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Fixed Assets, Inventory
and Procurement for
School Food
Authorities
2015 Fall Conference
Child Nutrition
Federal Grant Program
Funding for Child
Nutrition
Office of Management and
Budget (OMB) – Federal “Super
Circular”
2 CFR 200: Uniform Administrative
Requirements,
Cost Principles, and Audit
Requirements for Federal Awards
Council on Financial Reform (COFAR)
has streamlined and highlighted
internal controls as extremely
important
A-133 has been moved to the Super
Circular for streamlining guidance,
effective December 2014
Significant Changes
Combined all related OMB guidance
into one location (2 CFR 200)
Administrative requirements (A-
102, A-110)
Federal cost principles (A-21, A-
87, A-122)
Single audit (A-133, A-89, parts of
A-50)
According to the COFAR, this
eliminated about 80 pages of
overlapping, duplicative, and
conflicting provisions
“Eliminating” 80 Pages
0
50
100
150
200
250
300
350
Old Guidance New Guidance
A-102
A-110
A-21
A-87
A-122
A-133
A-89
A-50
2 CFR 200
6
Super Circular Subparts
A. Acronyms and Definitions
B. General Provisions
C. Pre-Award Requirements
and Contents of Federal
Awards
D. Post-Award Requirements
E. Cost Principles
F. Audit Requirements
Additional Changes
Changes in organization/terminology
Internal control requirements
New procurement standards
Subrecipient
monitoring/management
Minor changes to cost principles
Numerous changes to single audit
Fixed Asset
Defined as those tangible items
with a unit cost of $5,000 or
more including taxes, shipping
and other costs that make the
equipment/asset operative
A fixed asset has a life of more
than one year and is often
referred to as Capital Assets or
Nonspendable Assets
Alabama Equipment
Request Form for Fixed
Assets
Newly Revised Form
Qty
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SDE Use Only
School Name Equipment Item Cost per Item Total Cost
Encumbered
Amount
Anticpated
Completion
Date
Actual
Completion
Date Approved By
Approval
Date
System Name: Total Encumbered: -$
System Number: Total Requested: -$
-$
-$
-$
-$
Sheet Total:
Grand Total:
-$
-$
Fixed Asset
Approval is based on the following:
Financial status of the district
Allowable
Necessary
Allocable
Approved/signed equipment request form
by the superintendent, CSFO and child
nutrition director
October 2015 Revised form in your
packet
Post-Award Requirements
and Standards for Financial
Management
Property standards:
Title to real property and equipment
purchased with federal funds rests
with the non-Federal entity
Equipment must be:
Insured
Used as long as needed for the
original program
Reassigned to another federal
program
Inventoried every two years
12
Fixed Assets or Capital
Equipment Assets
Food service equipment- steamers,
ovens, slicers, refrigerators, exhaust
hoods etc.
Computers or network equipment
Software
Furniture – office and cafeteria
Vehicles
Floor Scrubbers
Carts, hand trucks, etc.
Fixed Asset
Accountability
You might
ask?
Fixed Asset
Accountability
Inventory Control System is
required by:
USDA
Alabama State
Department of Education
Fixed Asset
Accountability
What is the purpose?
Fixed Asset Accountability
and Responsibility
Deter theft
Aid in tracking missing
property
Track repairs
Track depreciation of value
Provide data to CNP Director
for life expectancy of fixed
assets
Fixed Asset Inventory Form
Example
Fixed Asset Inventory Form
Example 2
Fixed Asset Inventory Form
Example 3
Handout in packet
You may develop a system
for your fixed assets
Fixed Asset Accountability
and Responsibility
Who is responsible??
Fixed Asset Accountability
and Responsibility
What happens......
If fixed assets are
transferred?
If fixed assets are no
longer deemed usable by
the district?
Fixed Asset Accountability
and Responsibility
What happens when the
following occur???
