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X 8.` hp x (#8   \RX` hp x (#\S\  `&Times New RomanS%2A`Arial< :Outline001_1   GAKr`WingdingsG  ;1 4 <D x (#;   YOX` hp x (#YXXXS\  `&Times New RomanS  Kr`Wingdings:+ 8List Bullet23  ..<+ :List Bullet123  ..<+ :List Bullet 23  ..:+ 8List Number23  ..<+ :List Number323  ..<+ :List Number223  ..<+ :List Number123  ..<+ :List Number 23  ..<* :Normal (Web) S =jS    =jS:  8Body Text 2  ,*Date< :Comment TextXXX2 0Quick    CO<6X9`(CourierC  8. ` hp x (#8   8.` hp x (#8S\  `&Times New RomanS  <6X9`(Courier<:Footnote Ref.PY ,Style   8.44` hp x (#8  A7X` hp x (#A  2 0Quick P   CO<6X9`(CourierC  8.` ` hp x (#8   8.` hp x (#8S\  `&Times New RomanS  .[[,TOC 2    8.` ` hp x (#8   8.` hp x (#8  0oo.Title2S\  `&Times New RomanS XXXS\  `&Times New RomanS <$$ :Footnote Tex    XXX<DD :Normal Inden X 8.` hp x (#8  8.` hp x (#8:)) 8Body Text 3 {dXXX {d< :Body Text Fi d  d    Z+'..      XfXXXXfXXXf  _K\(XXK (#XXXfMarch2004QForeignFoodAidDonationCluster!!G(#USDAXfX(2+$ !..      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XfXXXXfXXXf  B. ` hp x (#XB K_(XXK3p x (# X(#3XXfA133ComplianceSupplement6p x (#X(#6Q{{{410.553<    15  <^  XfXhttp://www.fns.usda.gov/cnd_Hlt66503926_Hlt66503927http://www.fns.usda.gov/cndhttp://www.fns.usda.gov/fdd/programs/schcnp/_Hlt66503962_Hlt66503963http://www.fns.usda.gov/cnd/_Hlt66504037_Hlt66504038kIA`2WP TypographicSymbolskIA`2WP TypographicSymbols n Z+'..      XfXXXXfXXXf  B. ` hp x (#XB K\(XXK! (# X(#!XXfMarch2004QZZ)WIC!!G(#USDAXfXԈ X K((XKB.` hp x (#(#B k ^+)..      XfXXXXfXXXf  B. ` hp x (#XB K_(XXK3p x (# X(#3XXfA133ComplianceSupplement6p x (#X(#6Q{{{410.557<    23  <^  XfXhttp://www.fns.usda.gov/wic 35;AGMSY_1a.a.i.1.a.i.1.a.{ i.http://www.fns.usda.gov/wic E Z+'..      XfXXXXfXXXf  0p x (#X0K\(XXK$ (#X(#$XXfMarch2004Q(CACFP!!G(#USDAXfXԈ X K((XKB.` hp x (#(#B @ ^+)..      XfXXXXfXXXf  0p x (#X0K_(XXK6p x (#X(#6XXfA133ComplianceSupplement6p x (#X(#6Q{{{410.558<    18  <^  XfXhttp://www.fns.usda.gov/cnd/http://www.fns.usda.gov/fdd/programs/schcnp/_Hlt66518982_Hlt66518983http://www.fns.usda.gov/cnd d Z+'..      XfXXXXfXXXf  0p x (#X0K\(XXK$ (#X(#$XXfMarch2004QNutritionAssistanceforPuertoRico!!G(#USDAXfXԈ X K((XKB.` hp x (#(#B @ ^+)..      XfXXXXfXXXf  0p x (#X0K_(XXK6p x (#X(#6XXfA133ComplianceSupplement6p x (#X(#6Q{{410.566<    17  <^  XfX i Z+'..      XfXXXXfXXXf  0p x (#X0K\(XXK$ (#X(#$XXfMarch2004QEmergencyFoodAssistanceProgramCluster!!G(#USDAXfXԈ X K((XKB.` hp x (#(#B ? ^+)..      XfXXXXfXXXf  0p x (#X0K_(XXK6p x (#X(#6XXfA133ComplianceSupplement6p x (#X(#6Q410.568<    6  <^  XfX Y Z+'..      XfXXXXfXXXf  0p x (#X0K\(XXK$ (#X(#$XXfMarch2004QSchoolsandRoadsCluster!!G(#USDAXfXԈ X K((XKB.` hp x (#(#B ? ^+)..      XfXXXXfXXXf  0p x (#X0K_(XXK6p x (#X(#6XXfA133ComplianceSupplement6p x (#X(#6Q410.665<    8  <^  XfXhttp://www.fs.fed.us_Hlt66505913_Hlt66505914 W Z+'..      XfXXXXfXXXf  0p x (#X0K\(XXK$ (#X(#$XXfMarch2004QWaterandWasteProgram!!G(#USDAXfXԈ X K((XKB.` hp x (#(#B ? ^+)..      XfXXXXfXXXf  0p x (#X0K_(XXK6p x (#X(#6XXfA133ComplianceSupplement6p x (#X(#6Q410.760<    5  <^  XfXhttp://www.usda.gov/rus/water/_Hlt66506101_Hlt66506102 35;AGMSY_21.a.i.1.a.i.1.a. i. u Z+'..      XfXXXXfXXXf  _0p x (#X0K\(XXK$ (#X(#$XXfMarch2004Q99CommunityFacilitiesLoansandGrants!!G(#USDA X K((XKB.` hp x (#(#BXfX  ^+)..      XfXXXXfXXXf  _0p x (#X0K_(XXK6p x (#X(#6XXfA133ComplianceSupplement6p x (#X(#6Q%410.766  5  XfX#|x(O$(r$..      XcIXXXXcIXXXcI0&d9 Z6Times New Roman RegularX3#37=CIQYag1.a.i.(1)(a)(i)1)a)i)0 }0:i+00U !..      XfXXXXfXXXf  _       Y]XXXX  UNITEDSTATESDEPARTMENTOFAGRICULTURE     None   ` FOODFORPROGRESSPROGRAM ^  None   ` SECTION416(b)PROGRAM  D   XB.` hp x (#XB I.  PROGRAMOBJECTIVES  B   XE.` hp x (#X(#ETheU.S.DepartmentofAgriculture(USDA)donatesagriculturalcommoditiesforusein   carryingoutassistanceprogramsindevelopingcountriesandfriendlycountries.Suchcountries   areoftenemergingdemocraciesthathavemadeacommitmenttointroduceorexpandprivate l  enterpriseelementsintotheagriculturalsectorsoftheireconomies. R    XE.` hp x (#X(#E II.  PROGRAMPROCEDURES  P    XE.` hp x (#X(#E GeneralOverview    TheFoodforProgressProgramandtheSection416(b)Program(ForeignFoodAidDonation \  Programs)areCommodityCreditCorporation(CCC)programs.CCCimplementsthese B  programsthroughpersonneloftheForeignAgriculturalService(FAS)andFarmService (x  Agency(FSA).TheCCC,awhollyownedgovernmentcorporationwithintheUSDA,may ^  acquireagriculturalcommoditiesundervarioussurplusremovalandagriculturalpricesupport D programsandmakethemavailableforvariousdomesticandforeignfoodassistanceprograms. * UndertheFoodforProgressActof1985,CCCmaypurchasecommoditiesfromthemarketfor  donationoverseas.  RecipientsundertheForeignFoodAidDonationProgramsareknowncollectivelyas T CooperatingSponsors.TheCCCmakescommoditiesavailabletotheCooperatingSponsorsfor : useintheoperationofcharitableandeconomicdevelopmentactivitiesineligibleforeign  p countries.CooperatingSponsorsmaybeforeigngovernmentsorprivateentitiesincludingnon V profitorganizationslocatedintheUnitedStatesbutoperatingprogramsoverseaswhichare < registeredwiththeUnitedStatesAgencyforInternationalDevelopment(7_CFR_Ԁsection1499.3). " Thetwoprogramshavedifferentcriteriafordeterminingwhatisaneligibleforeigncountry.    XE.` hp x (#X(#EFoodforProgressProgram󀄀Commoditiesmadeavailableunderthisprogram, ."~ regardlessoffundingsource,mustbedonatedforuseindevelopingcountriesand #d emergingdemocraciesthathavemadecommitmentstointroduceorexpandfree #J enterpriseelementsintheiragriculturaleconomies.Theprogramsauthorizing $0  legislationwasamendedin1992tomaketheindependentstatesoftheformerSoviet %! Unioneligibleforcommodityassistanceunderthisprogram. &! Section416(b)Program󀄀CommoditiesmadeavailableunderSection416(b)outsidethe Z(# scopeoftheFoodforProgressProgrammaybeusedtosupportfoodassistanceprograms @)$   infriendlycountriesanddevelopingcountries. &*v%!  XE.` hp x (#X(#E& r  ProgramOperation    P E.` ` hp x (#X(#EGeneral ^  P E.` hp x (#` X(#EACooperatingSponsormustfileaPlanofOperationwiththeCCCundertheSection416(b)  \ Program.TheCCCisalsoauthorizedtorequiresuchaplanundertheFoodforProgress B Program(7_CFR_Ԁsection1499.5).ThisPlanofOperationbecomespartofanagreementbetween  ( theCCCandtheCooperatingSponsor.Theplanoragreementstipulates,amongotherthings,   thenatureoftheprojectthesponsorproposestooperate,thecountryinwhichsuchoperations   willtakeplace,thetypesandquantitiesofcommoditiesneeded,thepurposeforwhichthe   commoditieswillbeused,andtheuseofeitherdirectdistributionormonetizationof p  commodities.TheCooperatingSponsorisresponsibleforfulfillingthereportingrequirements V  concerninglogistics,monetization,andquarterlyfinancialreports.'r  <  DirectDistribution :  AdirectdistributionbytheCooperatingSponsorinvolvesthedistributionofdonated   commoditiesdirectlytoindividualsorcharitableinstitutionsinthehostcountryreferredtoas ~  RecipientAgencies(e.g.,hospitals,schools,kindergartens,orphanages,homesfortheelderly). d TheseRecipientAgenciesthenusethecommoditiesinservingtheirclientele. J RecipientAgencies H