meal
benefits without further application or eligibility determination.
Acceptable documentation for participants includes an a statement of
Head Start or Early Head Start enrollment, or a list of participants
from a Head Start or Early Head Start official. All reimbursable meals
served to participants in Early Head Start may be claimed at the free
rate [CACFP 11-2013, Questions and Answers Regarding the
Participation of Head Start Programs in Child Nutrition Programs, May
17, 2013].
In all other types of centers, except for emergency shelters and at-risk
afterschool care centers, free and reduced priced meal applications
must be on file for each participant whose meals are claimed at the
free or reduced price rate. The State agency must review 100 percent
of the free and reduced price meal applications for accuracy [7 CFR
226.15(e)(2); 7 CFR 226.23(e)(1)].
Review Steps
 For all participants whose meals are claimed for
reimbursement, determine if there is a current and accurately
determined free or reduced-price meal application on file.
Participants for whom there is no application must have been
claimed in the paid category. Verify there are meal
applications for all children claimed for free or reduced-price
meals.
o

Emergency shelters and at-risk afterschool care centers
will not claim based on an individual child’s free or reduced
price meal status, so will not maintain such documentation.

 Compare the names of children claimed for free meals with
Head Start or Early Head Start enrollment lists to ensure those
children were properly claimed and that no other children’s
meals were claimed as Head Start or Early Head Start
participants.
4) Enrollment ‘Rosters’ (Institutions)
Establishing a roster of participating children is not a Federal
requirement; however, a roster can assist with tracking current
participants, new enrollments and eligibility categories.

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Review Steps
 Verify that the roster lists the names and eligibility status of all
participants’ enrolled. Evaluate whether and how the institution
tracks additions and withdrawals of participants to determine if
the institution is maintaining an accurate roster.
 If rosters are not being maintained, evaluate how, and how
well, the institution is consolidating currently enrolled children,
the children’s eligibility status, and the meals being claimed for
each child.
EXAMPLE: Compare the total number of participants
enrolled to the highest number of served meals (of any
type). If the meal count exceeds the enrollment total, this is
an indication of inaccurate claiming. Trouble-shooting can
begin with information based on how and how well the
institution is consolidating currently enrolled children, the
children’s eligibility status, and the meals being claimed for
each child.
5) Verification of Free and Reduced-price Meal Applications Requirement
The State agency must conduct verification of eligibility for free and
reduced-price meals no less frequently than once every three years
[7 CFR 226.23(h)].
Review Steps
For all institutions except for sponsoring organizations of DCHs,
review of all free and reduced price meal applications on file.
 Verify applications for non-pricing Programs (Programs that
do not charge a separate, identifiable fee for meals) for the
following:
o

The application has been
fully completed by the
household;

Remember
If a roster is used,
ensure that it does not
allow overt
identification of
participants and that it
is accessible to only
those individuals who
need access.

o

The institution has correctly
determined and classified
the eligibility of enrolled
participants for free or
reduced price meals or, for
DCH homes, for tier I and
tier II reimbursement;

o

The institution has accurately reported to the State agency
the number of enrolled participants meeting the criteria for
free or reduced price meal eligibility; and

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o

Participant rosters are not required, but if they are
developed and used by the institution, ensure the roster
correctly lists the names and eligibility of participants.

 The verification of applications for pricing Programs
(Programs that charge a separate fee for meals) must include
the steps listed above for non-pricing Programs, and in
addition, verification of the accuracy of the reported income
information for no less than three percent of all approved
applications on file.
o

The State agency must contact the households to
obtain source documentation to support the income
reported on the household’s free and reduced-price
meal application.

o

Procedures for conducting this additional verification
must include the following:


If the application contains a SNAP, FDPIR, or
TANF case number for a child or a SNAP, FDPIR,
SSI, or Medicaid number for an adult, the
verification shall only consist of a confirmation that
the child or adult is certified eligible for the relevant
program.



Otherwise, households must be informed in writing
that they have been selected for verification and
that they are required to submit documentation to
verify their eligibility for free or reduced price meals.
This letter must include the types of documentation
that the State agency has deemed to be sufficient
for the purposes of verification.



This letter must also inform households that, in lieu
of income information, they may submit
documentation showing they are certified to
participate in SNAP, FDPIR, or TANF for enrolled
children or SNAP, FDPIR, SSI, or Medicaid for
enrolled adults.

 The State agency may conduct additional verification of the
information submitted on the eligibility application for nonpricing programs. If the State agency chooses to conduct this
additional verification for non-pricing programs, it must do so in
accordance with the procedure outlined below.
For more information concerning what is considered to be acceptable
verification documentation, consult CFR 7 226.23(h)(2)(v) and see the

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Income Eligibility Handbook for School Meals for more information on the
verification process for pricing Programs.
6) Meal Service Records
a. Menus - Requirement
Daily records of menus must contain a listing of the food items served
in each meal type to ensure that the CACFP meal pattern
requirements were met. Menu records must be updated to reflect
changes to planned menus so that the menu records reflect the actual
meal components and foods served to participants [7 CFR
226.6(15)(e)(10)].
Review Steps
 Evaluate the institution’s menus for the claim period that is
being reviewed to ensure that it meets the meal pattern
requirements.
 Verify that any substitution(s) to meal components, particularly
on the day of review, is noted on the menu.
b. Family-Style Meal Service - Requirement
Most DCHs, many centers, and all Head Start centers, serve meals
using CACFP’s family-style meal service. Family-style meal service
means that the food is placed on the table for each child or adult
participant to serve themselves. Participants may then select the
foods they want and the amount of each food they want. During the
meal, it is the responsibility of each institution and facility to
encourage each participant to accept the full required portion for each
food component of the meal pattern. If minimum portions are not
available for each participant, meals would be disallowed [7 CFR
226.20(p) and FNS Instruction 783-9, Rev. 2 Family-style Meal
Service in the Child and Adult Care Food Program].
Review Step
 Observe whether the requirements of family-style meal service are
being met and if they are not, either provide technical assistance
or deny the institution’s approval to use this type of meal service.
c. Meals Served to Children with Disabilities or Special Dietary
Needs - Requirements
If the institution serves children that have disabilities or special dietary
needs that lead to alterations of the meal pattern or the menu, ensure
that these children are being served meals in accordance with their
needs and confirm that the appropriate documentation has been
obtained and retained to support claiming the meals. See Part 11,

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Attachment 7 for a prototype form for documenting a medical or
special dietary needs substitution.
o

Medical Statements - In order to claim a meal that does not
conform to the regulatory meal pattern, there must be a medical
reason or a special dietary need and a signed statement on file.

o

Disabilities - If an institution is serving a child with a disability and
that disability directly affects which foods the child can consume,
the parent and/or guardian must submit a medical statement
signed by a licensed physician. The medical statement must be
kept on file, handled confidentially, and must describe:

o



The child’s disability and an explanation of why the
disability restricts the child’s diet;



The major life activity affected by the disability;



The food or foods to be omitted from the child’s diet, and



The appropriate substitutions.

Special Dietary Needs - If an institution is serving a child with
special dietary needs (e.g., vegetarian), the parent and/or
guardian may request substitutions by submitting a medical
statement signed by a recognized medical authority, such as
physician, physician assistant, nurse practitioner or other
professional specified by the State agency, listing the foods to be
omitted and appropriate substitutions.

Note: Milk substitutions that are made due to special dietary needs
that are not a disability must be nutritionally equivalent to milk, even if
accompanied by a medical statement. The institution can make such
substitutions at its discretion.
Review Steps
 For meals claimed that do not conform to Program requirements,
ensure there is an appropriate medical statement on file.
 Ensure milk substitutes for non-disabilities are nutritional
equivalent to milk.
For additional information, see FNS Instruction 783-2 Accommodating
Children with Special Dietary Needs, and CACFP 21-2011, Child
Nutrition Reauthorization 2010: Nutrition Requirements for Fluid Milk
and Fluid Milk Substitutions, September 15, 2011.

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7) Meal Counts - Requirements
Daily counts of the number of meals served to enrolled children, taken
at the point of service, must be recorded and maintained by all
participating centers.
When the “actual monthly counts” claiming method is assigned to the
center, its records must contain the number of meals served to
enrolled children by each meal type and by income eligibility
categories.
For centers assigned the “claiming percentages” or “blended rates”
computation methods, only the total number of meals served by type
(breakfast, lunch, supper or snack) must be recorded daily.
Review Steps
 Verify that meal counts are taken at the actual time of service,
or for family-style meal service, while participants are actually
eating.
 Total Counts - Compare your observed meal count to the meal
count taken by the institution/facility staff. Remember to
include all infants who will be included in the meal count
although they may be eating at another time.
 Meal Counts by Name - Confirm that providers are recording
meal counts by the name of the child; and
 If the State agency requires centers to record meal counts by
name under certain circumstances, ensure that the proper
procedures are being followed.

Remember
Attendance records cannot be used to determine the number of meals served,
but must support the actual meal counts reported.
Meal counts must not be pre-recorded (recorded prior to the meal service).
8) Meal Counts by Center Type - Requirement
At-risk afterschool care centers, OSHCCs, and emergency shelters
are not required to keep time of service meal counts; they must keep
records of the number of meals prepared, the number of meals
served, and the number of participants in attendance for each meal
service.

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Review Step
 For at-risk afterschool child care, OSHCCs and emergency
shelters compare the required data to ensure more meals are
not claimed than the number of children in attendance.
9) Meals Served to Adults - Requirement
Except for DCHs, daily counts of meals served to “Program adults”
working in the center’s food service and to any other non-enrolled
persons must also be recorded. Although not claimed for
reimbursement, costs of these meals are part of food costs reported
by the center or sponsoring organization [7 CFR 226.15(e)(5)]. NonProgram adults must pay for their meals or the cost of their meals
must be paid for with non-Program funds.
Review Step
 Verify the daily meal counts include the number of program
adults, as well as any other non-enrolled persons receiving
meals.
10) Other Food Service Records - Requirements
The State agency may require additional records. For example, the
State agency may require centers to keep daily meal production
records in addition to their daily meal counts, menu, and attendance
records.
Production Records
A meal production record is a written record of the quantity of food
prepared for each menu item served. Production records help
document whether an adequate amount of food was prepared and
served to enrolled participants to meet the CACFP meal pattern
requirements.
Monthly / Yearly Inventory
Many State agency require the calculation of the “cost of food used” at
the end of each month. In this case, monthly food inventory records
must be maintained.
Other State agencies may require an inventory to be taken once a
year so they can make adjustments in the cost of food on an annual
basis. In this case, the same procedure as the monthly inventory
would be followed, but only once a year.

Review Step

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 If production records and or inventories are required by the
State agency, evaluate them and the inventory records to
ensure that enough food was available and prepared to
support the number of meals claimed for the review period.
11)

Meal Service Observation
a. Observation - Requirement
The State agency must include an observation of a meal service as
part of its review of an independent center [7 CFR 226.6(m)(3)(vii)].
Review Steps
 Observing a meal service at an
institution provides a great
opportunity for the State agency
monitor to understand to what
extent the CACFP is being
operated in accordance with the
intent of the Program.
Observation of a meal service
enables the State agency
monitor to provide an extra
level of review to ensure that
the institution is in compliance
with multiple Program
regulations.

Remember
If the institution or
facility cares for infants,
observe the infant meal
service to determine if
the infant meal pattern
is being followed.

 When observing a meal service, the State agency monitoring
should be sure to look at the following.
b.

