7 CFR 247.31 – Audits and investigations
(a) What is the purpose of an audit? The purpose of an audit is to ensure that:
(1) Financial operations are properly conducted;
(2) Financial reports are fairly presented;
(3) Proper inventory controls are maintained; and
(4) Applicable laws, regulations, and administrative requirements are followed.
(b) When may the Department conduct an audit or investigation of the program? The Department may conduct an audit of the program at the State or local agency level at its discretion, or may investigate an allegation that the State or local agency has not complied with Federal requirements. An investigation may include a review of any State or local agency policies or practices related to the specific area of concern.
(c) What are the responsibilities of the State agency in responding to an audit by the Department? In responding to an audit by the Department, the State agency must:
(1) Provide access to any records or documents compiled by the State or local agencies, or contractors; and
(2) Submit a response or statement to FNS describing the actions planned or taken in response to audit findings or recommendations. The corrective action plan must include time frames for implementation and completion of actions. FNS will determine if actions or planned actions adequately respond to the program deficiencies identified in the audit. If additional actions are needed, FNS will schedule a follow-up review and allow sufficient time for further corrective actions. The State agency may also take exception to particular audit findings or recommendations.
(d) When is a State or local agency audit required? State and local agency audits must be conducted in accordance with part 3052 of this title, which contains the Department’s regulations pertaining to audits of States, local governments, and nonprofit organizations. The value of CSFP commodities distributed by the agency or organization must be considered part of the Federal award.
(e) What are the requirements for State or local agency audits? State and local agency audits must be conducted in accordance with the requirements of part 3052 of this title, which contains the Department’s regulations pertaining to audits of States, local governments, and nonprofit organizations. The State agency must ensure that local agencies meet the audit requirements. The State agency must ensure that all State or local agency audit reports are available for FNS review.