Disposal of items
Sale
Donate
Proceeds from sale of
equipment or disposal of
scrap
Post-Award Requirements
and Standards for Financial
Management
Disposition of real property per Super
Circular:
Request instructions
Options:
1. Retain and compensate the
federal agency/CNP
2. Sell and compensate the federal
agency/CNP
3. Transfer title to the federal
agency or designated third party24
Post-Award Requirements
and Standards for Financial
Management
Disposition of equipment:
Under $5,000, no
requirements
Over $5,000, sell and
compensate CNP for the sale
or disposal of items
Disposal of Equipment
Surplus Equipment (SE)
Record on Fixed Asset (Equipment)
Inventory Form
Disposal Options for SE
RFP
Auction
Sell as scrap metal if other
disposal options fail lead to no
responses
Disposal of Equipment
May I transfer equipment
purchased with federal funds to
another department or program in
the school district?
Athletic Program
Culinary Arts Program
Head Start or Title 1 program
Disposal of Equipment
Answer
Yes, you may transfer to
another federal program such
as Head Start or Title 1
Program
No, you may not transfer to
another school program in the
district which is not funded by
federal funds
Disposal of Equipment
Where is revenue from surplus
CNP equipment deposited?
All revenue earned from the
sale of CNP surplus equipment
shall be deposited into the
child nutrition account as per
the account codes.
Surplus Equipment
May usable equipment be
transferred from one school to
another school in the district?
If the equipment is in good
operating condition and all
utilities requirements match in
both schools, complete a transfer
of equipment sheet from the
losing school to the fixed asset
inventory sheet of the gaining
school to complete required
records.
Surplus Equipment
My district is selling a school building
with all of the existing food service
equipment. What do I do to account for
the food service equipment?
Inventory all food service equipment
and have a food service salvage
company evaluate and assign a
salvage equipment value. After the
property sales and the district
receives payment, the salvage
equipment value shall be
deposited/transferred to the CNP
account.
FEDERAL
PROCUREMENT
REGULATIONS
The “Super Circular”
Not technically a circular
Federal regulations carry
more weight of law
Officially:
Uniform Administrative
Requirements,
Cost Principles, and Audit
Requirements for Federal Awards
FEDERAL PROCUREMENT
TOPICS TO BE DISCUSSED
I. FEDERAL PROCUREMENT
REGULATIONS FOR CNP
II. FEDERAL PROCUREMENT
PRINCIPLES
III. FEDERAL PROCUREMENT
PROCEDURES FOR SFA’s
PROCUREMENT
STANDARDS
2 C.F.R. § 200.317-326
New Super Circular for procurement
Formerly 7 C.F.R. Parts 3016 and
3019
Effective as of December 26, 2014
“All other non-Federal entities,
including subrecipients of a state,
will follow §§200.318 General
procurement standards through
200.326 Contract provisions.” (See 2
C.F.R. § 200.317)
CHILD NUTRITION
PROGRAMS
7 C.F.R. § 210-249
7 CFR 210-249: CNP
7 CFR 210: NSLP
7 CFR 210.21: NSLP
Procurement
SFA’s AND FEDERAL
PROCUREMENT
REGULATIONS
Federal regulations apply when
procurement uses Federal funds,
including CNP accounts
Only defer to state or local
regulations if they are more
restrictive
Under no circumstance can less
restrictive laws or exemptions apply
when using Federal funds for
procurement
FULL AND OPEN
COMPETITION
This is the most important
principle of procurement
(see 2 C.F.R. § 200.319)
Ensures that all potential
suppliers are on an equal
playing field and have the
same opportunity to
compete
FULL AND OPEN
COMPETITION
Two primary goals:
1) Have as many suppliers as
possible respond to every
solicitation
2) Provide the highest quality
of goods and services at the
lowest possible price
COST PRINCIPLES
Reasonable costs
Ordinary and necessary for
operations
Sound business practices and
arm’s-length bargaining
Market prices for comparable
goods/services for the geographic
area
Individuals act with prudence
No significant deviation from
established practices/policies to
increase costs
39
COST PRINCIPLES
Allocable costs
Based on the relative benefits
received:
Incurred specifically for federal
award
Benefits both federal awards
and other work (distribute
proportionately)
Necessary for overall operation
of the non-Federal entity
Allocable costs may not be
charged to other Federal awards
to overcome funding deficiencies40
COST PRINCIPLES
Allocable costs
Use direct allocation if
feasible without undue effort
or cost
Otherwise, allocate on any
reasonable documented
basis
41
COST PRINCIPLES
Applicable credits
Receipts or reduction-of-
expenditure-type transactions that
reduce expense items allocable to
a Federal award as direct or
indirect costs
Examples: purchase discounts,
rebates or allowances, recoveries
or indemnities on losses, insurance
refunds or rebates, and
adjustments of overpayments
42
COST PRINCIPLES
Prior written approval:
Reasonableness and
allocability can be difficult to
determine
To avoid later disallowances
or disputes, non-Federal
entities may request prior
written approval 43
FEDERAL PROCUREMENT
PRINCIPLES
Forecasting
Specifications
Required Provisions
Documentation
FORECASTING
The process of estimating
the goods and services
needed for purchasing by
your district
Estimate quantities of a
product to be purchased
Forecasting higher
quantities should result in
lower bid prices
FORECASTING
Where do I get the forecast
information?