Meal Pattern - Requirement
There are three meal patterns outline in the CACFP regulations [7
CFR 226.20].
All infants enrolled for care must be offered meals that meet the
CACFP infant meal requirements, regardless if the institution or facility
claims infant meals [CACFP Policy - Obligation to Offer Infant Meals,
May 17, 2002].
Review Step
 Observe the served meal and determine if all required
components and required quantities are served. Reference the
correct meal pattern (Infant, Child, or Adult) for the age of
participant served and according to what meals the center has
been approved to serve.

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12) Meal Service Times – Requirement
State agencies establish requirements regarding meal times for
Program meals.
Review Step
 Ensure that the meal service being observed is served during
the time frame approved by the State agency.
13) Menus and Foods – Requirements
Institutions must serve meals according to the posted menus and
document substitutions. USDA Foods must be used and stored
properly. Documentation must be maintained on pre-prepared foods
to indicate what amount of the meal component is being met.
Review Steps
 Compare the meal served with the posted menu to ensure that
the menu reflects the actual meal being served. If substitutions
are made, make sure the meals are still in compliance and that
the center staff is documenting the substitutions.
 USDA Foods - If the institution has received USDA Foods,
ensure the institution is storing them safely, and using them
effectively to enhance the meals.
 Child Nutrition (CN) and Manufacturer Labels – Ensure that all
commercially processed combination dishes (i.e., those dishes
containing more than one meal pattern component) have a CN
label or manufacturer’s product analysis sheet to verify that
meal pattern requirements are being met. If a CN label/
manufacturer’s product analysis sheet is not available, verify
that another creditable food is added in sufficient quantity to
meet the meal pattern requirements. Confirm that the
institution or facility understands the directions on the CN label
or product analysis sheet for serving the correct amount of
commercially processed items.
Refer to the Food Buying Guide for fresh and cooked food yields. A link
can be found in Part 10, A.
14) Training Records
Requirements
The State agency must verify that the institution has provided
adequate training to its staff and facilities as described in its
management plan. Records of annual or more frequent training
sessions for center personnel must be maintained. The training

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records must include the training session date(s) and location(s), as
well as CACFP topics presented and names of each trained staff
member [7 CFR 226.15(e)(12)].
For sponsoring organizations, records documenting the attendance at
training of each staff member with monitoring responsibilities must be
maintained. Training must include instructions, appropriate to the level
of staff experience and duties, on the Program’s meal patterns, meal
counts, claims submission and claim review procedures,
recordkeeping requirements, and an explanation of the Program’s
reimbursement system and adherence with civil rights requirements
[7 CFR 226.15(e)(14) and FNS Instruction 113-1, XI].
Review Steps
 Verify the training session date(s), location(s), and the names
of participants;
 Verify that all required training topics were covered.
For additional information on the requirements for management plans,
see the Guidance on Management Plans and Budgets CACFP
Handbook.
15) Claims for Reimbursement
Requirement
Independent centers and sponsoring organizations must maintain
copies of all submitted claims for reimbursement [7 CFR 226.15(e)(7)].
Review Steps
 Verify that the signatory on the claim is same as identified in
the agreement as the claim authority.
 Using daily meal count forms to reconstruct the claim for the
month of review to verify the institution’s claim, and in the case
of a sponsoring organization, to verify accurate consolidation.
16) Financial Management Requirements
The review of the institution’s financial management includes a review
of all income to and expenses of the institution, whether it is an
independent center or a sponsoring organization of multiple centers or
homes or both. Institutions must retain required documentation.
Failure by the institution to maintain these records shall be grounds
for the denial of reimbursement. FNS Instruction 796-2, Rev. 4,
Financial Management in the Child and Adult Care Food Program
outlines specific information related to the financial elements of each
institution participating in the CACFP.

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The State agency must develop systems for evaluating fiscal records
such as invoices, the checking account(s), and provider payments to
ensure fiscal integrity of the sponsoring organization.
The CACFP regulations at 7 CFR 226.15(e), outline the records that
must be maintained by institutions. The following financial records
must be reviewed during a State agency monitoring review.


Copies of invoices, receipts or other records required by the State
agency. The reviewer will look at the administrative and operating
costs claimed by the institution as well as income to the CACFP.



Copies of all claims for reimbursement submitted to the State
agency.



Receipts for all Program payments received by the institution from
the State agency.



If applicable, information with the dates and amounts of
disbursements to each child or adult care facility under its
sponsorship.



Documentation of nonprofit food service to ensure CACFP funds
are used solely for the food service operation or to improve the
food service operation for the benefit of enrolled participants.
Review Steps
The purpose of the financial management review is to verify all
financial information related to the nonprofit meal service. Whether
reviewing a sponsoring organization of multiple facilities or an
independent center, the purpose is the same: assure costs
charged to the nonprofit food service were used to meet CACFP
meal service requirements, and where applicable, that the costs
claimed for reimbursement under the CACFP are allowable,
meaning they are necessary and reasonable for the effective and
efficient operation of the food service.
Nonprofit food service operations must account for all income
attributable to the food service including the CACFP
reimbursement. Nonprofit food service is defined as food service
operations conducted by the institution principally for the benefit of
enrolled participants, from which all of the Program
reimbursement funds are used solely for the operations of
improvement of such food service.
Other income could be earned from meals served to visiting adults
who pay for their meal, fundraising for the purpose of the food
service operation, and monies earmarked for food service such as

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grants received from Head Start where a portion of the grant is for
food service, etc.
 The Accounting System
o

Ensure the accounting system used by the institution is
consistent from month to month based on one of the
following cash management bases; either the,


Cash Basis -- Expenses and income are reported when
paid or received,



Accrual Basis – Expenses and income are reported
when the expense or income is incurred, or the



Modified Accrual Basis – Certain expenses and income
are reported on an accrual basis while others are
reported on a cash basis.

 Revenues
o

Review all revenues and ensure all revenue is attributable
to the nonprofit food service. Refer to the Guidance on
Management Plans and Budgets CACFP Handbook for
more specific information about allowable costs, as well as
the sponsoring organization’s approved budget identifying
revenue expected for the organization.

o

CACFP reimbursements – verify the number of meals
claimed was accurate and that meals were claimed in the
right category (free, reduced-price, or paid).

o

Identify whether other revenue/income was acquired and
attributed to the nonprofit food service.

o

If equipment is sold that was purchased with food service
funds, confirm the revenue from that sale was accounted
for in the food service account.

o

If non-Program adults receive a meal, verify the cost of that
meal was either paid for by the adult or that the cost of the
meal was accounted for in the nonprofit food service
account.

 CACFP operating and administrative expenses
o

Review all transactions. Refer to the Guidance on
Management Plans and Budgets CACFP Handbook for
more specific information on allowable costs, as well as the
sponsoring organization’s approved budget to ensure all
expenses are approved.

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

Operating and/or administrative - Reference and
compare line item operating and administrative
expenses with the approved budget.



Confirm the food receipts support the meals served
during the month reviewed.



Confirm payroll records support the labor costs for the
food service operation.



If the director’s salary is reported as an expense to the
food service operation, verify the allocation of the
director’s time is reasonable based on the duties
performed for the food service operation.



If the cook’s duties are all related to the food service,
100 percent of the cook’s salary can be attributed as
an operating expense.



If others within the operation have some level of
responsibility related to food service and other
responsibilities on other activities, only those labor
costs related to the food service may be claimed.



If the purpose of the sponsoring organization includes
providing meals to DCHs as they care for children,
verify all reported labor expenses were correctly
allocated for the number of hours worked on food
service.



Contracted Services – Critical management functions
of the CACFP may not be subcontracted; however,
other tasks such as data processing, building
maintenance, security, records storage, equipment
rental, etc., may be provided as a contracted service.
Confirm that invoices and/or contracts document the
claimed amounts.



Labor and Benefits – Verify time and attendance
reports were correctly completed and on file for any
labor that is charged to the CACFP (both part-time and
full-time operating costs and labor).



Rent and Utilities – If rent and utilities are shared by
more than one Program within the agency, verify the
portion claimed to the CACFP was allocated using an
approved allocation method. Confirm that invoices
and/or contracts document the claimed amounts.

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

Office Supplies, Postage – Verify expenses using
receipts and invoices.



Travel  Mileage expenses must be documented on an
approved mileage log.
 Receipts and invoices must be available to
support any other travel costs claimed.

 Indirect Cost Rate – Some institutions will have a cognizant
agency which determines what costs are included in an
indirect cost pool and approves an indirect cost rate. This is
allowable and the reviewer should determine if the indirect
cost rate is applied correctly. The State agency may need to
know what cost activities were included in the indirect cost rate
pool to then determine what other expenses will have been
allocated.
 Determine if income exceeds expenses.
o

If income exceeds expenses, ensure the excess revenue is
retained for the purpose of the nonprofit food service.
Note: Each State agency must determine what constitutes
an excessive nonprofit food service balance.


Excessive balances may be used for improvements
or expansion of the nonprofit food service.



Institutions cannot transfer excess funds to
nonprogram operations or use them to increase
salaries or fringe benefit costs when the only
purpose is to decrease the excess nonprofit food
service balance.

 If expenses exceed income, non-Program funds must
available and used to cover meal service or fiscal expenditure
shortfalls. Determine that non-Program funds were acquired
and evaluate the institution’s fiscal viability.
Reference the FNS Instruction 796-2, Rev. 4, for additional
information. Also, refer to Part 11, Attachment 5 Spot Checks and
Red Flags in Financial Management Reviews of Institutions,
specifically Sponsoring Organizations for additional recommended
review activity.

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Other Fiscal Requirements – Audits
The audit report of either a nonprofit or a for-profit organization must be
completed and the report submitted to the Federal Audit Clearinghouse
(http: //harvester.census.gov/sac/) within nine months after the end of the
audit period. If there are CACFP findings, the institution must provide a
copy of the report to the State agency.
Nonprofit Organizations - Requirements
Audits are required of all institutions that receive more than
$500,000 in total Federal funds for the entire institution during a
fiscal year. Audit requirements for institutions that participate in
the CACFP are outlined in 7 CFR 3052 and Office of Management
and Budget (OMB) Circular A-133, Audits of States, Local
Governments, and Nonprofit Organizations.
Important provisions in OMB Circular A-133 include the following
requirements for different types of audits.


Non-Federal organizations that expend $500,000 or more in a
year in Federal funds must have a single or Program-specific
audit conducted for that year. A single audit will cover the
entire operation of the organization. A Program-specific audit
is an audit of only the CACFP.



If a non-Federal organization expends Federal funds under
only one Federal Program, the organization may elect to have
a Program-specific audit. For example, if CACFP funds are the
only Federal funds expended by the institution, the institution
may elect to have a Program-specific audit of the CACFP.

For-Profit Institutions - Requirements


Each State agency has the authority to establish audit policy forprofit institutions with regard to the receipt of Federal funds [7
CFR 3052.210(e)]. CACFP Policy - Audit Requirements - CACFP
Proprietary Title XIX and Title XX Institutions, August 13, 1998,
requires each State agency to institute audit procedures
applicable to for-profit institutions participating in the CACFP.
Review Steps
 The State agency must ensure the required audit was
conducted within nine months of the end of the Program year
and submitted to the Federal Audit Clearinghouse if there are
no CACFP findings or to the State agency if there were
CACFP-related findings.

