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: -$

-$

-$

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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.