ACooperatingSponsormustenterintoanagreementwithaRecipientAgencypriortothe  transferofanycommodities,salesproceeds,orprogramincometotheRecipientAgency.The  agreementmustrequiretheRecipientAgencytocompensatetheCooperatingSponsorforany r agriculturalcommoditiesorotherassetsgeneratedbytheprogramthatarenotusedforpurposes X expresslyprovidedforintheagreement,orthatarelost,damaged,ormisusedastheresultofthe > RecipientAgencysfailuretoexercisereasonablecare. $t Monetization " AmonetizationagreementauthorizestheCooperatingSponsortosellthecommoditiesinthe   applicableforeigncountryandusethesalesproceedstosupportitsprogrammaticactivitiesin f! accordancewiththesignedagreement.Tothemaximumextentpossible,theCooperating L" Sponsorisexpectedtoconductthesaleofcommoditiesthroughtheprivatesectorofthehost 2# countryseconomy.ACooperatingSponsorsagreementwiththeCCCmayalsoprovidefor $h barteringcommoditiesinexchangeforgoodsandservicestosupportprogramoperations. $N  Inadditiontocommodities,theCCCsagreementwiththeCooperatingSponsormayprovidethe &! CooperatingSponsorcashassistancetofundprogramadministrativeandoperationalexpenses. '" Programregulationsalsoauthorizecashadvancesforthispurpose.Suchcashawardsmaybe x(#   madeonlyafterapprovalofaprogramoperatingbudgetsubmittedbytheCooperatingSponsor. ^)$! & `  SourceofGoverningRequirements   CommoditydonationsareauthorizedbytheFoodforProgressActof1985(7_USC_Ԁ1736o) ^ (FoodforProgressProgram)andSection416(b)oftheAgriculturalActof1949(7_USC_ D 1431(b))(Section416(b)Program).Implementingregulationsarefoundat7_CFR_Ԁpart1499.'` *z  AvailabilityofOtherProgramInformation   ( Formoreinformation,contacttheDirector,CCCProgramSupportDivision,FAS,USDAat   Stop1031,1400IndependenceAvenue,_S.W._,Washington,D.C.202501031.Contactsmay l  alsobemadethrough:(202)7204221(voice);(202)6900251(fax);orinfo@fas.usda.gov(E R  mail). 8    XE.` hp x (#X(#E III.  COMPLIANCEREQUIREMENTS 6    XE.` hp x (#X(#EIndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal   program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to z  identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are `  applicableandthenlooktoParts3and4forthedetailsoftherequirements.  F    XE.` hp x (#X(#E A.  ActivitiesAllowedorUnallowed  D  XE.` ` hp x (#X(#E1. ` UseofFunds   ThePlanofOperationandagreementsetforththedescriptionoftheactivitiesfor P whichcommodities,monetizedproceeds,orprogramincomeshallbeused. 6 ExceptasapprovedinadvancebyCCC,theCooperatingSponsorshallordinarily 4 bearallcostsincurredsubsequenttoCCCsdeliveryofcommoditiesatU.S.ports  or_intermodal_Ԁpoints(7_CFR_Ԁsection1499.7(d)).  WithpriorwrittenapprovalfromCCC,theCooperatingSponsormayuseCCC ^ fundsforadministrativeexpensesundertheFoodforProgressProgram. D  Administrativeexpensesincludeexpensesincurredforthepurchaseofgoodsand *!z servicesdirectlyrelatedtoprogramadministrationandmonitoringofdistribution "` andmonetizationoperations(7_CFR_Ԁsection1499.7(b)(3)). "F  2. ` UseofCommoditiesandMonetizationProceeds $  ACooperatingSponsormustuseUSDAcommoditiesfurnishedunderthe R&! ForeignFoodAidDonationPrograms,andproceedsfromthesaleofsuch 8'" commoditiesifapplicable,forpurposesexpresslyprovidedforinitsagreement (n# withtheCCC(7_CFR_Ԁsections1499.10(a)and1499.12(d)). )T$ AgreementswithCooperatingSponsorsimplementingSection416(b)projects *& mayprovidefortheuseofproceedsfrommonetizationoperationstofund +&  administrativeexpenses(7_USC_Ԁ1431(b)(7)(F)). ~,'! _  XE.` hp x (#` X(#E&  C.  CashManagement    XE.` ` hp x (#X(#E1. ` CashAdvancesFromtheCCC ^  ACooperatingSponsormayrequestanadvanceofupto85percentoftheamount  \ ofanapprovedprogramoperatingbudget.CashadvancesfurnishedbytheCCC B mustbedepositedininterestbearingaccounts.Anyinterestearnedonsuch  ( advancesmustbeusedforthesamepurposesasthecashadvancesthemselves   (7CFRsections1499.7(f)and(g)).'6.    & , 2. ` CommodityMonetizationProceeds R   ACooperatingSponsormustdepositallproceedsfromthesaleofUSDAdonated P  commoditiesundermonetizationagreementsintointerestbearingaccounts. 6  Exceptionsarepermittedwherethispracticeisprohibitedbylocallaworcustom   oftheimportingcountry,ortheCCCdeterminesthatenforcingtherequirement   wouldimposeanundueburdenonthesponsor(7CFRsection1499.12(c)).',R 0     XE.` hp x (#` X(#E F.  EquipmentandRealPropertyManagement  F   Totheextentrequiredbytheprogramagreement,aCooperatingSponsormustfurnish D theCCCandFASwithinventorylistsofequipmentandrealpropertyacquiredwith * proceedsfromthesaleofdonatedcommodities,interest,andotherprogramincome  (OMBNo.05510035).Whensuchassetsarenolongerneededforprogrampurposes,  thesponsormustdisposeoftheminaccordancewith7CFRsection1499.12(g).   XE.` hp x (#X(#E H.  PeriodofAvailabilityofFederalFunds  :  XE.` hp x (#X(#EAnyportionofacashadvancenotobligatedbytheCooperatingSponsorwithin180days 8 ofreceipt,andanyrelatedinterest,mustberefundedtotheCCCwithin30daysafterthe  CooperatingSponsorsobligationalauthorityoverthefundshasexpired(7CFRsection  1499.7(h)).  CCCwillnotpayanycostincurredbytheCooperatingSponsorpriortothedateofthe H! programagreement(7CFRsection1499.7(c)). ."~  & ` I.  ProcurementandSuspensionandDebarment  #,  ACooperatingSponsormustfollowcommerciallyreasonablepracticesinprocuring %  goodsandservicesandwhenengaginginconstructionactivityinaccordancewithits p&!  agreementwiththeCCC(7CFRsection_1499.12(f)).'`#)9 V'"  &   J.  ProgramIncome    Programincomeincludesinterestonsaleproceedsandmoneyreceivedbythe ^ CooperatingSponsor,otherthanmonetizationproceeds,asaresultofcarryingout D approvedactivities(7_CFR_Ԁsection1499.1).ACooperatingSponsormustuseprogram *z incomeforprogrampurposesidentifiedinitsagreementwiththeCCC(7_CFR_Ԁsection  ` 1499.5).  F   L.  Reporting':    XE.` ` hp x (#X(#E1. ` FinancialReporting  R   E. ` hp x (#` X(#Ea. SF269,FinancialStatusReport󀄀NotApplicable P  b. SF270,RequestforAdvanceorReimbursement󀄀NotApplicable   c. SF271OutlayReportandRequestforReimbursementforConstruction \  Programs󀄀NotApplicable B  d. SF272FederalCashTransactionsReport󀄀NotApplicable @  e. FinancialStatement(OMBNo.05510035)󀄀AnyCooperatingSponsor   thatreceivesanadvanceofCCCfundsmustfilequarterlyfinancial  statementswiththeCCC. j  KeyLineItems: h   ` E.` hp x (# X(#E(1)  Cashonhandatbeginningofthequarter.  (2)  CCCadvancesreceivedduringthequarter. t (3)  Interestearnedduringthequarter. "r (4)  ExpendituresforadministrativeandInternalTransportation,   Storage,andHandling(_ITSH_)costsduringthequarter.Both ! categoriesofcostmustbesubdividedintosubcategoriesidentified " ininstructionsissuedbytheFAS. # (5)  Cashonhandattheendofthequarter. 0%   ` E.` ` hp x (#X(#E 2. ` PerformanceReporting  &."  E. ` hp x (#` X(#Ea. CCCForm620,LogisticsReport(OMBNo.05510035)󀄀ACooperating (# SponsormustsubmitthisreporttotheFASsemiannuallyforeach r)$ agreement.Ifcommoditiesaredistributeddirectly,thesponsormust X*% continuesubmittingreportsuntilallcommoditiesmadeavailableunder >+& theagreementhavebeendistributed.Inthefollowingdetail,quantitiesof $,t' commoditiesarereportedintermsofnetmetrictons(_NMT_)unless  -Z( otherwisespecified(7_CFR_Ԁsection1499.16(c)(1)). -@)  _ & z KeyLineItems󀄀Thefollowinglineitemscontaincriticalinformation:    ` E.