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 If there were CACFP findings, ensure corrective action was
conducted and documented to the State agency prior to the
State agency closing the audit.
17) All other Program - Requirements
The State agency must also ensure that all institutions and facilities being
reviewed are in compliance with all other Program requirements as well
as any applicable handbooks and guidance issued by FNS or the State
agency.

E. Additional Requirements When Reviewing Sponsoring Organizations
When the institution under review is a sponsoring organization, the State agency
must also ensure the sponsoring organization is fulfilling its administrative
responsibilities and maintaining records relating to the payment, review, and training
of facilities under its sponsorship. The administrative responsibilities which must be
reviewed include the following.
1)

Training
Requirement
The State agency must review the training conducted by sponsoring
organization for its staff and for its facilities [7 CFR 226.6(m)(3)(viii)].
Review Step
 Verify that the sponsoring organization has conducted regular
training for its staff and facilities according to its management
plan. Documentation must confirm that the required topics
were covered and that all key sponsor and facility staff
(including all monitoring staff) were in attendance at the
training. Training must include, at a minimum: meal patterns;
meal counts; claims submission and review procedures
recordkeeping requirements; reimbursement system; and civil
rights [7 CFR 226.15(e)(12) & (14) and FNS Instruction 113-1
XI)].

2)

Tiering
Requirement
The State agency monitor must ensure that the sponsoring
organization is properly implementing the tiering process [7 CFR
226.6(m)(3)(xi)].
Review Step
 The sponsoring organization is required to maintain
documentation to support the tier level assigned to each DCH

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[7 CFR 226.15(f)]. Review all tiering decisions to ensure that
the all DCHs are accurately tiered and that the tiering process
was implemented correctly.
3)

Additional Financial Management Review Requirements
Sponsoring Organizations’ Disbursement to Facilities
Requirement
Sponsoring organizations must maintain records of the amount and
date of all funds disbursements to each sponsored facility [7 CFR
226.15(e)(9)].
Review Steps
 Verify facilities were disbursed payment within five working
days of receiving reimbursement from the State agency; and
 Verify the disbursement was made for the full amount the
facilities were entitled to receive.
a. Administrative Carryover
Sponsoring organizations of DCHs are allowed to carry over 10
percent of their CACFP reimbursement from one Federal fiscal year to
the next. Carryover funds are available only when there is a difference
between the administrative payments and actual expenses.
Sponsoring organizations which choose to receive administrative
payments based on actual expenses will not be able to carry over
funds into the next fiscal year [CACFP 11-2012, Day Care Home
Administrative Reimbursements: Options and Carryover
Requirements, March 19, 2012].
Review Step
 After reviewing the sponsoring organization’s expenditures
and income to verify its financial status, the sponsoring
organization may retain up to 10 percent of its
administrative reimbursement but no more than 10 percent
of what would have been earned based on meals times
rates [CACFP 11-2012, Family Day Care Home
Administrative Reimbursements: Options and Carryover
Reporting Requirements, March 19, 2012].
For additional information on requirements that sponsoring
organizations’ must monitor when review their facilities, see the
Family Day Care Homes Monitor Handbook.

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b. State Agency Reviews of Sponsored Facilities
Requirements
As part of the State agency’s review of a sponsoring organization, it
must review facilities on-site. The State agency must review 10
percent of the facilities for institutions that sponsor less than 1,000
facilities. For institutions that sponsor more
than 1,000 facilities, the State agency must
Remember
review 5 percent of the first 1,000 facilities
and 2.5 percent of all facilities in excess of
The State agency
1,000.
shall ensure that
facilities selected for
There are two areas required as part of each
review are
facility review; however, a State agency may
representative of the
include other areas. The required areas are:
proportion of tier I, tier
a) verification of income applications; and b)
II, tier II mixed DCHs
conducting a five-day reconciliation. Though
in the sponsorship.
not required, the State agency monitor is
encouraged to observe a meal at each
facility to ensure that the facility is meeting the meal pattern and
properly documenting meals served to participants [7 CFR
226.6(m)(3)(vii)].
DCH providers are allowed to record meals by the end of the day.
State agencies have the option to require time of service meal counts
in DCHs where more than 12 children are served or if the provider has
been declared seriously deficient due to problems with meal counts
and claims [7 CFR 226.15(e)(4)].
Review Step
 After the State agency monitor completes reviews of
sponsored facilities, the monitor must analyze and evaluate
whether the reviews conducted by the sponsoring organization
reveal similar findings to those identified by the State’s
reviews. This enables the State agency to determine how
thoroughly the sponsoring organization is conducting its
reviews.
c. Verification of Income Applications
Requirements
The State agency must conduct verification of eligibility for free and
reduced-price meals in each independent center no less frequently
than once every three years.
The State agency must evaluate and verify accuracy of only the
approved applications on file for the facilities being monitored as part
of its review of the sponsoring organization. However, the State

Monitoring Handbook for State Agencies

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agency must also meet a review threshold of at least 10 percent of the
total approved applications on file with the sponsoring organization, so
in some cases, the State agency must choose additional applications
to verify [7 CFR 226.23(h)].
Review Step
 Follow the same verification procedure outlined in this
guidance, Section D, 3. Verification of Free and Reduced-price
Meal Applications to evaluate the accuracy of the sponsoring
organization’s free and reduced-price meal application
determinations.
4)

Implementation of the Household Contact System
Requirement
The State agency monitor must verify that the sponsoring organization
is correctly implementing the household contact systems established
by the State agency. Use of household contacts can verify the
enrollment and attendance of participants at the sponsoring
organization’s facilities [7 CFR 226.6(m)(3)(x) and CACFP Policy Additional Guidance on the Child and Adult Care Food Program
Second Interim Rule, December 23, 2004].
Review Step
 Analyze how effectively the sponsoring organization is
implementing the State agency’s household contacts system.

5)

Monitor Staffing Standards
The State agency must ensure that the sponsoring organization is
fulfilling all of its monitoring responsibilities as listed in 7 CFR
226.16(b)(1); 7 CFR 226.16 and (d)(4) [7 CFR 226.6(m)(3)(viii)].
Federal regulations state that a sponsoring organization must employ
the equivalent of one full-time monitoring staff person for each 50-150
DCHs and the equivalent of one full-time monitoring staff person for
each 25-150 centers it sponsors. Sponsoring organizations must
document that they meet this requirement as part of their
management plan [7 CFR 226.16(b)(1)].
Review Step
 Verify the information listed in the management plan and
compare to monitoring records to ensure that the sponsoring
organization is fulfilling this requirement. Verify that the
monitors listed in the management plan are conducting
reviews of DCHs.

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6)

Monitoring Frequency
Requirement
The sponsoring organization is required to review each of its facilities
three times every year. The type and timing of these reviews must
follow the guidelines described below.


At least two of the three reviews must be unannounced.



At least one unannounced review must include observation of a
meal service.



At least one review must be made during each new facility's first
four weeks of Program operations.



The first review requirement also applies to a facility that changes
sponsors or to a facility that re-enters CACFP after a break in
participation.



The amount of time between reviews may not exceed six months
(unless review averaging is used, see below).



The timing of unannounced reviews must be varied in a way that
would ensure they are unpredictable to the facility [CACFP 162011, Child Nutrition Reauthorization 2010: Varied Timing of
Unannounced Reviews, April 7, 2011].



All meal types (breakfast, lunch, supper, snacks, weekend,
evening, holidays)
Remember

The requirement that the first review be made during each new facility’s first four weeks
of operation is designed to ensure that facilities that are new to CACFP receive an early
review from their sponsor, to minimize the possibility that the facility is making critical
errors that could result in large overclaims.

Review Step
 During a review of a sponsoring organization, verify that the all
of the above requirements are being met. This should be done
through an analysis of the sponsoring organization’s facility
review records to confirm that:
o

The sponsoring organization has conducted the required
number of reviews, including the required number of
unannounced reviews;

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o

No more than six months elapsed between reviews;

o

At least one unannounced review included an observation
of the meal service;

o

The reviews were scheduled in an unpredictable pattern;
and if the sponsor allows the facilities to claim suppers,
evening, or weekend meals, a proportionate number of
reviews were completed during these meals and dates.

Review Averaging
Review averaging allows sponsoring organizations to focus more monitoring efforts on
facilities that need additional oversight and less time on facilities that have a documented
history of CACFP compliance. Review averaging is conducted by averaging both total
and unannounced reviews each year.
Sponsoring organizations exercising the review averaging option must have a written
monitoring schedule in place at the beginning of each Federal fiscal year that includes
rationale as to why a facility may be receiving more or less than the required three
monitoring reviews [7 CFR 226.16(d)(4)(iv].
EXAMPLE: Of the 220 DCHs sponsored by ABC Sponsorship Inc., 5 DCHs were
declared seriously deficient and then the serious deficiency was deferred within
the last fiscal year, and 20 DCHs were billed for over 10 percent of their annual
reimbursement as overclaims within the last year. These 25 DCHs are targeted
for additional reviews in the current fiscal year; a random sample of the other
DCHs that are fully in compliance will be reviewed less than 3 times this year, but
still within the required 9 month time frame.
7)

Review Content - Requirement
In addition to verifying that the sponsoring organization is meeting all
of the requirements related to the frequency of facility reviews, the
State agency monitor must also ensure that the content of the facility
reviews meets the regulatory requirements.
Facilities must maintain child enrollment forms and meal counts
onsite, for at least 12 months from the end of the claim month [7CFR
226.10(d); 7 CFR 226.18(d), (e), and (g), and CACFP 03-2009,
Record Maintenance Requirements for Family Day Care Home
Providers in Child and Adult Care Food Program, February 24, 2009].
At least 15 percent of the total number of facility reviews required
must be unannounced [7 CFR 226.6(m)(6)].

Review Steps

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 Verify that the sponsoring organization’s facility reviews
include, at a minimum:
a. A five-day reconciliation of meal counts with
enrollment and attendance forms,
b. Ensuring that all meals served meet the meal
pattern,
c. Ensuring that the facility is properly licensed or
approved,
d. Ensuring that key facility staff attended annual
training,
e. Ensuring that menus and meal count records are
accurate and up to date,
f.

Ensuring that enrollment forms are updated
annually and contain all of the necessary
information,

g. Determining whether or not findings from previous
reviews have been appropriately addressed,
h. Determining whether the at-risk centers they
sponsor are located in eligible areas,
i.

Verification that the WIC flyer is posted or
distributed to parents; and the WIC flyer informs
parents and/or guardians of enrolled children about
the WIC Program and its benefits, and includes the
name and telephone number of the WIC State
agency and sponsoring organization, if applicable,
and

j.

Verification that the Building for the Future Notice is
posted in DCHs or distributed to parents [FNS-317].

.
8)

Five-day Reconciliations
Requirement
Remember
As part of the review of sponsored facilities,
the State agency must examine the meal
counts recorded by the facility for five
consecutive days during the current and/or
prior claiming period [7 CFR 226.6(m)(4)].

Do not use the day of
review as one of the
test days.