From usage reports from
previous year
Recap of total products for
the current year order
requests
SPECIFICATIONS
Concise statement of a set
of requirements to be
satisfied (Institute of Child
Nutrition)
Clear and accurate
description of technical
requirements and terms,
such as delivery and
packaging
SPECIFICATIONS
Must not be overly
restrictive to limit or stop
competition
When using a brand name
you must state “brand
name or preapproved
equal”
Using a brand name only
restricts open competition
SPECIFICATIONS
Who can write specifications??
SPECIFICATIONS
Who may not write specifications?
Company representative
Manufacturer Representative
Food Service Sales
Representative or Dealer
Employee of a company who
will submit a bid
SPECIFICATIONS
Geographic Preference
applies to local
agricultural products
than retain their inherent
character
REQUIRED PROVISIONS
“Buy American” is required in all
specifications 7 C.F.R. § 210.21(d)
All contracts made by the non-
Federal entity under the Federal
award must contain the necessary
standard Federal provisions from 2
C.F.R. Part 200 Appendix II
Any state or local required
provisions
DOCUMENTATION
Financial records, supporting
documents, statistical records,
and all other non-Federal entity
records pertinent to a Federal
award must be retained for a
period of three years. 2 C.F.R.
§ 200.333
Applies to all claims,
purchases, free and reduced
meal applications etc.
DOCUMENTATION
SFA’s records shall be retained
for a period of 3 years after
submission of the final Claim
for Reimbursement for the
fiscal year.
If audit findings have not been
resolved, the records shall be
retained beyond the 3-year
period as long as required for
the resolution of the issues
raised by the audit. 7 C.F.R. §
210.23(c)
FEDERAL PROCUREMENT
PROCEDURES FOR SFA’s
Aggregate Purchasing
Thresholds
Micro Purchases
Informal Small Purchases
Formal Sealed Bid Purchases
Sole Source
Group Purchasing
Organizations (GPO’s)
AGGREGATE PURCHASING
THRESHOLDS
The combined total
purchased amount per item
per school year determines
which method of
procurement is required
FNS defines aggregate as not
exceeding the procurement
threshold
AGGREGATE PURCHASING
THRESHOLDS
Unlawfully splitting a bid or
invoice occurs when a
purchase is intentionally
divided up to stay within a
purchasing threshold to
avoid additional
requirements
MICRO PURCHASES
Purchases where the
aggregate total during a
school year is so small that
quotes are not required
Most SFAs will have to make
the determination
MICRO PURCHASES
Once purchases of an item
add up to the aggregate
threshold limit you must then
move up to the next level of
purchasing requirements
Under $3,000 - Federal
Threshold
Under $1,000 - Alabama
Threshold
Which Threshold would you
use?
INFORMAL SMALL
PURCHASES
Informal and competitive
solicitation
1) Written specifications
2) Requires at least 3 current,
written quotes
3) Bid evaluation
4) Award to the most
responsible bidder with the
lowest price
5) Manage the contract
INFORMAL SMALL
PURCHASES
Under $150,000 - Federal
Threshold
Under $15,000 - Alabama
Threshold
Which Threshold would you
use?
FORMAL SEALED BID
PURCHASES
Formal and competitive sealed
bid solicitation:
1) Written specifications
2) Publicly announce/advertise
the IFB/RFP
3) Sealed bid evaluation
4) Award to the most responsible
bidder with the lowest price
5) Manage the contract
FORMAL SEALED BID
PURCHASES
Over $150,000 - Federal
Threshold
Over $15,000 - Alabama
Threshold
Which Threshold would you
use?