` hp x (# X(#E(1)  CommodityDeliveryTable󀄀Thefollowingdatarelatingto ^  shipping ofeachcommodityprovidedforintheagreement:'zG D  6 hp x (#X(#6(a) h Amountreceivedatport. B (b) h Oceanlosses/damages.   (c) h Amountreceivedatwarehouse. N  (d) h Inlandloses/damages.  L   E.` hp x (#hX(#E(2)  FreightCharges󀄀Thedollaramountofclaimsforareductionor   recoveryoffreightchargesinbothlocalcurrencyandU.S.dollar   equivalents.Claimsgeneratedbytheoceanandinlandportionsof v  theshipmentshouldbeseparatelyidentified. \  (3)  WarehouseLosses󀄀Thefollowingdatarelatingto storage ofeach  Z  commodityprovidedforintheagreement: @   6 hp x (#X(#6(a) h Warehouselosses/damages.   (b) h Balanceavailablefordistribution. L  E.` hp x (#hX(#E(4)  DirectDistribution󀄀Thefollowingdatarelatingto direct J distribution ofeachcommodityprovidedforintheagreement: 0   ` E.h` hp x (#X(#E(a) h Amountdistributed.  (b) h Distributionlosses/damages. < (c) h Typeofinstitutionreachedandnumberofinstitutions : reached.   (d) h Numberofbenefitingindividuals. ~"  ` E.` hp x (#hX(#E(5)  WarehouseInventoryStatusThewarehouseinventorystatusof ,$| eachcommodityprovidedforintheagreement:beginning %b  inventory,totalreceivedinwarehouse,totaldispatchedfrom %H!  warehouse,warehouselosses,andendinginventory. &."  ` E. ` hp x (#X(#E& B  b. CCCForm621,MonetizationReport(OMBNo.05510035)󀄀A  CooperatingSponsormustsubmitthisreporttotheFASsemiannuallyfor  eachagreementthatprovidesformonetizationofthecommodities. | Reportsarerequireduntilallthecommoditieshavebeensoldandthe b proceedsdisbursedforauthorizedpurposes.Ifamonetizationproject H involvesarevolvingloanprogram,currentFASpolicyrequiresthe . ~ CooperatingSponsortosubmitreportsonlythroughrepaymentofthefirst  d loancycle.  J  MethodsaCooperatingSponsormayusetodetermineprevailinglocal   marketpricesformonetizationpurposesinclude,butarenotlimitedto,    solicitingsealedbids,usingpublicauctions,involvingcommodity t  exchanges,orobtainingwrittenstatementsfromtheagriculturalattacheor Z  ministerforforeignagriculturalaffairsinthehostcountry.TheFAS @  homepageontheInternetprovidesagriculturalattachecontact &v  information.(4` O  5  +  http://www.fas.usda.gov/scri% a %a>X% b ptsw/fasfield/ovc_frm.asp+Wb)P  6WWlica  741?!W)'BR  \  &  KeyLineItems󀄀Thefollowinglineitemscontaincriticalinformation:   PartISales:'5Y h  ` E.` hp x (# X(#EForeachcommodityprovidedforintheagreement:theamount f sold,thepriceperMT(metricton),exchangerate,proceeds L generatedinLC(localcurrency),andproceedsgeneratedinUSD 2 (U.S.dollarequivalent).   ` E. ` hp x (#X(#EPartIIBarter: v  ` E.` hp x (# X(#EForeachcommodityusedinbarterexchanges:thetypeand $t amountbartered,thecommodity/servicereceived,andthe  Z domesticpriceontransactiondateforcommoditybarteredand @ commodity/servicereceived. &  ` E. ` hp x (#X(#EPartIIIDepositstoSpecialFundsAccount: !  ` E.` hp x (# X(#EThefollowingclassesoffundsdeposited,bothinlocalcurrency 2# andintheequivalentnumberofU.S.dollars:salesof $h commodities,interest,otherprogramincome. $N   ` E. ` hp x (#X(#EPartIVDisbursementsFromSpecialFundsAccount: &!  ` E.` hp x (# X(#ETheamountofeachdisbursement,inbothlocalcurrencyandU.S. Z(# dollars,andabriefstatementoftheuseoffunds. @)$   ` E. ` hp x (#X(#E& z PartVBalanceofSpecialFundsAccounts: *>&!  ` E.` hp x (# X(#EBeginningandendingbalancesofspecialfundaccounts,bothin ,'" localcurrencyandinU.S.dollars.'z*` -(#   ` E.` ` hp x (#X(#E 3. ` SpecialReporting 󀄀NotApplicable    B+ ` hp x (#` X(#B&  N.  SpecialTestsandProvisions ^   E.` ` hp x (#X(#E1. ` RecipientAgencies '^Kc  \   XE.` hp x (#` X(#E ComplianceRequirement 󀄀ThePlanofOperationisrequiredtodescribetheRecipient   AgenciesthatwillbeinvolvedintheprogramandadescriptionofeachRecipient   Agencyscapabilitytoperformitsresponsibilities(7CFRsection1499.5(a)(3)).A   RecipientAgencyisdefinedasanentitylocatedintheforeigncountrythatreceives l  commoditiesorcommoditysaleproceedsfromaCooperatingSponsorforthepurposeof R  implementingactivities(7CFRsection1499.1). 8  TheCooperatingSponsormustenterintoawrittenagreementwithaRecipientAgency 6  beforetransferringUSDAcommodities,monetizationproceeds,orotherprogramincome   tothatentity.SuchanagreementmustrequiretheRecipientAgencytopaytothe   CooperatingSponsorthevalueofanycommoditiesprovidedbyUSDA,salesproceeds,   orotherprogramincomenotusedforpurposesexpresslypermittedunderthe ~  CooperatingSponsorsownagreementwiththeCCC;orthatarelost,damaged,or d misusedastheresultoftheRecipientAgencysfailuretoexercisereasonablecare J (7CFRsection1499.11(a)). 0 TheCooperatingSponsormustensurethattheactivitiesofanyRecipientAgencythat . receives$25,000ormoreincommoditiesorcommoditysalesproceedsaresubjectedto  onsiteinspection.TheCooperatingSponsormaymeetthisrequirementbyrelyingupon  independentauditsoftheRecipientAgenciesorbyconductingitsownonsitereviews  (7CFRsection1499.17). v  AuditObjective 󀄀Determinewhether(1)theCooperatingSponsorenteredintowritten $t agreementswiththeRecipientAgencies,(2)theuseoftheRecipientAgencieswas  Z consistentwiththePlanofOperation,and(3)theCooperatingSponsormonitoredthe @ activitiesofRecipientAgenciestoensureproperperformanceofassignedactivitiesand & useofcommodities,monetizedproceeds,andprogramincome.    SuggestedAuditProcedures  j"   XE.` ` hp x (#X(#ESelectasampleofRecipientAgenciesandascertainif: $h a. ` TheCooperatingSponsorenteredintoawrittenagreementwiththeRecipient %! Agency. &! b. ` TheCooperatingSponsorsuseoftheRecipientAgencywasconsistentwiththe Z(# PlanofOperation. @)$  c. ` TheCooperatingSponsorappropriatelymonitoredtheactivitiesoftheRecipient *>&! Agencytoensureproperperformanceofassignedactivitiesanduseof +$'" commodities,monetizedproceeds,andprogramincome. , (#  E. ` hp x (#` X(#E    cYd]    UNITEDSTATESDEPARTMENTOFAGRICULTURE     ?( hp x (# X(#? CFDA10.500 COOPERATIVEEXTENSIONSERVICE  ^ H.` hp x (# X(#H I.  PROGRAMOBJECTIVES   \ TheCooperativeStateResearch,Education,andExtensionService(CSREES)providesformula   grantfundstothe1862landgrantinstitutionsandthe1890landgrantinstitutionsfor   cooperativeagriculturalextensionworkwhichconsistsofthedevelopmentofpractical   applicationsofresearchknowledgeandpracticaldemonstrationsofexistingorimproved l  practicesortechnologiesinagriculture,usesofsolarenergywithrespecttoagriculture,home R  economics,andruralenergy,andrelatedsubjectstopersonsnotattendingorresidentincolleges. 8   II.  PROGRAMPROCEDURES  6  TheFirstMorrillActof1862providedfortheestablishmentofthe1862landgrantinstitutions   whicharelocatedinthe50States,theDistrictofColumbia,theCommonwealthofPuertoRico, z  andtheinsularareasofAmericanSamoa,Guam,Micronesia,NorthernMarianas,andtheVirgin `  Islands.TheSecondMorrillActof1890providedforthesupportofthe1890landgrant F  institutions,includingTuskegeeUniversity,whicharelocatedin16States. ,| The1862landgrantinstitutionsreceiveformulagrantfundsforcooperativeextensionwork * undersections3(b)and(c)oftheSmithLeverActandthe1890landgrantinstitutions,  includingTuskegeeUniversity,receiveformulagrantfundsforcooperativeextensionwork  undersection1444oftheNationalAgriculturalResearch,Extension,andTeachingPolicyActof  1977(NARETPA).TheonlyexceptionistheDistrictofColumbia,whichreceivesextension r fundsundertheDistrictofColumbiaPublicPostsecondaryEducationReorganizationAct,Pub. X L.93471,asopposedtotheSmithLeverAct. > Fundsareallocatedtothelandgrantinstitutionsbasedonspecifiedformulas,andthesefunds < aremadeavailabletothelandgrantinstitutionsatthebeginningofeachquarterthroughthe " DepartmentofHealthandHumanServicesPaymentManagementSystem(DHHSPMS).  