Reconciliations are used to highlight red flags in claiming procedures. If
enrollment forms are not required, as in OSHCCs, emergency shelters,

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and at-risk afterschool care centers, reconcile meal counts to attendance
records.
If enrollment or attendance records are not required conduct a more
general review of the facility’s meal counting and claiming procedures that
would not include a five-day reconciliation [CACFP 07-2005, Conducting
Five-day Reconciliations in Centers, September 23, 2005].
Review Steps
For Sponsored Centers Reimbursed on a Blended Rate or a
Claiming Percentage - Evaluate enrollment and attendance records to ensure that
they are current and accurate;
 Compare total meal counts to the center’s licensed capacity;
meal counts cannot exceed licensed capacity for any day
unless the center is approved for shift care;
 Compare the center’s total enrollment to its recorded daily
attendance to ensure that the number of participants in
attendance does not exceed the number of enrolled
participants. If attendance exceed enrollment, for any day or
for any shift, determine the source of the error and determine
the overclaim, if any;
 Compare the center’s total daily attendance (or if the State
requires time in/out documentation) to its meal counts using
any five consecutive days (that the center was open for
business) of aggregate meal counts for each approved meal
type to ensure that meal counts do not exceed the number of
participants in attendance on any day (see Attachment 1). If
meal counts and attendance cannot be reconciled, determine
whether the establishment of an overclaim is necessary.
For Sponsored Centers Reimbursed on Actual Daily Meal
Counts - When sponsored centers are reimbursed on actual daily meal
counts, the meal counts are reconciled to attendance and
enrollment records by participants. To make the workload
more manageable, the reconciliation may be based on a
random sample of children for the five-day period. For the
sample, choose at least 10 percent of the number of children
enrolled, with a minimum of five children’s records being
reconciled in sponsored centers with 50 or fewer enrolled
children.
For DCHs --

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 The reconciliation must include all children in care. In most
cases, the monitor will choose five consecutive operating days
during the current and/or last claiming period. An earlier month
may be reviewed if the DCH was closed or if there is a pattern
the monitor is trying to establish.
EXAMPLE: If a provider’s meal counts routinely included
the full licensed capacity of children on the Friday prior to
three-day weekends, but not on other Fridays, the State
agency would want to include such a Friday as part of the
five day reconciliation.
 If the provider claims meals for weekends and/or holidays,
these count as operating days and must be included when
reviewing five days in a row.
 Identify the licensed capacity for the provider.
 Choose five consecutive days prior to the day of review from
the Meal Count Record (if early in the month, refer to the Meal
Count Record from the prior month, if necessary, to get five
consecutive days).
 Identify the number of children in attendance during the fiveday period.
 Ensure that each child received no more than two meals and
one snack or one meal and two snacks for each of the five
days.
 Ensure that meals are only claimed for children during these
five days if current and properly approved enrollments are on
file.
 Compare date of enrollment to dates that meals were claimed
for each child.
 Compare meals claimed to “typical” hours and days in care per
child’s enrollment form.
 Compare meal counts for each meal type for the five days to
ensure that no meal count totals exceed provider’s licensed
capacity unless the provider is approved to provide the same
meal type(s) during different shifts. See Attachment 1. FiveDay Reconciliation Worksheets (Centers and DCHs).

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9)

Implementation of the Serious Deficiency Process
Requirement
Sponsoring organizations of DCHs are responsible for implementing
the serious deficiency process as described in 7 CFR 226.16(l) and
the Serious Deficiency, Suspension, and Appeals CACFP Handbook
[7 CFR 226.6(m)(3)(ix)].
Review Steps
 When the State agency
monitor is evaluating
Remember
facility reviews
conducted by the
Prior to claims payment, the
sponsoring organization,
State agency must verify that
confirm that the serious
independent center’s or
deficiency process is
sponsoring organization’s
being implemented
post-review claims for
when there is evidence
reimbursement do not include
that a provider has
any meals that were
committed one or more
disallowed by the State
serious deficiencies.
agency during the review.
This will include not only
ensuring the sponsoring
organization is implementing the serious deficiency process
accurately and completely, but that the sponsoring
organization’s monitoring of its facilities is sufficient to identify
serious deficiencies within the facilities it sponsors.
 If the administrative review (appeal) process has been
delegated to the sponsoring organization, evaluate how
accurately the sponsoring organization is executing the
process.

10)

Analyze Observations of Sponsoring Organization’s Operation
Analyze the findings of facility reviews conducted by the sponsoring
organization and evaluate whether or not appropriate overclaims were
assessed as a result from the review findings.
Determine if the facility review findings were frequent and severe enough to
be considered a serious deficiency, and if so, if the sponsoring organization
took the appropriate steps to begin the serious deficiency process.

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F. Analyze Observations, Determine Corrective and Fiscal Action, and
Identify Serious Deficiencies
1)

Analyze Observations
Rather than simply state the findings, the State agency should analyze their
findings of the institution’s operation and administration of the CACFP, the
details offered in the management plan, the claims consolidation and
submission processes, the leadership and support of the governing board,
the institution’s self-oversight, issues that have arisen within or throughout
the period since the previous review, and any other information the State
may poses that will assist it in exploring why problems have occurred and
what recommendations and technical assistance the State can provide to
ensure problems are adequately addressed. This analysis will also identify
administrative strengths that may be shared with other institutions for a
stronger State Program.
Questions the State monitor may ask themselves in conducting the analysis
include:

2)



Are there issues that the governing board should be addressing?



Is there training that board members should be asked to attend to
better administer their position within the CACFP?



Are the communication systems between personnel or departments
problematic?



Is the institution maintaining its Viability, Capability and
Accountability (VCA) as outlined and approved in its application?



For institution’s operating the CAFCP for a number of years, is the
institution improving its Program on based on its increased
experience in the CACFP? If not, what action might the institution
need to take to improve within its administration of the VCA
performance standards?

Corrective Action
If the results of the State agency verification reveal that the institution has
incorrectly classified or reported the number of participants receiving free or
reduced price meals, the institution must correct the eligibility category
retroactive to the month in which the incorrect information was reported to
the State agency by the institution. The State agency must also require the
institution to submit a corrected claim(s) for reimbursement for the month(s)
identified as incorrect or take an overclaim for the inaccurate meals claimed.
If the results of the verification show that households failed to provide
adequate documentation to justify eligibility for free or reduced price meals,
the State agency must immediately adjust the rates of reimbursement for the

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institution moving forward. However, this adjustment will not take effect until
the household has been informed of the action and any ensuing appeals
have been heard [7 CFR 226.23(h)(5); 7 CFR 226.6(k)(5)(ii)].
3)

Fiscal Action
Overclaims occur when an institution received more reimbursement than
was actually earned based on records to support the claim. Underclaims
occur when an institution receives less reimbursement than was actually
earned based on the records supporting the claim. Fiscal action may be
taken against any institution that fails to comply with the regulatory
requirements for participation in the CACFP.
During a review, the State agency monitor will validate the claim for
reimbursement filed by the institution and shall disallow any portion of the
claim that is incorrect and recover any payment to an institution this is not
properly payable. Should the State agency choose to adopt such policy, an
underclaim may be permitted to off-set any overclaims for an institution as a
result of an audit, investigation, or review [7 CFR 226.14(a)].

4)

Common reasons for disallowing meals and snacks
include (but not limited to):
a. Claiming meals for a
participant not enrolled in the
Program;
b. No written menu for claimed
meals or snacks;
c. Meals are missing
component(s);
d. Non-creditable items being
counted as a food
component;

Tip
Disallowance of
meals/snacks should
always result in technical
assistance for an
institution or facility in
order to prevent future
oveclaiming of meals or
snacks.

e. Less than two servings of fruit and/or vegetable component
being served for lunch or supper;
f.

Planned portion sizes are not appropriate for the age of the
children;

g. DCH Provider claiming own child for meals when no other
child is present;
h. Serving meals or snacks outside of approved hours;
i.

Meal counts exceed the number of children in attendance;

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j.

Inadequate quantity of milk or food provided for the number of
children served;

k. Meals served with substitute of component for medical
reasons without a proper medical note on file;
l.

Insufficient quantity of milk or food being purchased to meet
the amount required for the claimed meal service;

m. Meals claimed for reimbursement on a day when the center or
home is not in operation; and/or
n. Absence of daily attendance records, enrollment records, or
daily meal counts to substantiate the number of meals being
claimed.
In addition to fiscal action taken for other parts of the overall monitoring
review, fiscal action must be taken for the following:


Expenditures not identified in the approved budget;



Expenditures for which there are no receipts available or for which the
receipts do not support the meals served; and/or



Audit report findings of questioned costs.
o



To close audits, the State agency must require the institution
to correct any findings and take any required overclaims if any
questioned costs cannot be are verified as allowable costs.
The State agency will then close the audit via notice to the
Federal Audit Clearinghouse.

For tier determinations made in error, the State agency must take an
overclaim for meals served and claimed at the incorrect
reimbursement rates based on incorrect tiering rates. If the State
agency identifies that the sponsoring organization’s determination of a
DCH’s tier status was incorrect due to something non-systemic, the
sponsoring organization must correct the determination, but the State
agency may be allowed forgo taking an overclaim [7 CFR 226.14(a)].

The State agency will notify the institution of any overclaims or
underclaims established as a result of the review findings - either are an
identification of an inaccuracy. The notification must include the basis for
the action, the claim(s) that was affected, the amount of the
reimbursement that will be recovered, and the method of payment options
(via check or deduction from a future valid claim). A copy of the appeal
procedures must be provided when there is an adverse action affecting
reimbursement.

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5)

Assessment and Accrual of Interest
Beginning October 1, 2004, the Child Nutrition and WIC Reauthorization
Act of 2004 (Public Law 108-265) allowed a disregard threshold for
overpayments to child or adult care institutions participating in the CACFP
at the discretion of the State agency. A disregard threshold in the amount
of no greater than $600.00 will be placed on any operational over-claim
notice assessed as a result of a Program review or audit. However, no
overpayment will be disregarded where there is substantial evidence of
violations of criminal law or civil fraud statutes, or for any administrative
overclaim or disallowed administrative expense. If an institution incurs an
overclaim greater than $600.00, the entire debt must be repaid in full
within 30 days from the date of notification [7 CFR 226.14(a)].
The Program regulation at 7 CFR 226.14 is very specific in terms of the
State agency’s responsibility to collect debts, including an assessment of
interest. Also, interest will continue to accrue on debts not paid in full
within 30 days of the initial demand for remittance up to the date of
payment. It is the responsibility of the State agency to notify the debtor
(institution) that interest will be charged. The notification or demand must
be sent to the institution by certified mail return receipt requested. If after
30 days the institution fails to remit full payment or agree to a satisfactory
repayment schedule, a second written demand for the return of improper
payments must be sent to the institution.
If after 30 days following the second demand, the institution does not
respond to the written demand letter for the return of improper payments,
the State agency staff would refer the claim to the appropriate State
authority for pursuit of the debt payment. FNS defers to the State’s own
laws and procedures when establishing a repayment plan. The details of
any repayment plan should be worked out between the State agency and
the institution. As a general rule, FNS expects that State agencies will
pursue debts that are established and make all reasonable efforts to
collect them in full. That would include the State agency billing the
institution for the entire amount, charging interest on the outstanding
balance, accepting payments made by the institution, and referring the
case to the State agency’s collection process if initial demands are not
met with payment.
Interest is computed monthly and is charged on the unpaid principal and
accrues from the date of the initial demand for remittance and bill. If the
bill is paid within 30 days, no interest is collected. If the bill is not paid
within 30 days, interest continues to accrue from the date of the bill on
any portion of the principal that remains unpaid. The appropriate rate to
use is the Current Value of Funds Rate, which is published annually by
the Department of the Treasury in the Federal Register and is available
through the FNS Regional Office’s Financial Management staff.
If the Treasury changes the interest rate prior to payment, the rate
charged does not change. If the State agency has an interest rate for
other bills, it must use the one established by the Treasury.