SOLE SOURCE FEDERAL
Procurement by
noncompetitive proposal(s)-
Results of solicitation of a
proposal from only one
source
May be used only when one
or more of the following
circumstances apply:
SOLE SOURCE FEDERAL
1) The item is available only from a
single source
2) The public exigency or emergency
for the requirement will not permit
a delay resulting from competitive
solicitation
3) The Federal awarding agency or
pass-through entity expressly
authorizes noncompetitive
proposals in response to a written
request from the non-Federal entity
4) After solicitation of a number of
sources, competition is determined
inadequate
2 C.F.R. § 200.320(f)(1-4)
SOLE SOURCE STATE
Approval for sole source purchases
shall be given only if the purchasing
state entity establishes that no other
goods or service can meet its needs
and that no other vendor offers
substantially equivalent goods or
service that can accomplish the
purpose for which the goods or
service is required.
The Director of Finance may require
information from either the
purchasing entity or the vendor
seeking to be declared a sole source
that is deemed necessary to meet
the requirements of this provision.
Code of Alabama § 41-16-75
GROUP PURCHASING
ORGANIZATIONS (GPO)
The purpose of a GPO or a
purchasing cooperative is to
allow SFA’s to use their
collective buying power and
expertise of the group to
obtain the highest quality
products at the best price
Both state and Federal laws
recognize GPO’s
Group Buying
Organizations (GBO)
Are often mistaken for GPO’s
Are not recognized by state
and Federal regulations
May be used as sources for
competition
Are not exempt from Federal
Threshold Procurement
Regulations
GPO VERSUS GBO
GPO
Purchases for
themselves
Non-profit
Members have
public status only
Receives rebates
and discounts
directly
Fixed price award
on solicited items
GBO
Buys on behalf of
others
For-profit
Members can have
private status
Often keep
rebates and
discounts
Fluctuating prices
on a cost plus
percentage of
non-solicited
items
SFA’s RESPONSIBILITY
To know and comply with:
Federal procurement
requirements
State procurement
requirements
Local procurement
requirements
SFA’s RESPONSIBILITY
Each SFA must perform its own
documented and competitive
solicitations
All funds deposited into CNP
accounts are considered
Federal; therefore, fall under
these requirements
USDA Procurement Reviews
are coming
RESOURCES
Procuring Local Foods for Child
Nutrition Programs from USDA;
see handout
Procurement in the 21st
Century www.nfsmi.org from
the Institute of Child Nutrition
Code of Federal Regulations
www.ecfr.gov
Code of Alabama
www.legislature.state.al.us
Fiscal Procedures Manual
www.purchasing.alabama.gov
USDA IS AN EQUAL
OPPORTUNITY EMPLOYER
USDA Nondiscrimination
Statement In accordance with Federal civil rights law and U.S. Department of
Agriculture (USDA) civil rights regulations and policies, the USDA, its
Agencies, offices, and employees, and institutions participating in or
administering USDA programs are prohibited from discriminating based
on race, color, national origin, sex, disability, age, or reprisal or
retaliation for prior civil rights activity in any program or activity
conducted or funded by USDA.
Persons with disabilities who require alternative means of
communication for program information (e.g. Braille, large print,
audiotape, American Sign Language, etc.), should contact the Agency
(State or local) where they applied for benefits. Individuals who are
deaf, hard of hearing or have speech disabilities may contact USDA
through the Federal Relay Service at (800) 877-8339. Additionally,
program information may be made available in languages other than
English.
To file a program complaint of discrimination, complete the USDA
Program Discrimination Complaint Form, (AD-3027) found online at:
http://www.ascr.usda.gov/complaint_filing_cust.html, and at any USDA
office, or write a letter addressed to USDA and provide in the letter all of
the information requested in the form. To request a copy of the
complaint form, call (866) 632-9992. Submit your completed form or
letter to USDA by:
(1) mail: U.S. Department of Agriculture
Office of the Assistant Secretary for Civil Rights
1400 Independence Avenue, SW
Washington, D.C. 20250-9410;
(2) fax: (202) 690-7442; or
(3) email: program.intake@usda.gov.
This institution is an equal opportunity provider.
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