Theseformulasarebasedonthefarmandruralpopulationsofeachstateandincludeanequal   portiondistributedtoalleligibleinstitutions.Thesefundssupporttheactivitiescommonly ! referredtoas baseprograms. j" Formulafundsarealsoprovidedtothe1862landgrantinstitutionsundersection3(d)ofthe $h SmithLeverActfortheexpandedfoodandnutritioneducationprogramwhichisauthorized $N  undersection1425ofNARETPA,andthesefundsaremadeavailabletothe1862landgrant %4! institutionsinthe50States,theCommonwealthofPuertoRico,andtheinsularareasof &" AmericanSamoa,Guam,Micronesia,NorthernMarianas,andtheVirginIslands.Toenable '#  lowincomeindividualsandfamiliestoengageinnutritionallysoundfoodpurchasingand (#! preparationpractices,theexpandedfoodandnutritioneducationprogramprovidesfor |)$" employmentandtrainingofprofessionalandparaprofessionalaidestoengageindirectnutrition b*%# educationoflowincomefamiliesandinotherappropriatenutritioneducationprograms.Tothe H+&$  maximumextentpracticable,programaidesarehiredfromtheindigenoustargetpopulation. .,~'% The1862andthe1890landgrantinstitutionsarerequiredtosubmita5YearPlanofWork   whichdescribestheextensionprogramsthattheyintendtoadministerfortheperiodfrom  October1,1999,throughSeptember30,2004(7USC344and3221). | &  SourceofGoverningRequirements '* *z Thelawsgoverningthisprogramarecodifiedat7USC301349,3221,3222,3222d,and3319.  (  III.  COMPLIANCEREQUIREMENTS   IndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal 4  program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to j  identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are P  applicableandthenlooktoParts3and4forthedetailsoftherequirements.  6   A.  ActivitiesAllowedorUnallowed      E.` ` hp x (#X(#E1. ` Formulagrantfundsmaybespentonlyforthefurtheranceofcooperative B  extensionworkandaccordingtothe5YearPlanofWorkapprovedbyCSREES (x  (7USC344and3221(d)).TheGuidelinesfortheStatePlansofWorkfor ^  AgriculturalResearchandExtensionFormulaFundswerepublishedinthe D FederalRegisteronJuly1,1999(64FR3591035919).The5YearPlanof * Workforfiscalyear(FY)2000throughFY2004wasdueJuly15,1999.  This5YearPlanofWorkmaybeintegratedwiththeresearchcomponentofthe  landgrantinstitutionwhichisfundedundertheHatchAct,and/orthe5Year  PlanofWorkmaybeajointplanbetweenan1862landgrantinstitutionandan r 1890landgrantinstitutioniftheyarebothlocatedinthesameState(64FR X 35916). > 2. ` NoportionofSmithLeverActfundsandsection1444fundsofNARETPAmay < beapplieddirectlyorindirectly tothepurchase,erection,preservationorrepair " ofanybuildingorbuildings,orthepurchaseorrentalofland(7USC345and  3221(e)).   3. ` NoportionofSmithLeverActfundsandsection1444fundsunderNARETPA L" maybeapplieddirectlyorindirectlyincollegecourseteachingorlecturesin 2# college(7USC345and3221(e)). $h   E.` hp x (#` X(#E B.  AllowableCosts/CostPrinciples  %!   E.` ` hp x (#X(#E1. ` IndirectCosts󀄀Noindirectcostsortuitionremissionmaybechargedagainstthe t'" formulagrantfundsauthorizedundertheSmithLeverActorundersection1444 Z(# ofNARETPA(7USC3319). @)$  2. ` RetirementContributions󀄀Retirementandpensioncontributionspaidfromgrant *>&! fundsforindividualswhosesalariesarepaidinwholeorinpartwithgrantfunds +$'" arecappedat5percent.ThedepositsandcontributionsofFederaloriginmustbe , (# atleastequaledbythegrantee(7USC331). -($   E.` hp x (#` X(#E&  G.  Matching,LevelofEffort,Earmarking     E.` ` hp x (#X(#E 1. ` Matching ' ^  E. ` hp x (#` X(#Ea. 1862LandGrantInstitutionsinthe50States󀄀Allformulafunds  \ providedtothe1862landgrantinstitutionsinthe50Statesundersections B 3(b)and(c)oftheSmithLeverActmustbe100percentmatched.Inkind  ( contributionsarenotallowedasmatchforformulafundsauthorizedunder   sections3(b)and(c)oftheSmithLeverAct(7USC343(e)).Funds   providedundersection3(d)oftheSmithLeverActfortheexpandedfood   andnutritioneducationprogram(EFNEP)donotrequireanymatching p  contributions(7USC3175). V  b. 1862LandGrantInstitutionintheDistrictofColumbia󀄀Allallocations T  madetothe1862landgrantinstitutionintheDistrictofColumbiaunder :  theDistrictofColumbiaPublicPostsecondaryEducationReorganization   Act,Pub.L.93471,mustbe100percentmatched.Inkindcontributions   arenotallowedasmatchforformulafunds(Pub.L.93471,Section  208(c)).  c. 1862LandGrantInstitutionsintheCommonwealthofPuertoRicoand 0 theinsularareasofAmericanSamoa,Guam,Micronesia,Northern f Marianas,andtheVirginIslands󀄀TheCommonwealthofPuertoRico L andtheinsularareasmustmeeta50percentmatchingrequirementofthe 2 FederalformulafundsbeginninginFY2003(7USC343(e)(4)and7USC  301(note)).TheSecretaryofAgriculturemaywaivethematchingfunds  requirementforanyfiscalyeariftheSecretarydeterminesthatthe  governmentoftheinsularareawillbeunlikelytomeetthematching z requirementforthefiscalyear(7USC343(e)(4)). Matchingfunds ` meanscashcontributionsandexcludesinkindmatchingcontributions. F Matchingfundsmustbeusedtosupportresearchandextensionactivities ,| asidentifiedintheapproved5YearPlanofWorkorforapproved  b qualifyingeducationalactivities(7USC343(e);7CFRpart3419).  H d. 1890LandGrantInstitutions,includingTuskegeeUniversityInFY " 2003,thematchingrequirementis60percent;inFY2004,70percent;in # FY2005,80percent;inFY2006,90percent;andinFY2007and r$ thereafter,100percent.Theselandgrantinstitutionsmayapplyfora X%  waiverofthematchingfundsrequirementinexcessof50percentforany >&!! fiscalyear. Matchingfundsmeanscashcontributionsandexcludesin $'t"" kindmatchingcontributions.Matchingfundsmustbeusedtosupport  (Z## researchandextensionactivitiesasidentifiedintheapproved5YearPlan (@$$ ofWorkorforapprovedqualifyingeducationalactivities.Matching )&%% fundsmustbeavailableinthesameFederalfiscalyearastheFederal * && funds(7USC3222dand7CFRpart3419). +&'  X E.` hp x (# X(#E 2. ` LevelofEffort 󀄀NotApplicable P-((  3. ` Earmarking 󀄀NotApplicable   X H.  PeriodofAvailabilityofFederalFunds  ^  XE.` hp x (#X(#ESmithLeverActformulafundsdistributedtothe1862landgrantinstitutionsmaybe  \ carriedforwardfiveyearsfromtheyearallocated.ForSection1444ofNARETPAfunds B allocatedtothe1890landgrantinstitutions,includingTuskegeeUniversity,nomore  ( than20percentofthefundsreceivedinanyfiscalyearmaybecarriedforwardtothe   succeedingfiscalyear(7USC3221(a)).    XE.` hp x (#X(#E&  L.  Reporting  R   X 1. ` FinancialReporting  P   X E. ` hp x (#X(#Ea. SF269,FinancialStatusReport󀄀Thisreportisduefromthe1862land   grantinstitutionsbyApril1(7USC344(b))andfromthe1890landgrant   institutions,includingTuskegeeUniversity,byDecember1(7USC z  3221(d)). `  b. SF270,RequestforAdvanceorReimbursement󀄀NotApplicable'R  ^  c. SF271,OutlayReportandRequestforReimbursementforConstruction   Programs󀄀NotApplicable  d. SF272,FederalCashTransactionsReport󀄀NotApplicable P  X E.