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Institutions may submit funds to the State agency via check or may
request an adjustment be made to subsequent eligible reimbursements
the institution earns for the remainder of the current fiscal year. If the
overclaim cannot be recovered within the current fiscal year in which it
was assessed, or if the overclaim is for a prior, closed fiscal year, the
State agency must:
Initiate a billing letter explaining that, since the year is closed,
“Payment is due within thirty (30) days from the date of the bill.
Interest at a rate of xx.x percent per annum will be computed
monthly on the unpaid balance and will accrue from the date of
the bill. Interest will not be assessed if paid in full within 30 days.”
The institution may remit a check payment or ask the State
agency to offset a current year claim to recover the funds.
If the balance due cannot be remitted in one check, or recovered
from one reimbursement payment, the State agency must
calculate interest on the unpaid balance and should provide the
institution with a repayment schedule detailing principal and
interest.
6)

Questions and Answers
1. How should State agencies return the funds (principal and interest)
to FNS for prior, closed years?
State agencies must mail payments to the lockbox and should include
both principal and interest, if interest was collected. FNS Regional Offices
establish two receivables for collections involving interest, one for
principal and one for interest. This is due to the fact the interest amount is
returned to the Treasury and the principal amount is returned to the
Program account.
If remitting a check to the lockbox, a breakdown of how much of the
collection is for principal and how much is for interest should be included
on the check stub. At the same time the collection is returned to the
lockbox, it would be helpful if written notification (e.g., email) is sent to the
FNS Regional Office financial staff. Contact your FNS Regional Office for
the address for the lockbox.
2. What other reports must a State agency file if it assesses an
overclaim for a CACFP institution?
The State agency will need to submit a revised FNS form 44 for the
months impacted by the overclaim. If the claim adjustments are for
months in the current fiscal year, they can be processed in Food
Programs Reporting System until the year is closed. Once the year is
closed, a revised FNS 44 must be submitted in accordance with FNS
policy outlined in 30/60/90-day policies and the FNS Regional Office
should be consulted to provide guidance and direction as needed. In

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addition, the State agency should contact the FNS Regional Office for
guidance on preparing the FNS 44 when payment schedules have been
negotiated since the reporting must coincide with the return of funds.
3. How to Identify When Findings Rise to a Serious Deficiency
An institution may be declared seriously deficient for any of the reasons
listed in 7 CFR 226.6(c)(3)(ii)(A) – (U) and the State agency will exercise
judgment to differentiate between occasional or minor errors and major or
systemic errors. Factors to consider include:


Frequency of the error;



Institution’s length of Program experience;



Severity of the error; and



Literacy level or English proficiency.

Refer to the Serious Deficiency, Suspension, and Appeals CACFP
Handbook for details and procedures.

G. Technical Assistance
FNS provides State Administrative Expense funds to State agencies for administrative
expenses incurred in supervising and giving technical assistance to institutions
participating in the CACFP.
State agencies are responsible for providing
training and technical assistance to participating
Best Practice
CACFP professionals to increase their knowledge
of CACFP guidelines and Federal regulations.
If serious deficiencies are
Reviews are designed to ensure that institutions are
found, inform the institution
operating according to requirements and to provide
as part of the exit and alert
an opportunity for the State agency monitor to give
it to the consequences of
technical assistance if a need is identified during
voluntary termination prior
the review. Providing technical assistance at the
to corrective action.
time findings are identified will ensure that
institutions and facilities are able to correct the
findings expeditiously. All technical assistance provided should be documented and
maintained on file to support the institution’s progress [7 CFR 226.6(m)(1)].
Attachment 2 of this guidance provides a sample Technical Assistance Form.

H. Exit Conference
The purpose of the exit conference is to discuss the preliminary review findings. The
State agency will report Program strengths, findings, required corrective actions, and
recommendations. The agenda may include the following:

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

Introductions to anyone in attendance for whom introductions have not yet been
made and provide them with a very brief explanation of the purpose of visit;



Thank the director and staff for their assistance and hospitality;



Encourage them to ask questions and to point out any findings or observations
that they believe are incorrect. This is their opportunity to correct any
misunderstandings or misinterpretations of policies and procedures;



Inform them that a formal written report will be
issued within the timeframe designated by the
State agency, at which time a corrective action
response will be required for identified findings;

Tip
Team discussions held
prior to the exit
conference help to
avoid team
inconsistencies in
findings.



Some corrections can be immediate; such as,
better documentation of fruit and/or vegetable on
menus. Others require longer timeframes-- such
as, computer system changes [7 CFR
226.6(c)(4)(i)-(iii)];



Provide guidance on developing a corrective action response, if requested;



Discuss each finding and explain what is required to be in compliance. Identify
any repeat findings or observations from the previous review. Inform them of
findings that require further evaluation and analysis by State agency staff. Refer
to the Serious Deficiency, Suspension, and Appeals CACFP Handbook for
details in identifying and addressing serious deficiencies;



Commend them on any areas where they are performing well or have
accomplished permanent corrective action for previous findings; and



Ask all in attendance if they have any suggestions for future training or technical
assistance on Program issues that would be beneficial to their institution.

I. Questions & Answers
1. State agencies are required to review an institution once every three years.
Does this mean that the review must occur within 36 calendar months from
the last review? For example, if the State agency reviewed a center on
January 5, 2010, would the next review have to be conducted by January 5,
2013, or could the next review occur later in Federal fiscal year 2013?
The requirement does not restrict the State agency to a 36-month cycle. It
requires reviews to be conducted within the 3-year review cycle based on a State
fiscal year, Federal fiscal year, or calendar year. Therefore, a State agency using
a Federal fiscal year may review a center on January 5, 2010, so the next review
must be conducted no later than September 30, 2013.

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2. The requirements for sponsoring organization monitoring of facilities are
based on the assumption that most facilities participate in CACFP 12
months each year, and that they continue to participate on a full-year basis
from one year to the next. Are there other scenarios that could occur?
State agencies will need to establish requirements concerning the monitoring of
facilities that participate on an other-than-year-round basis. When establishing
State-level requirements, consideration may be given to the proportion of the
year that a facility normally participates in CACFP.
Note: There are also minimum review requirements when a facility begins
participation near the end of the sponsoring organization’s review cycle.
If a sponsoring organization used the Federal fiscal year as its normal review
cycle and a facility began operating in August, the facility would be reviewed
once within four weeks during that fiscal year and during the next fiscal year
beginning in October, it would be reviewed three times.
3. Can a child care center that is a pricing Program charge one meal rate for
children ages 1-12 and a higher meal rate for infants?
A pricing center may charge different rates for meals served to children ages 1 to
12 and for meals served to infants. However, the meal service fees that families
pay must be deposited in the center’s nonprofit food service account and used
only for the operation or improvement of the nonprofit food service for the
enrolled children and infants.
4. When must a five-day reconciliation be conducted?
A five-day reconciliation must be included in each DCH review conducted by a
sponsoring organization. The State agency also must conduct a five-day
reconciliation for each facility it reviews during its overall review of a sponsoring
organization [7 CFR 226.16(d)(4)(i)(ii); 7 CFR 226.6(m)(4)].
5. Does the State agency monitor need to conduct a five-day reconciliation in
an independent center?
Program regulations do not require the State agency to conduct a five-day
reconciliation of an independent center.
6. When a facility is approved to serve meals on weekends, evenings, and/or
holidays, is the State agency required to determine if the sponsoring
organization has monitored these meal services?
Yes. State agencies must, during its review of a sponsor, determine whether the
sponsoring organization has made a reasonable effort to monitor all of the meal
services being claimed by its facilities.

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7. If, as part of a facility review, State agency monitors are unable to observe
a meal service because the sponsoring organization indicates the facility is
not having a meal service on the day of review, can the review still be
counted as one of the State agency’s required reviews?
Yes. State agencies are only required to observe meal services at independent
centers [7 CFR 226.6(m)(3)(vii)]. Although the observance of a meal is a good
practice for facilities as well, it may not always be practical.
8. If enrollment forms are missing and meals are disallowed in the review
month, are meal disallowances required for each month the participants
were in attendance in the applicable Program year?
State agencies have discretion on how far back to take this type of disallowance.
Some State agencies may only take disallowances for the review month; some
may go back three months; and others may go back to the beginning of the
Program year. It is important for State agencies to have written policies and
procedures to address this matter and to ensure consistency for all
disallowances.
9. In an effort to maximize storage space, are sponsoring organizations
permitted to maintain electronic copies of records, in place of paper
documents for the purpose of supporting their claims for reimbursements?

Maintaining electronic documents is certainly an acceptable practice as long as
certain measures are taken to protect the integrity of the information. There is no
reason for the sponsoring organization to keep both an electronic copy and a
hard copy of the documents [CACFP 07-2007, Update on Electronic
Transactions, May 1, 2007].

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Part 4. Writing a Review Report
Once the on-site review is completed, the State agency is responsible for preparing a
comprehensive written report detailing the areas covered during the review. The report is
addressed to the executive director, chairman of the board of directors, owner(s), and all
person(s) responsible for the effective operation of the Program; i.e., Responsible
Principal/Individuals (RP/I). The correspondence is sent certified mail, return receipt
requested (or the equivalent private delivery service), by fax, or by email (proof of
delivery required).
All deficiencies and findings found during the review must
be discussed during the exit and then, to ensure and track
correction of the findings, all findings must then be listed
as findings in the written report. Findings are areas of
noncompliance with Federal regulations the CFR, FNS
Instructions, and CACFP policy memoranda; and require
immediate attention. To observe findings but not discuss,
document, and track their correction decreases the
integrity of the review and the State agency’s credibility.

Best Practice
For each finding,
provide citations from
Federal regulations,
FNS Instructions, or
CACFP policy.

Prototypes that can be used for various review outcomes
are offered as Attachment 3 of this guidance Prototype Review Letter with No Findings,
and Attachment 4 Prototype Review Letter with Findings.
There are instances when the results of a review require an adjustment to the original
claim for reimbursement. When this occurs, the State agency could use the disregard
[Reference Part 6 of this guidance and 7 CFR 226.8(e)].

Best Practice
Prior to issuing the review report to the institution, the State
agency can conduct a second-party review of the findings and
corrective action plan to ensure an accurate report.

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Part 5. Corrective Action Response
Institutions must be required to provide a written corrective action response to the review
findings within the timeframe designated by the State agency. The response submitted
must address each finding and include the actions being implemented by the institution
to permanently correct the deficiencies found. Requiring the institution develop a
corrective action response assists the institution to:


Document that the institution’s staff understands what they are doing wrong and
what they need to do to make improvements;



Document the institution’s plan for improvement;



Provide an opportunity for the State agency to evaluate and accept the corrective
action or request additional information or clarification; and



Provide sufficient detail so that during any subsequent or follow-up review a
determination can be made as to whether the issues were corrected and those
corrections have been permanently maintained.

Before the corrective action can be determined, the institution needs to establish WHAT
the problem is and WHY it is occurring. The corrective action response must then clearly
state the following:
HOW the problem can be prevented or eliminated. This cannot merely be a
restatement of the issue, or an assurance that the mistake will not happen again.
The solution must be a process – specific steps that have been taken to correct
the deficiency; and what extra steps will be taken to make sure this problem does
not occur again;
WHEN the problem was corrected (the time frame will generally be less than 30
days; and
WHO will be responsible for ensuring the corrections were made and written
policies and/or procedures will be maintained.
For a sample that outlines a corrective action response following the Who, What, How,
When, Why format, see Part 11 of this guidance, Attachment 6 Corrective Action Plan
Form.

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Part 6. Follow-Up Reviews
Follow-up reviews can be conducted on-site, or, in some cases, by reviewing CACFP
records that have been mailed, faxed, or delivered to the State agency (desk review).
Desk reviews may be conducted for issues involving
paperwork, such as:


Free and Reduced Price Meal Applications;



Enrollment Rosters;



Audits;



Receipts;



Menus;



Claim Review;



Five-day Reconciliation (for all meals, not just
the one observed); and



Meal Counts vs. Attendance.

Best Practice
A follow-up review may
be conducted any time
corrective action is
required. The purpose
of the follow-up review
is to ensure the
institution has
completely corrected
the review findings,
according to their
approved corrective
action response.

On-site reviews occur when there is a need to directly observe whether the corrective
action has been implemented. These may include findings associated with:


Meal Preparation;



Verification of attendance;



Meal Service (components);



Food Safety Issues.

Follow-up reviews are generally unannounced and should be made after the State
agency has accepted the corrective action response. During the follow-up review, only
those Program findings of noncompliance during the initial review need to be checked,
though the State agency has the authority to review any part of the Program and will
need to address any findings and/or serious deficiencies that arise in a follow-up review.
If any of the initial findings still remain (remember, this is a review that uncovered only
minor findings), the State agency should make a determination on whether additional
corrective actions will suffice or whether to declare the institution seriously deficient.

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Part 7. Closing the Review
When the corrective action response is received from an institution, the State agency
evaluates the submission to ensure that it is complete and that each finding has been
adequately addressed. If the State agency determines the institution’s response is
satisfactory, the State agency will issue a letter to the institution indicating that its
response was acceptable, and the review is closed.
If the corrective action response is incomplete, the State agency will inform the institution
of all outstanding items and allow additional time for the institution to submit the
remaining documentation.
If the corrective action response is not submitted and/or the additional documentation is
inadequate, the State agency must proceed to declare the institution seriously deficient.

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Part 8. Complaints
A Program complaint is a verbal or written complaint in which the complainant alleges
that violations of CACFP requirements have, or are taken place [7 CFR 226.6(n)].
A civil rights complaint is a verbal or written complaint in which the victim alleges
discrimination on the basis of one or more of the six classes protected in the CACFP.
Note: The USDA’s nondiscrimination statement includes more protected classes than
the CACFP regulations identify for Program participants. The protected classes in the
CACFP include: race, color, national origin, age, sex, or disability [USDA’s
nondiscrimination policy, 7 CFR 226.6(b)(4)(ii) and FNS Instruction 113-1, Civil Rights
Compliance and Enforcement - Nutrition Programs and Activities].

A. Program Complaints
Whenever the State agency receives a Program complaint it is required to promptly
investigate it. Complaints may be received in either written or verbal form. State
agencies must maintain on file, evidence of the investigations and any actions taken.
FNS and OIG may investigate at the request of the State agency or whenever FNS or
OIG determines that investigations are appropriate.
State agencies must have written processes or procedures in place to investigate
institutions or facilities when complaints are received or when irregularities in Program
operations are reported.

B. Civil Rights Complaints (Discrimination in Program Participation)
When the State agency receives a written or verbal complaint of Program discrimination,
it is required to forward the complaint to the USDA, Office of Civil Rights for processing.
If a verbal complaint is received, the State agency can encourage the complainant to
complete a USDA Program Discrimination Complaint Form at;
http://www.ascr.usda.gov/complaint_filing_cust.html
however, the use of the form is not a prerequisite for acceptance of a complaint. If the
complainant is unable or unwilling to put the allegations in writing, the person to whom
the allegations are made must write up the elements of the complaint for the
complainant using the USDA Program Discrimination Complaint Form. Every effort
should be made to have the complainant provide the following information:
1. Name, address, and telephone number or other means of contacting the
complainant;
2. The specific location and name of the State agency, local agency, or other subrecipient delivering the service or benefit;
3. The nature of the incident or action that led the complainant to feel discrimination
was a factor, and an example of the method of administration that is having a
disparate effect on the public, potential eligible persons, applicants, or
participants;
4. The basis on which the complainant believes discrimination exists (race, color,
national origin, age, sex, or disability);

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5. The names, telephone numbers, Titles, and business or personal addresses of
persons who may have knowledge of the alleged discriminatory action; and
6. The date(s) during which the alleged discriminatory actions occurred or, if
continuing, the duration of such actions [FNS Instruction 113-1, XV].
The completed form can be sent via regular mail, e-mail, or phone, as follows:
Mail:

U.S. Department of Agriculture
Director, Office of Adjudication
1400 Independence Avenue S.W.
Washington, D.C. 20250-9410

Fax:

(202) 690-7442

Email: program.intake@usda.gov
Individuals who are deaf, hard of hearing, or have speech disabilities may contact USDA
through the Federal Relay Service at (800) 877-8339 or (800) 845-6136 (Spanish).

C. Questions & Answers
1. If an employee believed he or she was discriminated against by their
employer (a CACFP institution), would that discrimination complaint need
to be sent to USDA?
No. If an employee believes that he or she was discriminated against by their
CACFP institution, the employment discrimination complaint would not be sent to
the USDA since employment discrimination falls under Title VII of the Civil Rights
Act of 1964. Only alleged discriminations that fall under the umbrella of Title VI
(Programs and activities receiving Federal financial assistance) are reported to
USDA.

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Part 9. Acronyms and Glossary
CACFP – Child and Adult Care Food Program
CFR – Code of Federal Regulations
CN – Child Nutrition
DCH – Day Care Home
FNS – Food and Nutrition Service
NDL – National Disqualified List
OMB – Office of Management and Budget
OIG – Office of Inspector General
OSHCC - Outside School Hours Care Center
RP/I – Responsible Principal/Individual
VCA – Viable, Capable and Accountable
USDA –United States Department of Agriculture
WIC – Women, Infants and Children
For Program definitions, see the CACFP regulations at 7 CFR 226.2. Other definitions
used in this handbook follow.
Desk Review – Review activity performed by staff while not on-site – examples include
review of printed files, electronic media, etc. The entire institution or facility review
cannot be accomplished via desk review.
Finding – Identification of noncompliance with Program regulations, FNS Instructions, or
policy memos. Each finding is associated with a required corrective action.
Federal Fiscal Year – A period of 12 calendar months beginning October 1 of any year
and ending with September 30 of the following year.
On-site Review – Activity performed at the institution’s and/or facility’s central office or
local office, or at the Program’s operating location; i.e. activity not performed in the State
agency’s office. This may include local agency visits, interviewing staff, review of
computer systems, participant files, reports, forms, and records.
Technical Assistance – Guidance and support to local agencies to achieve regulatory
compliance and Program improvement.

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Part 10. Resources
Below is a list of available resources including regulations, required notices, rates, and
meal service and planning guides.
A. General
Building for the Future Notice
This notice describes CACFP, its eligibility requirements, and the types of meals that
can be served. The web link contains both the English and Spanish language
versions.
http://www.fns.usda.gov/sites/default/files/Build4Future.pdf
CACFP Meal Patterns
http: //www.fns.usda.gov/cnd/care/programbasics/meals/meal_patterns.htm
Code of Federal Regulations – CACFP related
http://www.fns.usda.gov/cacfp/regulations-0
The Dietary Guidelines for Americans are the cornerstone for Federal nutrition
policy and nutrition education activities.
http://www.health.gov/dietaryguidelines/
Feeding Infants: A Guide for Use in the Child Nutrition Programs
http: //www.fns.usda.gov/tn/Resources/feeding_infants.html
Food and Nutrition Service. FNS administers the CACFP on the Federal level.
http://www.fns.usda.gov/
The Food Buying Guide for Child Nutrition Programs
http://www.fns.usda.gov/tn/resources/foodbuyingguide.html
The Healthy Meals Resource System is an online information center for USDA
Child Nutrition Programs and has been delivering resources to Program staff since
1995.
http://healthymeals.nal.usda.gov
FNS Instruction 113-1 Civil rights Guidance and Enforcement – Nutrition
Programs and Activities, IX, B.1
http://www.fns.usda.gov/cr/Documents/113-1.pdf
FNS Instruction 783-2 Accommodating Children with Special Dietary Needs
Obtain a copy from the FNS Regional Office
FNS Instruction 783-9, Rev. 2 Family-style Meal Service in the Child and Adult
Care Food Program
Obtain a copy from the FNS Regional Office
Income Eligibility Handbook for School Meals
http://www.fns.usda.gov/cnd/Guidance/EliMan.pdf

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MyPlate was developed as an effort to promote healthy eating to consumers. The
MyPlate icon is easy to understand and it helps to promote messages based on the
2010 Dietary Guidelines for Americans.
http://www.choosemyplate.gov/
The National Food Service Management Institute, part of the School of Applied
Science at The University of Mississippi, offers in-person training at little or no cost
and free online courses designed to support the professional development of Child
Nutrition Program and child care personnel at all levels of responsibility. The Institute
also delivers free training resources managers can use to train their staff.
http://www.nfsmi.org/
State Agency Contacts
http://www.fns.usda.gov/cnd/Contacts/StateDirectory.htm
Team Nutrition is an initiative of the USDA Food and Nutrition Service to support
the Child Nutrition Programs through training and technical assistance for
foodservice, nutrition education for children and their caregivers, and school and
community support for healthy eating and physical activity. Users can download
recipes, activity sheets and other nutrition related materials.
http: //teamnutrition.usda.gov/Default.htm

B. FNS CACFP Handbooks
http://www.fns.usda.gov/cacfp/cacfp-handbooks
Adult Day Care Handbook
At-risk Afterschool Care Handbook
Crediting Handbook for CACFP
Family Day Care Home Monitor Handbook
Guidance for Management Plans and Budgets
Serious Deficiency, Suspension, & Appeals for State Agencies and Sponsoring
Organizations

C. Financial Management Resources
2 CFR Part 225 (formerly Office of Management and Budget (OMB) Circular A-87)
Cost Principles for State, Local, and Indian Tribal Governments
http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title02/2cfr225_main_02.tpl
2 CFR Part 230 (formerly OMB Circular A–122) Cost Principles for Nonprofit
Organizations
http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title02/2cfr230_main_02.tpl
7 CFR 3016, Uniform Administrative Requirements for Government-wide Debarment
and Suspension (Non-procurement)
http: //www.gpo.gov/fdsys/granule/CFR-2012-Title7-vol15/CFR-2012-Title7-vol15part3016/content-detail.html

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7 CFR 3018, New Restrictions on Lobbying
http://cfr.regstoday.com/7cfr3018.aspx
7 CFR 3019, Uniform Administrative Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals, and other Nonprofit Organizations
http: //www.ecfr.gov/cgi-bin/text-dx?tpl=/ecfrbrowse/Title07/7cfr3019_main_02.tpl
48 CFR Part 31, Contract Cost Principles and Procedures
http: //www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title48/48cfr31_main_02.tpl

D. Memoranda Issued by FNS Relating to Monitoring the CACFP
May 17, 2013

CACFP 11-2013 Questions and Answers Regarding the
Participation of Head Start Programs in Child Nutrition
http://www.fns.usda.gov/sites/default/files/SP40-2013os_0.pdf