` hp x (# X(#E 2. ` PerformanceReporting 󀄀NotApplicable N  X 3.  SpecialReporting 󀄀NotApplicable     Z ecfd UNITEDSTATESDEPARTMENTOFAGRICULTURE     $   ?( hp x (#X(#? CFDA10.551 FOODSTAMPS  ^   CFDA10.561 STATEADMINISTRATIVEMATCHINGGRANTSFORFOOD D STAMPPROGRAM  *z  $ E+ ` hp x (#  X(#E I.  PROGRAMOBJECTIVES   ( E.` hp x (#X(#ETheobjectiveoftheFoodStampProgramistohelplowincomehouseholdsbuythefoodthey   needforgoodhealth. l  B+ ` hp x (#X(#B II.  PROGRAMPROCEDURES  j  E.` hp x (#X(#E Administration    TheU.S.DepartmentofAgriculture(USDA),FoodandNutritionService(FNS)administersthe v  FoodStampProgramincooperationwithStateandlocalgovernments. \  Statewelfareagencies(orcountywelfareagenciesundertheoversightoftheStategovernment)  Z  certifyeligibilityandprovidebenefitstohouseholds.FNSauthorizes,monitors,andinvestigates @  storesthatredeembenefits,providesfundingforStateadministrationandbenefits,andoversees &  theoperationofStatewelfareagenciestoensurecompliancewithFederallawsandregulations.    FederalFundingofBenefitsandStateAdministrativeCosts  j TheFederalGovernmentpays100percentofthevalueofFoodStampProgrambenefitsand h generallyreimbursesStatesfor50percentoftheircoststoadministertheprogram(7CFR N section277.4(b)),exceptforthosefunctionslistedinIIIG.1.,Matching.TheFoodStamp 4 ProgramsauthorizingstatuteplacesnocapontheamountoffundsavailabletoreimburseStates  atthe50percentrateforallowableadministrativeexpenses.Noreimbursementisallowedfor  Stateexpendituresforactivitiesundertakenasaconditionofsettlementofqualitycontrolclaims  againsttheStateforlowpaymentaccuracy. |  Certification  *!z Eligibilityforfoodstampsisbasedprimarilyonincomeandresources.Althoughwelfarereform "( andsubsequentlegislationincreaseStatedesignoptionsthatcanaffectbenefitsforrecipients,a # keyfeatureoftheprogramisitsstatusasanentitlementprogramwithstandardizedeligibility $ andbenefits. %  AssessingNeed 8'" Householdsgenerallycannotexceedagrossincomeeligibilitystandardsetat130percentofthe (6$ Federalpovertystandard(7CFRsection273.9(a)(1)).Householdsalsocannotexceedanet )% incomestandard,whichissetat100percentoftheFederalpovertystandard(7CFRsection *& 273.9(a)(2)).Thenetincomestandardallowsspecifieddeductionsfromgrossincome,e.g.,a +&  standarddeductionanddeductionsformedicalexpenses(elderlyanddisabledonly),excess ~,'! sheltercosts,andworkexpenses.Nonfinancialeligibilitycriteria,onlysomeofwhichaffect d-(" benefitamounts,include:age,schoolstatus,citizenship,residency,householdcomposition,  workrequirements,anddisabilitystatus.Somenoncitizensareineligibletoparticipateinthe  program(7USC2015(f)).Ablebodiedadultswithoutdependentsaresubjecttoatimelimitfor | receivingbenefitsifcertainrequirementsarenotmet(7USC2015(o)). b ApplicationProcess  ` Theapplicationprocessincludescompletingandfilinganapplicationform,beinginterviewed,   andhavingcertaininformationverified.Inadditiontousinginformationsuppliedbythe   recipients,welfareagenciesusedatafromotheragencies,suchastheSocialSecurity   Administration,theInternalRevenueService,andtheStateemploymentsecurityagency,to p  verifythehouseholdsidentityandincome. V   Benefits  T  Benefitamountsvarywithhouseholdsizeandincome.Asrequiredbylaw,allotmentsfor   varioushouseholdsizesarerevisedOctober1ofeachyeartoreflectthecostoftheThriftyFood   Plan,amodelplanforalowcostnutritiousdietthatisdevelopedandcostedbyUSDA. ~  Thebenefitseachhouseholdreceivesareredeemedforfoodinparticipatingretailstores.States ,| generallyissuebenefitsintheformofdebitcards,whichrecipientscanusetopurchasefood. b Thisisknownaselectronicbenefitstransfer(EBT).Welfarereformlegislationrequiredall H StatestouseEBTby2002,andmostStateshaveachievedfullcompliance.Historically,the . benefitformhasbeenapapercouponissuedindenominationsof$1,$5,and$10.AfewStates  havenotyetcompletedtheconversionfromissuingpapercouponstousingEBTsystems.Ina  limitednumberofsituations,recipientsmayreceivetheirbenefitsincash.   BenefitRedemption  > Generally,householdsmustuseprogrambenefitsforfoodstobepreparedandconsumedat < home.Thereare,however,someexceptionstothisgeneralpolicy.Forexample,thereare " provisionsforthehomelesstouseprogrambenefitsinauthorizedrestaurantsandforresidentsof  somesmallinstitutionalsettingstoparticipateintheprogram.RetailersinStateswherecoupons   arestillusedredeemthemthroughthebankingsystemwithoutthedirectinvolvementofState ! governments.However,theuseofEBTincreasesStateinvolvementintheredemptionprocess. j" TheStatesEBTcontractorisresponsibleforsettlement,orpayment,toretailersthathave P# acceptedEBTcardsforfoodpurchases.Thecontractors concentratorbankmakesthe 6$ paymentthroughtheNationalAutomatedClearingHouse(ACH)system.Theconcentrator %l  bankisreimbursedforthepaymentsbyadrawmadeontheStatesEBTbenefitaccountwiththe &R! U.S.Treasury.StatesusuallyauthorizetheirEBTcontractorstomakethesedraws,although &8"  someStatesdrawthecashandpaytheconcentratorbanksthemselves.TheStateisresponsible '#! forreconcilingthepaymentsmadetoretailersbyitsEBTcontractorwiththeamountsdrawn ($" fromitsEBTaccountwiththeU.S.Treasury. )$# StatesmustobtainanexaminationbyanindependentauditoroftheStateEBTserviceprovider H+&$ (serviceorganization)regardingtheissuance,redemption,andsettlementofbenefitsunderthe .,~'%  FoodStampPrograminaccordancewiththeAmericanInstituteofCertifiedPublicAccountants -d(& (AICPA)StatementonAuditingStandards(SAS)No.70,ServiceOrganizations.AppendixVIII  tothisSupplementprovidesadditionalguidanceontheseexaminations.   InperformingauditsunderOMBCircularA133oftheFoodStampProgram,anauditormay D usetheseSAS70reportstogainanunderstandingofinternalcontrolsandobtainevidenceabout *z theoperatingeffectivenessofcontrols.  `  StateResponsibilities    AStateadministeringtheFoodStampProgrammustsignaFederal/StateAgreementthat l  commitsittoobserveapplicablelawsandregulationsincarryingouttheprogram(7CFR R  section272.2).Althoughwelfarereformandsubsequentlegislationprovidedadditional 8  administrativeflexibility,theFoodStampActremainshighlyprescriptive.Boththelawand n  regulationsprescribedetailedrequirementsfor:(1)meetingprogramgoals,suchasproviding T  timelyserviceandrightstoappeal;and(2)ensuringprogramintegrity,suchasverifying :  eligibility,safeguardingcouponinventories,establishingandcollectingclaimsforbenefit   overpayments,andprosecutingfraud.   ToensurethatStatesoperateincompliancewiththelaw,programregulations,andtheirown d PlansofOperation,eachStateisrequiredtohaveasystemformonitoringandimprovingits J administrationoftheFoodStampProgram(7CFRsection275.1(a)),particularlytheaccuracyof 0 eligibilityandbenefitdeterminations.Thisperformancemonitoringsystemincludes f managementreviews,reviewsofqualitycontrolsystems,andreportingtoFNSonprogram L performance.Stateagenciesshallconductareviewonceeveryyearforlargeprojectareas,once 2 everytwoyearsformediumprojectareas,andonceeverythreeyearsforsmallprojectareas,  unlessanalternativescheduleisapprovedbyFNS.Projectsareclassifiedaslarge,medium,or  smallbasedonStatedeterminations.TheStatemustalsoensurecorrectiveactioninresponseto  thedetectionofprogramdeficiencies(7CFRsections275.2,275.5,and275.1619). z  FederalOversightandComplianceMechanisms  (x FNSoverseesStateoperationsthroughanorganizationconsistingofheadquartersandseven & regionaloffices.Inaddition,about60fieldofficesareofteninvolvedinStateagencyoversight.   