March 19, 2012

CACFP 11-2012 Day Care Home Administrative
Reimbursements: Options and Carryover Requirements
http://www.fns.usda.gov/cnd/Care/RegsPolicy/policymemo/2012/CACFP11-2012.pdf

September 15, 2011 CACFP 21-2011, Child Nutrition Reauthorization 2010:
Nutrition Requirements for Fluid Milk and Fluid Milk
Substitutions
http://www.fns.usda.gov/cnd/care/RegsPolicy/policymemo/2011/CACFP-21-2011.pdf
April 7, 2011

CACFP 16-2011, Child Nutrition Reauthorization 2010: Varied
Timing of Unannounced Reviews in the Child and Adult Care
Food Program
http://www.fns.usda.gov/cnd/care/RegsPolicy/policymemo/2011/CACFP-16-2011.pdf

February 24, 2009

CACFP 03-2009 Record Maintenance Requirements for
Family Day Care Home Providers in Child and Adult Care
Food Program
http://www.fns.usda.gov/cnd/care/RegsPolicy/policymemo/2007-2009/CACFP03-2009.pdf

May 17, 2013

CACFP 11-2013 Questions and Answers Regarding the
Participation of Head Start Programs in Child Nutrition
Programs
http://www.fns.usda.gov/sites/default/files/SP40-2013os_0.pdf

January 26, 2007

CACFP 01-2007 Retention of Records Relating to Institutions,
Responsible Principals or Responsible Individuals, and Day
Care Homes on the NDL; Retention of Records Relating to
Serious Deficiencies
http://www.fns.usda.gov/cnd/care/RegsPolicy/policymemo/2007-2009/CACFP_01-2007.pdf

Monitoring Handbook for State Agencies

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May 1, 2007

CACFP 07-2007 Update on Electronic Transactions
http://www.fns.usda.gov/cnd/Care/RegsPolicy/policymemo/2007-2009/CACFP_07-2007.pdf

September 23, 2005 CACFP 07-2005 Conducting Five-day Reconciliations in
Centers
http://www.fns.usda.gov/sites/default/files/2005-09-23- a.pdf
December 23, 2004

Additional Guidance on the Child and Adult Care Food
Program Second Interim Rule
http://www.fns.usda.gov/cnd/care/RegsPolicy/policymemo/2004-2006/2004-12-23.pdf

May 17, 2002

Obligation to Offer Infant Meals
http://www.fns.usda.gov/cnd/Care/RegsPolicy/policymemo/2000-2003/2002-05-17.pdf

August 13, 1998

Audit Requirements - CACFP Proprietary Title XIX and Title
XX Institutions
http://www.fns.usda.gov/cnd/Care/RegsPolicy/policymemo/1999-1996/1998-8-13.pdf

Monitoring Handbook for State Agencies

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Part 11. Attachments
Attachment 1. Five-Day Reconciliation Worksheets (Centers and DCHs)
Attachment 2. Prototype Technical Assistance Form
Attachment 3. Prototype Review Letter with No Findings
Attachment 4. Prototype Review Letter with Findings
Attachment 5. Spot Checks and Red Flags in Financial Management Reviews of
Institutions, specifically Sponsoring Organizations
Attachment 6. Corrective Action Plan Form
Attachment 7. Prototype Medical Statement (Developed by the FNS Mid-Atlantic
Regional Office)

Monitoring Handbook for State Agencies

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Attachment 1
Five-Day Reconciliation Worksheet for Sponsored Centers
For centers, you reconcile by the numbers. The highlighted parts are the numbers the
monitor should question the center about and request clarifications.
Five-Day Reconciliation Worksheet for Sponsored Centers
License Capacity: 55

Day 1:

Enrollment
50

Attendance
45

Breakfast
45

Day 2:
Day 3:
Day 4:
Day 5:
Total

50
50
50
50
250

50
50
50
40
235

50
50
50
45
240

AM
Snack

0

Lunch
45

PM
Snack
45

50
50
50
45
240

50
50
50
45
240

Supper

Evening
Snack

0

0

Extra review observation for a monthly claim: Is it reasonable that the same number
of meals were served for all meals for all children in care for all 5 days? This would
indicate that all children in attendance were in care all day long for all days. Also note
that attendance for Day 5 is 40, but the center is claiming 45 meals.

Monitoring Handbook for State Agencies

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Five-Day Reconciliation Worksheet for Day Care Homes
For DCH, you reconcile by the child. The example below has two charts, one collects
information on enrollment and attendance and the other collects meal counts. Compare
the number of meals served (2nd chart) to the number of children in attendance (1st
chart) for that meal.
For example: On Day 2 and Day 5 (highlighted), the monitor can ask the provider why
they claimed 4 breakfasts and/or snacks when there were only 3 children in attendance
at those times and why they claimed more meals than attendance.
Day Care Home
Licensed Capacity: 8

Child Names:
#1 Maria F.
#2 Kevin K.
#3 Katie L.
#4 Brian M.
#5 Jose P.
#6 Taylor P.
#7
#8
Total

Enrollment
Day(s)*
M-F
M-F
M-F
M-F
M-F
M-F

Time
8am-5pm
8am-5pm
8am-5pm
8am-5pm
noon-6pm
noon-6pm

Day 1
1
1
1
1

Day 2
1
1
1
1
1

Attendance
Day 3
Day 4
1
1
1
1
1
1
1
1
1
1
1

4

5

6

5

PM
Snack

Supper

Evening Snack

0

2
2
2
2
8

0

Day 5
1
1
1
1
1

5

*Day(s) = days of the week the child attends day care

Day 1
Day 2
Day 3
Day 4
Day 5
Total

Breakfast

AM
Snack

Lunch

4
4
4
3
4
19

4
4
4
3
4
19

4
6
6
5
6
28

Monitoring Handbook for State Agencies

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Attachment 2
TECHNICAL ASSISTANCE FORM – Prototype
All or parts of this form can be used as part of technical assistance documentation while
leading an institution through Program requirements
INSTITUTION_________________________________________________
1. Approved Application and agreement package
Current license
IRS documentation
Other documentation
2. Enrollment/Income eligibility forms
Current Income eligibility form for each enrolled child
Completed enrollment forms that are updated annually
Both forms are valid for 12 months and must be signed and dated by a parent or
legal guardian
3. Master Enrollment form
Lists enrolled children and must correspond with income eligibility forms
4. Attendance Records
Must be taken daily
Daily and Monthly totals must correspond
5. Daily meal counts
Must be taken at point of service (when participants are actually receiving meals)
The State agency must be notified of all field trips away from the independent
center during meal service times
6. Menus
All meals served must meet USDA meal pattern requirements
All menus must be dated daily
All meals must correspond with food production records or itemized receipts
7. Documentation of meal service labor and administrative labor
8. Itemized receipts
Monthly (food)
Monthly non-food expenses (supplies related to food Program)
9. Reimbursement Claims
Method (actual, percentage and blended)
Deadline for submitting to State agency
10. Food Service Account
Must be able to track CACFP monies separate from other funds if a separate is
not used

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11. Training
Staff must be trained on CACFP requirements at least once a year and
documentation of this training must be maintained
12. Civil Rights Compliance
All the above areas have been explained to Institution Representatives - whose
signature appears below and the Institution has a workable knowledge of the
CACFP rules and regulations
13. Record Retention
All records must be kept (at a minimum) for three years plus the current year.
Some records must be maintained for longer periods of time or permanently such
as: applications and agreements, records related to serious deficiencies,
documentation of nonprofit status, etc.
REMARKS:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

___________________________
Technical Assistance
State Representative
SIGNATURE

___________________________
Institution Representative
SIGNATURE

Date_______________________

Date________________________

Monitoring Handbook for State Agencies

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Attachment 3
Review Letter with No Findings

Date
Name(s) and Title(s) of all RP/Is
Address
CACFP Agreement No.
Dear ______________:
Thank you for the courtesy and cooperation you and your staff extended to our
representatives during the [date] Child and Adult Care Food Program (CACFP) review.
The purpose of this review was to assess your organization’s administration of the
CACFP and to provide technical assistance to strengthen Program management and
integrity.
Our reviewers examined CACFP documentation such as income eligibility forms,
enrollment forms, master enrollments lists, attendance records, meal count records,
menu records, and food service cost records. The review focused on the records
supporting your [month/year] claim for reimbursement. We also assessed compliance
with civil rights requirements and observed a meal service.
All areas reviewed were found to be in compliance with regulatory requirements. A
response to this letter is not required as no deficiencies were noted.
We appreciate your efforts in ensuring proper management and integrity of the Program.
If you have any questions, you can contact [reviewer’s name] at [telephone number] or
via e-mail at [e-mail].
Sincerely,

State agency representative

Monitoring Handbook for State Agencies

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Attachment 4
Review Letter with Findings
[Best practice: send Certified Mail – Return Receipt Requested]
Date
Name(s) and Title(s) of all RP/Is
Address
CACFP Agreement No.
Dear ________:
Thank you for the courtesy and cooperation you and your staff extended to our
representatives during the [date] Child and Adult Care Food Program (CACFP)
administrative review. The purpose of this review was to assess your organization’s
administration of the CACFP and to provide technical assistance to strengthen Program
management and integrity.
Our reviewers examined CACFP documentation such as income eligibility forms,
enrollment forms, master enrollment lists, attendance records, meal count records, menu
records and food service cost records. The review focused on the records supporting
your [month/year] claim for reimbursement. We also assessed compliance with civil
rights requirements and observed a meal service.
The following deficiencies were identified in your Program operation and require
corrective action. The institution must outline what action it will take to correct each
finding; this will include who will take the corrective action, who will be responsible for
ensuring the correction occurs, by what date the correction will be made. This corrective
action may require changes in procedures, staffing changes, etc. All detail regarding
changes will need to be in the corrective action response.
Findings
List each finding providing detailed explanations and cite applicable regulations; identify
the date by which the correction must be made, and identify the overclaim associated
with the finding, if applicable.
If the review resulted in an overclaim, the following paragraph would be included in the
review letter.
As a result of the errors noted with the meal counts and income eligibility statements, we
recalculated your [review month] claim and determined an overclaim of [$XX.00]. An
adjusted claim for reimbursement must be submitted as part of your corrective action
response.
Finally, in compliance with 7 CFR 226.6(k) of the CACFP Regulations, you have the right
to appeal the overclaim decision. A copy of your appeal rights is enclosed for your
information. If you decide to appeal the overclaim, please ensure that you follow these

Monitoring Handbook for State Agencies

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procedures exactly. Failure to comply may result in the denial of your request for an
appeal.
Please prepare and submit a corrective action plan advising this office of the action
taken to correct the deficiencies noted above. Describe, in detail, the corrective actions
taken to permanently eliminate the problems identified. Failure to correct these problems
may result in a notice of serious deficiency issued to your institution. The corrective
action response must be received in the State office by [date], not simply postmarked by
this date.
If you have any questions regarding this letter or your CACFP operation, please do not
hesitate to contact [reviewer’s name] at [telephone number].
Sincerely,

State agency representative
Enclosures:

Calculation Worksheet
Appeal Procedures

Monitoring Handbook for State Agencies

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Attachment 5
Spot Checks and Red flags for the
Financial Management Reviews of Institutions,
Specifically Sponsoring Organizations
Sponsoring organizations develop their financial management systems in a number of
different ways. State agency monitors will need to constantly modify their monitoring
practices to improve their skills and procedures in evaluating fiscal records to better
understand each institution’s systems, to ensure institutions’ fiscal viability, and/or to
identify mismanagement.
Insufficient funds (ISF) charges
Review steps
 Review the bank statement for any ISF charges. If ISF charges are claimed
as administrative costs, they are unallowable, so must be overclaimed.
Note: If these charges have not been claimed for CACFP reimbursement,
there is still a concern for the CACFP. ISF charges indicate poor
management of funds and poor accountability.
Invoices
Review step
 Spot check to ensure the addresses for invoices for which payment has been
made match the addresses used for issuing and mailing payments (including
electronic systems) to verify that payments are made for only valid invoices.
Check cashing irregularities
a. Examples of check clearing irregularities include large blocks of skipped check
numbers without explanation; checks that are more than 6 months old clearing
the account, checks clearing the bank before the date the check was written; and
checks written in excess of available funds. If any of these irregularities are
identified, make copies of the check registers, bank statements and bank
reconciliations and conduct further investigation of records of providers and/or
vendors to address concerns.
Review step
 Scan the check register, bank statements, and bank reconciliations for the
patterns.
b. Checks outstanding for more than 2 months could indicate that the sponsoring
organization is asking or requiring providers to delay cashing their checks, or the
sponsoring organization may have claimed for homes not operating, or may have
diverted checks. There may be additional information to be gained by
investigating this issue with the providers who have delayed cashing their
reimbursement checks.