FNSprogramoversightincludesbudgetreviewandapproval,reviewsoffinancialandprogram j" reportsandStatemanagementreviewreports,andonsiteFNSreviews.EachyearFNS P# headquartersconveystoitsregionstheconcernsthatwereelevatedtothenationallevelthrough 6$ auditsorothermechanisms.RegionscombinethiswiththeirknowledgeofindividualStatesto %l  informtheStatesofpossiblevulnerabilitiestoincludeintheirinternalmanagementreviewsand &R!  correctiveactionplans. &8"  & X  AlthoughFNSusestechnicalassistanceextensivelytopromoteimprovementsinStateoperation  oftheprogram,enforcementmechanismsarealsoavailable.Inadditiontothefinancialrewards  andpenaltiesrelatedtopaymentaccuracy,FNShasothermechanismstorecoverotherlosses | andthecostofnegligence(7CFRsections276.2and276.3).Forotherformsofnoncompliance, b FNShastheauthoritytogivenoticeand,ifimprovementsdonotoccur,withholdadministrative H fundsforfailuretoimplementprogramrequirements(7CFRsection276.4). . ~  CertificationQualityControlSystem   , TheFoodStampProgrammaintainsanextensivequalitycontrolsystemrequiredbylawand   regulation(7CFRsections275.1014).ThesystemprovidesStateandnationalmeasuresofthe p  accuracyofeligibilityandbenefitamountdetermination(oftenreferredtoaspaymentaccuracy), V  bothunderpaymentandoverpayment,andofthecorrectnessofdecisionstodeny,terminate,or <  (beginninginfiscalyear2001)suspendbenefits.'X  "r  Measurement   Statesarerequiredtoselectastatisticallyvalidsampleofcasesandtoreviewthecasesfor ~  eligibilityandbenefitamount.Reviewmethodsinthissamplearegenerallymoreintensivethan d thoseusedindeterminingeligibility.Statessubmitfindingsofallsampledcases,including J incompleteandnotsubjecttoreviewcases,toanautomateddatabasemaintainedbytheFederal 0 Government.StatequalitycontroldataallowaStatetobeawareonanongoingbasisofitslevel f ofaccuracy,andallowfortheidentificationoftrendsandappropriatecorrectiveaction. L TheapplicableFNSregionalofficereviewseachStatessamplingplanannuallyandrereviews  asubsampleoftheStatequalitycontrolreviews.TheFNSrereviewprocessprovidesfeedback  toeachStateonitsqualitycontrolsystem.FNSusestheStatessampleandtheFNSsubsample v inaregressionformula(describedinregulation)todeterminepaymenterrorrates.Bylaw,the \ errorrateisthecombinedvalueofoverpaymentsandunderpaymentstoparticipating B households.FNSheadquartersalsoreviewsitsregionaloperationsandprovidestechnical (x assistancetoassureconsistencyinthenationalqualitycontrolsystem. ^ CorrectiveActionandPenalties   ThereisaspecificlegislativerequirementforcorrectiveactionbyanyStatewithanerrorrate j" above6percent(7USC2025(c)(1)(B)).FNSmaintainsanextensivesystemoftechnical P# assistanceforStatesastheydevelopandimplementcorrectiveaction.FNSalsomonitorsthe 6$ implementationofcorrectiveactionplans.Stateswithpersistentlyhigherrorratesareassessed %l   fiscalliabilitiesbasedontheamountofbenefitsissuedinerror. &R! &   ImplicationsofQualityControlfortheComplianceSupplement  TheFoodStampProgramQualityControlsystemusesanintensiveStatereviewofmorethan ^ 55,000activecasesacrosstheUnitedStatestomeasuretheaccuracyofFoodStampProgram D eligibilitydeterminationsandbenefitamounts.AnFNSrereviewofmorethan18,000ofthose *z casesfollows.ThesesamplesarestatisticallyvalidattheStateandnationallevel.Information  ` fromFederalprogramoversightindicatesthatthissamplingsystemisoperatingadequatelyto  F provideassurancesthatFNSismeasuringtheaccuracyofeligibilitydecisionsandthatthesedata  , provideabasisforcorrectiveactiontoimprovetheaccuracyofeligibilitydecisions.Therefore,   theQualityControlSystemsufficientlytestsindividualeligibilityintheFoodStampProgram.'?   However,inthosesituationswherecomputersystemsareintegraltotheoperationofthe V  program,e.g.,automatedeligibilitydetermination,theauditorshouldperformtestsasdeemed <  necessarytoobtainassuranceoftheintegrityofthesesystems.Inthoseinstanceswhere "r  multipleprogramssharethesamesystems,e.g.,automatedintakesystemsforTemporary X  AssistanceforNeedyFamilies(TANF),FoodStamps,Medicaid,etc.,testingmaybedoneas >  partoftheworkonmultipleprograms. $  SourceofGoverningRequirements   TheFoodStampProgramisauthorizedbytheFoodStampActof1977,asamended(7USC 0 2011etseq.).ThisdescriptionofFoodStampProgramproceduresincorporatesprovisionsof f thefollowingamendmentstotheAct:thePersonalResponsibilityandWorkOpportunity L ReconciliationActof1996(WelfareReform,Pub.L.104193,August22,1996),theBalanced 2 BudgetActof1997(Pub.L.10533,August5,1997);andtheAgriculturalResearch,Extension,  andReformActof1998(Pub.L.105185,June23,1998);andtheFarmSecurityandRural  InvestmentActof2002(Pub.L.107171,116Stat.134etseq.,May13,2002).FoodStamp  Programregulationsarefoundin7CFRparts271through285. z & z AvailabilityofOtherProgramInformation  (x AdditionalprograminformationisavailablefromFNSsFoodStampsiteontheInternetat & 4g (O  5  +  http://www.%b\X% h %h% i fns.usda.gov/fsp+kiler  63to  7re a.'z(^    III.  COMPLIANCEREQUIREMENTS  j"  IndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal $h program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to $N  identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are %4! applicableandthenlooktoParts3and4forthedetailsoftherequirements.  &" Note:Generally,E.Eligibility,G.1Matching,I.Procurement,andN.SpecialTestsand x(#  ProvisionsonlyapplytoStategovernments.However,whenStateshavedelegatedtothelocal ^)$! governmentsfunctionsnormallyperformedbytheStateasadministeringagency,e.g.,eligibility D*%" determination,issuanceoffoodstamps,etc.,therelatedcompliancerequirementswillapplyto *+z&# thelocalgovernment. ,`'$ B+ ` hp x (#X(#B A.  ActivitiesAllowedorUnallowed  -)%  XE.` hp x (#X(#EFundsmadeavailableforadministrativecostsmustbeusedtoscreenandcertify  applicantsforprogrambenefits,issuebenefitstoeligiblehouseholds,conductfraud  investigationsandprosecutions,providefairhearingstohouseholdsforwhichbenefits | havebeendeniedorterminated,conductnutritioneducationactivities,preparefinancial b andspecialreports,operateautomateddataprocessing(ADP)systems,monitor H subrecipients(whereapplicable),andotherwiseadministertheprogram.Portionsofthe . ~ awardmadeavailableforspecificpurposes,suchasADPsystemsdevelopmentor  d EmploymentandTrainingactivities,mustbeusedforsuchpurposes(7CFRpart277).  J  &  E .  Eligibility     XE.` ` hp x (#X(#E 1.  ` EligibilityforIndividuals  V   Theauditorisnotrequiredtotesteligibilitybecausedetailtestingofthe T  individualcasefilesisperformedbythequalitycontrolunitandreviewedbyFNS :  andtheautomatedsystemsupportingeligibilitydeterminationsandprocessing   andtrackingfoodstampissuancesistestedunderIII.N.1, SpecialTestsand   ProvisionADPSystemforFoodStamps.'     2. ` EligibilityforGroupofIndividualsorAreaofServiceDelivery 󀄀Not J Applicable 0  3. ` EligibilityforSubrecipients 󀄀NotApplicable .   B+ ` hp x (#` X(#B&  G.  Matching,LevelofEffort,Earmarking     E.