Monitoring Handbook for State Agencies

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Review step
 To evaluate check cashing irregularities, make a list of check numbers that
are outstanding on the review month’s bank statement and of the check
numbers outstanding from the bank statement for one month prior to the
review month. Identify the providers associated with these check numbers
and determine if and which providers are delaying cashing their checks for
more than two months. This irregularity flags a number of possible concerns
which warrant additional investigation.
Distribution of funds
Review Step
 List the providers whose numbers were in the sponsoring organization’s
consolidation and compare that list with the payment record to ensure all
providers were actually paid. If all were matched, spot check that the number
of meals the provider served match the number claimed by the sponsoring
organization to ensure the sponsor is correctly consolidating the claim and
that providers are receiving accurate reimbursement.
Misuse of provider funds
Funds from the provider account, or the providers’ share of funds in a co-mingled
account must be expended for only providers’ reimbursement.
Review steps
 Using the bank statement for the provider’s bank account, identify any
payments made from the provider account which were not made to providers
for reimbursement payments.
 If the sponsoring organization is using one bank account for its administrative
reimbursement and for provider reimbursement -- a co-mingled account -ensure that on the day prior to the date provider checks were written, there
were sufficient funds in the account to cover all provider payments and all
outstanding checks.
Operating on floating funds
If checks for provider reimbursements and/or for administrative expenses have been
sent with the expectation they will be processed for withdrawal at the bank on a date
following the date of an expected deposit, the sponsoring organization’s viability would
come into question and its financial system determined unaccountable.
Review step
 Compute the amount for checks that were outstanding on or before the
date of the lowest balance.

Monitoring Handbook for State Agencies

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To do this, you will need the bank statement, check register, and bank
reconciliation. The bank statement identifies the checks that have cleared
the bank by date. The check register will list the check number, date the
check was written and the amount. The bank reconciliation will identify
the check number and amount of all checks outstanding (not yet cleared
through the bank).
The outstanding checks will be in two sections. Checks written on or
before the last day of the bank statement; and those written after the last
day of the bank statement through to the date the reconciliation was
performed.
Observations
Review steps
 Look for unexpected payments—e.g., payments to board members, property
tax payments when rent is claimed, more than one check to the same vendor
– for example, rent payments made more than once per month, all
employees paid every two weeks, except one employee paid monthly or
weekly; checks written to cash; personal-expense-type checks such as to
doctors, school tuition, grocery, and department stores.
 Look for checks written for cash; there are few instances when a cash
payment is appropriate from a business account.
State agency action
For observations of irregularities that cannot be validated as acceptable, the State
agency must require corrective and/or fiscal action, and must determine if the institution
is seriously deficient.

Monitoring Handbook for State Agencies

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Attachment 6
[State agency]
Child and Adult Care Food Program (CACFP)
Corrective Action Plan for
Name of institution_______________________________ Agreement #________
Review #______________________________ Operational Weakness #________
Instructions: A separate corrective plan should be prepared for each operational
weakness. It is also better to prepare a separate form for each part of an operational
weakness (1a, 1b, etc.), to insure you respond to each issue.
A. Operational Weakness: Explain what the institution is doing that is inaccurate.

B. What and How (list what processes and/or procedures will be implemented to
correct the operational weakness and how will the institution ensure that the
processes and/or procedures are followed consistently in order to prevent future
operational weaknesses):

C. Who (list all persons, including their titles, involved in correcting the operational
weakness and preventing it from recurring in the future):

D. When (this is the implementation date. When will the procedure for addressing the
operational weakness begin? How often will the procedure be done; i.e., daily,
weekly, monthly, etc.)

Monitoring Handbook for State Agencies

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E. Identify the supporting documentation included with this CAP which verifies
corrections were made or will be implemented. (This might include copies of
training documentation, site monitoring reports, attendance records, meal count
forms, etc.)

Signature: ___________________________________

Date:__________________

Title: ________________________________________

Monitoring Handbook for State Agencies

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Attachment 7

MEDICAL STATEMENT TO REQUEST
SPECIAL MEALS AND/OR ACCOMMODATIONS
1. School/Agency Name

2. Site Name

3. Site Telephone Number

4. Name of Participant

5. Age or Date of Birth

6. Name of Parent or Guardian

7. Telephone Number

8. Check One:

Participant has a disability or a medical condition and requires a special meal or accommodation. (Refer to
instructions on reverse side of this form.) Schools and agencies participating in federal nutrition programs
must comply with requests for special meals and any adaptive equipment. A licensed physician must sign
this form.
Participant does not have a disability, but is requesting a special meal or accommodation due to food
intolerance(s) or other medical reasons. Food preferences are not an appropriate use of this form. Schools
and agencies participating in federal nutrition programs are encouraged to accommodate reasonable
requests. A licensed physician, physician’s assistant, or nurse practitioner must sign this form.
Participant does not have a disability, but is requesting a special accommodation for a fluid milk substitute
that meets the nutrient standards for non-dairy beverages offered as milk substitutes. Food preferences are
not an appropriate use of this form. Schools and agencies participating in federal nutrition programs are
encouraged to accommodate reasonable requests. A licensed physician, physician’s assistant, nurse
practitioner or parent or guardian may sign this form.
9. Disability or medical condition requiring a special meal or accommodation:

10. If participant has a disability, provide a brief description of participant’s major life activity affected by the disability:

11. Diet prescription and/or accommodation: (please describe in detail to ensure proper implementation-use extra pages as needed)

12. Foods to be omitted and substitutions: (please list specific foods to be omitted and suggested substitutions. you may attach a
sheet with additional information as needed)

A. Foods To Be Omitted

B. Suggested Substitutions

13. Indicate texture:

Regular

Chopped

Ground

Pureed

14. Adaptive Equipment:

15. Signature of Preparer*

16. Printed Name

17. Telephone Number

18. Date

19. Signature of Medical Authority*

20. Printed Name

21. Telephone Number

22. Date

* Physician’s signature is required for participants with a disability. For participants without a disability, a
licensed physician, physician’s assistant, or nurse practitioner must sign the form. Parent/legal guardian
signature is acceptable for fluid milk substitution for a child with special medical or dietary needs other than a
disability.

The information on this form should be updated to reflect the current medical and/or nutritional needs of the
participant.
The U.S Department of Agriculture prohibits discrimination against its customers, employees, and applicants for employment
on the bases of race, color, national origin, age, disability, sex, gender identity, religion, reprisal, and where applicable, political
beliefs, marital status, familial or parental status, sexual orientation, or all or part of an individual’s income is derived from any
public assistance program, or protected genetic information in employment or in any program or activity conducted or funded
by the Department. (Not all prohibited bases will apply to all programs and/or employment activities.)
If you wish to file a Civil Rights program complaint of discrimination, complete the USDA Program Discrimination Complaint
Form, found online at http: //www.ascr.usda.gov/complaint_filing_cust.html, or at any USDA office, or call (866) 632-9992 to
request the form. You may also write a letter containing all of the information requested in the form. Send your completed
complaint form or letter to us by mail at U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence
Avenue, S.W.,
Washington, D.C. 20250-9410, by fax (202) 690-7442 or email at program.intake@usda.gov.Individuals who are deaf, hard of
hearing or have speech disabilities may contact USDA through the Federal Relay Service at (800) 877-8339; or (800) 8456136 (Spanish).
USDA is an equal opportunity provider and employer.

REQUEST for SPECIAL MEALS AND/OR ACCOMMODATIONS
INSTRUCTIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

14.
15
16.
17.
18.
19.
20.
21.
22.

School/Agency: Print the name of the school or agency that is providing the form to the parent.
Site: Print the name of the site where meals will be served (e.g., school site, child care center, community
center, etc.)
Site Telephone Number: Print the telephone number of site where meal will be served. See #2.
Name of Participant: Print the name of the child or adult participant to whom the information pertains.
Age of Participant: Print the age of the participant. For infants, please use Date of Birth.
Name of Parent or Guardian: Print the name of the person requesting the participant’s medical statement.
Telephone Number: Print the telephone number of parent or guardian.
Check One: Check () a box to indicate whether participant has a disability or does not have a disability.
Disability or Medical Condition Requiring a Special Meal or Accommodation: Describe the medical
condition that requires a special meal or accommodation (e.g., juvenile diabetes, allergy to peanuts, etc.)
If Participant has a Disability, Provide a Brief Description of Participant’s Major Life Activity Affected
by the Disability: Describe how physical or medical condition affects disability. For example: ”Allergy to
peanuts causes a life-threatening reaction.”
Diet Prescription and/or Accommodation: Describe a specific diet or accommodation that has been
prescribed by a physician, or describe diet modification requested for a non-disabling condition. For
example: ”All foods must be either in liquid or pureed form. Participant cannot consume any solid foods.”
Indicate Texture: Check () a box to indicate the type of texture of food that is required. If the participant
does not need any modification, check “Regular”.
A. Foods to Be Omitted: List specific foods that must be omitted. For example, “exclude fluid milk.”
B. Suggested Substitutions: List specific foods to include in the diet. For example, “calcium fortified
juice.”
Adaptive Equipment: Describe specific equipment required to assist the participant with dining.
(Examples may include a sippy cup, a large handled spoon, wheel-chair accessible furniture, etc.)
Signature of Preparer: Signature of person completing form.
Printed Name: Print name of person completing form.
Telephone Number: Telephone number of person completing form.
Date: Date preparer signed form.
Signature of Medical Authority: Signature of medical authority requesting the special meal or
accommodation.
Printed Name: Print name of medical authority.
Telephone Number: Telephone number of medical authority.
Date: Date medical authority signed form.

The American with Disabilities Act Amendment Act defines a “disability,” in part, as a physical or mental impairment that
substantially limits a major life activity or major bodily function of an individual.
(For additional information on the definition of disability, please refer to Section 504 of the Rehabilitation Act of 1973
and the Americans with Disabilities Act Amendments Act of 2008)
Information regarding the ADAAA, which expanded the definition of disability, can be found at: http:
//www.law.georgetown.edu/archiveada/documents/ComparisonofADAandADAAA.pdf