` ` hp x (#X(#E 1. ` Matching  :  TheStateisrequiredtopay50percentofthecostsofadministeringtheprogram. 8 Exceptionstothe50percentreimbursementratesare:(a)100percentgrantsto  administertheEmploymentandTrainingProgram,and(b)anincreased  reimbursementrateforStateswithhighbenefitpaymentaccuracyrates(about  eightStatesreceivethismoney)(7CFRsection277.4(b)).'   ForFederalfiscalyears1999through2007,theFederalreimbursementwillbe ."~ decreasedandtheStateshareofadministrativecostswillincreasebyanamount #d equaltocertaincommoncertificationcostsgrandfatheredintotheStatesTANF #J grantlevelsbutattributabletotheFoodStampProgram(7USC2025(k),Section $0  4122ofPub.L.107171,116Stat.324,May13,2002).Theamountofeach %! StatesdownwardadjustmentwasdeterminedbytheDepartmentofHealthand &!  HumanServices,andtheStateswerenotifiedbyletter. '" & ,  Costsofpaymenterrorratereductionactivitiesconductedunderreinvestment  agreementswithFNSarenoteligibleforanylevelofFederalreimbursement.  PrivateinkindcontributionsarenotallowabletocounttowardtheStatesshare | oftheprogramsadministrativecost(7CFRsections275.4(c)and b 275.23(e)(11)(i)(C)). H   2. ` LevelofEffort 󀄀NotApplicable',h  F  3. ` Earmarking 󀄀NotApplicable     B+ ` hp x (#` X(#B I.  ProcurementandSuspensionandDebarment  R    E.` ` hp x (#X(#E1. ` ADPSystemsDevelopment󀄀ForcompetitiveacquisitionsofADPequipmentand P  servicescosting$5millionormore(combinedFederalandStateshares),theState 6  mustsubmitanAdvancedPlanningDocument(APD)forthecoststobeapproved   andallowableaschargestoFNS.Thisthresholdisforthetotalprojectcost.In   addition,noncompetitiveacquisitionsof$1millionormorerequireanAPD.   Contractsresultingfromnoncompetitiveprocurementsofmorethan$1million ~  andcontractsforEBTsystems,regardlessofcost,alsomustbeprovidedtoFNS d forreview(7CFRsection277.18). J 2. ` Procurement󀄀RegardlessofwhethertheStateelectstofollowStateorFederal H rulesinaccordancewiththeA102CommonRule,thefollowingrequirements . mustbefollowedforprocurementsinitiatedonorafterOctober1,2000:   E. ` hp x (#` X(#Ea. AStateorlocalgovernmentshallnotawardacontracttoafirmitusedto r orchestratetheprocurementleadingtothatcontract.Examplesofservices X thatwoulddisqualifyafirmfromreceivingthecontractincludepreparing > thespecifications,draftingthesolicitation,formulatingcontracttermsand $t conditions,etc.(7CFRsection3016.60(b)).  Z b. AStateorlocalgovernmentshallnotapplyinStateorlocalgeographical  preference,whetherstatutorilyoradministrativelyprescribed,inawarding   contracts(7CFRsection3016.60(c)). !  XE.` hp x (# X(#E L.  Reporting  2#  XE.` ` hp x (#X(#E 1. ` FinancialReporting  $0   E. ` hp x (#` X(#Ea. SF269,FinancialStatusReport󀄀Applicable &! b. SF270,RequestforAdvanceorReimbursement󀄀Applicable <(# c. SF271,OutlayReportandRequestforReimbursementforConstruction ):% Programs󀄀NotApplicable * &  d. SF272,FederalCashTransactionsReport󀄀NotApplicable ~,'!  E.` ` hp x (# X(#E 2. ` PerformanceReporting 󀄀NotApplicable   3. ` SpecialReporting  ^  Note:TherequirementforStateagenciestoautomatetheirfoodstampprograms  \ includesautomationofreportingrequirements(7CFRsection272.10(b)(2)(vi)). B Thetestingtoensureaccuracyandcompletenessofthefollowingreportsshould  ( becoordinatedwiththetestingoftheADPSystemforFoodStamps(seeIII.N.1    SpecialTestsandProvisionsADPSystemsforFoodStamps).     E. ` hp x (#` X(#Ea. FNS46FoodStampProgramIssuanceReconciliationReport R  (OMBNo.05840080).Thismonthlyreportisusedtoaccountfor 8  benefitsissuedduringareportmonthforeachissuancereconciliation n  point.TheFNS46reportsthereconciliationoffoodstampbenefits T  actuallyissuedwiththeStates(orcountysincountyrunoperations) :  MasterIssuanceFile.TheMasterIssuanceFilecontainsrecordsonall   householdseligibletoreceivebenefits(suchasalistingofthehouseholds   andthebenefitseachisauthorizedtoreceive).Actualissuancesmaybe  recordedintheRecordforIssuance(RFI)oralternativefilingsystem.  TheRFIiscreatedfromtheMasterIssuanceFileandshowstheamountof h benefitsthehouseholdiseligibletoreceiveandtheactualamountissued. N Generally,oneFNS46coverstheentireState.However,ifaState 4 concurrentlyoperatesmorethanonetypeofissuancesystem j (AuthorizationtoParticipate(ATP),mailissuance,EBT,orcashout),its P FNS46report(s)mustseparatelyidentifytheamountofbenefitsissued 6 undereachsystem.   KeyLineItems󀄀Thefollowinglineitemscontaincriticalinformation: z 9" hp x (# X(#9(1)  Line6TotalIssuancethismonth (x (2)  Line7Returnsduringcurrentmonth & (3)  Line9Valueofauthorizedreplacements(s)transacted !  E. ` hp x (# X(#Eb. FNS209StatusofClaimsAgainstHouseholds(OMBNo.05840069). 2# Ifahouseholdreceivesmorefoodstampbenefitsthanitisentitledto $h receive,theStatemustestablishaclaimagainstthathouseholdand $N  demandrepayment(7CFRsection273.18(a)).TheStateisrequiredto %4! createandmaintainasystemofrecordsformonitoringtheseclaims &" againsthouseholds.TheseStatesystemsgeneratethedataenteredonthe '#  FNS209report.Theminimumrequirementsforsuchsystemsarelisted (#! at7CFRsection273.18(m).TheStateispermittedtoretainaportionof |)$" thecollectedrepayments:35percentoftherecoveredfundsfromclaims b*%# involvingfraudorotherintentionalprogramviolations;35percentofthe H+&$ fundsrecoveredfromclaimsgeneratedbyinadvertenthouseholderrors, .,~'% collectedbyreducingapersonsunemploymentcompensationbenefits; -d(& and20percentoftherecoveredfundsfrominadvertenthouseholderror -J)' claimscollectedbyothermeans.Noportionoffundsrecoveredfrom  agencyerroroverpaymentsmayberetained(7CFRsection273.18(k)).   KeyLineItems󀄀Thefollowinglineitemscontaincriticalinformation: D   ` E.` hp x (# X(#E(1)  Line3aBeginningBalanceandline13EndingBalance󀄀represent B thebeginningandendingbalances,respectively,oftheclaims.  ( ColumnsA,B,andCrepresentthenumberandamountofclaims   byclaimtype(i.e.,intentionalprogramviolation,inadvertent   householderror,andStateagencyadministrativeerror).The   aggregatevalueofclaimsactivityfromthesubunitsshouldequal p  theStatetotals.Thebeginningandendingbalancesshould V  representthetotalofindividualclaimsthatcomprisethese <  balances. "r  (2)  Line14Cash,Check,andM.O.representstotalclaimspayments   madeintheformofcash,checks,ormoneyorders.   (3)  Line15FoodStamps󀄀representsallpaymentsintheformoffood d stampcouponsandEBTbenefitreturns. J (4)  Line16Recoupment󀄀representsthevalueofcollectionsmade H throughallotmentreductions. . (5)  Line17Offset󀄀representsthetotalvalueofcollectionsmadeby  offsettingrestoredbenefitsagainstoutstandingclaimbalances. r (6)  Line18bCashAdj.(+or)representsamendmentsorcorrections  p tothecollectionsummaryofapreviousreport. V (7)  Line18cNonCashAdj.(+or)representsamendmentsor  correctionstothecollectionsummaryofapreviousreportrelative  tothereturnoffoodstamps,recoupment,oroffsetting   transactions. f! (8)  Line19Transfers(+or)representstheclaimsthatwere #d containedinthecollectionsummaryofapreviousreportand #J whicharebeingtransferredfromoneclaimcategorytoanother $0  claimcategory. %! (9)  Line20aCashRefunds󀄀representsthevalueofcashrefunds t'" providedtohouseholdsthatoverpaidclaims. Z(# (10)  Line20bNonCashRefunds󀄀representsthevalueofnoncash *X%  refundsprovidedtohouseholdsthatoverpaidclaims. *>&! (11)  Lines21Total,and28TotalLetterofCreditAdjustments ,'" representtheTotalCollectionSummaryandtheTotalLetterof -(# CreditAdjustments.Theaggregatevalueofclaimscollection  activityfromthesubunitsshouldequaltheStatetotals.   ` E. ` hp x (#X(#Ec. FNS250FoodCouponAccountabilityReport(OMBNo.05840009). D Monthly,StateAgenciesmustsubmitanFNS250toFNSreporting *z monthlyfoodstampcouponissuanceandinventorybyanindividualor  ` consolidatedsite.TheFNS250,orequivalentinformation,isprovidedby  F eachcouponissuerandbulkstoragepointthatdistributesfoodstamps.  , Thereportsaretobesubmittedwithin45calendardaysafterthelastday   ofcouponissuanceeachmonth,andshouldreachtheFNSbythe15thday   ofthesecondmonthfollowingthelastdayofcouponissuanceforthe    month(7CFRsection274.4(b)(1)).VerificationofFNS250information t  willlikelyrequiretestworkatindividualcouponissuersorbulkstorage Z  points. @   & ` KeyLineItems󀄀Thefollowinglineitemscontaincriticalinformation: >    ` E.` hp x (# X(#E(1)  Line14TotalAvailable󀄀representsthetotalnumberoffood  couponsthatwereavailableforthemonth.(Testingthislinewill  requireverifyinglines813.)'`- h (2)  Line15EndingInventory󀄀representsthetotalnumberoffood f couponsthatwereonhandattheendofthemonth. L (3)  Line16InventoryDifference󀄀representsthemonthlyissuance  activityforcouponissuersandanunauthorizedshortagein  inventoryforbulkstoragelocations. v (4)  Line19TotalValueofCouponBooksIssued󀄀representsthetotal $t valueofcouponsissuedduringthemonthbasedonthephysical  Z inventory. @ (5)  Line22TotalValueofCouponsIssuedBasedonDocuments   representsthetotalvalueofcouponsissuedaccordingtorecords. !   ` B+ ` hp x (#X(#B&  N.  SpecialTestsandProvisions  2#   E.` ` hp x (#X(#E 1. ` ADPSystemforFoodStamps  $0   Note:SeeIII.E.1, EligibilityEligibilityforIndividuals,forthereasonwhythe &! testingoftheADPsystemforfoodstampsisunderthisspecialtestandprovision t'"  insteadofunderEligibility.'2#+3 Z(#  XE.` hp x (#` X(#E&   ComplianceRequirement 󀄀StateagenciesarerequiredtoautomatetheirFoodStamp  Programoperationsandcomputerizetheirsystemsforobtaining,maintaining,utilizing,  andtransmittinginformationconcerningtheFoodStampProgram(7CFRsections | 272.10and277.18).Thisincludes:(1)processingandstoringallcasefileinformation b necessaryforeligibilitydeterminationandbenefitcalculation,identifyingspecific H elementsthataffecteligibility,andnotifyingthecertificationunitofcasesrequiring . ~ noticesofcasedisposition,adverseactionandmasschange,andexpiration;(2)providing  d anautomaticcutoffofparticipationforhouseholdswhichhavenotbeenrecertifiedatthe  J endoftheircertificationperiodbyreapplyingandbeingdeterminedeligibleforanew  0 period(7CFRsections272.10(b)(1)(iii)and273.10(f)and(g));and(3)generatingdata    necessarytomeetFederalissuanceandreconciliationreportingrequirements.     AuditObjective 󀄀DeterminewhethertheStateadministeringagencysADPsystemfor Z  foodstampsismeetingtherequirementsto:(1)accuratelyandcompletelyprocessand @  storeallcasefileinformationforeligibilitydeterminationandbenefitcalculation;(2) &v  automaticallycutoffhouseholdsattheendoftheircertificationperiodunlessrecertified;  \  and,(3)providedatanecessarytomeetFederalissuanceandreconciliationreporting B requirements.'5 ( & , SuggestedAuditProcedures   BecauseofthediversityofADPhardwareandsoftwaresystems,itisnotpracticalforthe 4 ComplianceSupplementtoprovidesuggestedauditprocedurestoaddresseachsystem. j SeePart3,E.1.a(suggestedauditproceduresforeligibilityforindividualsrelatingto P automatedsystems)inthisSupplementforotherguidanceconcerningtestingADP 6 systems.TheauditorshouldtesttheADPsystemtoascertainifthesystem:',<    XE.` ` hp x (#X(#Ea. ` Accuratelyandcompletelyprocessesandstoresallcasefileinformationfor z eligibilitydeterminationandbenefitcalculation. ` b. ` Automaticallycutsoffhouseholdsfromfoodstampsattheendoftheir ^ certificationperiodunlessthehouseholdisrecertified. D c. ` ProvidesdatanecessarytomeetFederalissuanceandreconciliationreporting ! requirements.Note:ThistestingshouldbecoordinatedwiththetestingofSpecial " Reporting(seeIII.L.3). n#   eE. ` hp x (#` X(#E 2. ` EBTReconciliation  %l    XeE.` hp x (# X(#E ComplianceRequirement 󀄀StatesthatuseEBTmusthavesystemsinplacetoreconcile &" allofthefundsenteringinto,exitingfrom,andremaininginthesystemeachdaywiththe '#  StatesbenefitaccountwithTreasuryandEBTcontractorrecords.Thisincludesa (#! reconciliationoftheStatesissuancefilesofpostingstorecipientaccountswiththeEBT |)$" contractor.States(generallythroughtheEBTcontractorthatoperatestheEBTsystem) b*%# mustalsohavesystemsinplacetoreconcileretailercreditactivityasreportedintothe H+&$ bankingsystemtoclienttransactionsmaintainedbytheprocessorandtothefundsdrawn .,~'% downfromtheEBTbenefitaccountwithTreasury.StatesEBTsystemprocessors -d(& shouldmaintainaudittrailsthatdocumentthecycleofclienttransactionsfrompostingto -J)' pointofsaletransactionsatretailersthroughsettlementofretailercredits.Thefinancial  andmanagementdatathatcomesfromtheEBTprocessorisreconciledbytheStateto  theFoodStampProgramissuancefilesandsettlementdatatoensurethatbenefitsare | authorizedbytheStateandthatfundshavebeenproperlydrawndown.Statesmayonly b drawFederalfundsforauthorizedtransactions,i.e.,onlinepurchasessupportedbyentry H ofavalidpersonalidentificationnumber(PIN)orpurchasesusingmanualvoucherswith . ~ telephoneverificationsupportedbyaclientsignatureandanEBTcontractor  d authorizationnumber(7CFRsections274.12(a),274.12(g)(1)and274.12(j)(1)).  J & F AuditObjective 󀄀DeterminewhethertheStatereconcilesretaileractivitytoclient   transactions,toitsissuancefilesofpostingstorecipientaccountswiththeEBT    contractor,andtopostingstoanddrawdownactivityfromtheStatesbenefitaccount t  withTreasury. Z   SuggestedAuditProcedures 'F J X    XE.` ` hp x (#X(#Ea. ` VerifythattheStatehasasysteminplacetoreconciletotalfundsenteringinto,   exitingfrom,andremaininginthesystemeachday.  b. ` Selectandtestasampleofreconciliation(s)toverifythatdiscrepanciesare J followedupandresolved.Thisisgenerallyacontractorduty. 0 c. ` VerifythattheStateoritscontractorhasasysteminplacetoreconcileretailer . creditsagainsttheinformationenteredintotheAutomatedClearinghousenetwork  andtotheamountoffundsdrawndownbytheStateortheStatesfiscalagent  (theEBTcontractor).  d. ` AscertainiftheStateoritscontractorhasrecordedanynonFederalliabilitiesin > thedailyEBTreconciliation,i.e.,transactionswhichcannotbechargedtothe $t program.Ifso,verifythatthenonFederalliabilitieswerefundedbynonFederal  Z sources(i.e.,theStateorthecontractor). @ &  3. ` IssuanceDocumentSecurity      XE.` hp x (#` X(#E ComplianceRequirement 󀄀TheStateisrequiredtomaintainadequatesecurityover, L" anddocumentation/recordsfor,AuthorizationtoParticipate(ATP)cards,other 2# documentsauthorizingissuance,EBTcards(7CFRsection274.12(h)(3)),andthefood $h stampcouponsthemselvestoprevent:coupontheft,embezzlement,loss,damage, $N  destruction;unauthorizedtransfer,negotiation,oruseofcoupons;andalterationor %4! counterfeitingofcouponsandotherdocumentsauthorizingissuance(7CFRsections &" 274.7(b)and274.11(c)).' P '#   AuditObjective 󀄀DeterminewhethertheStatemaintainssecurityoverinstrumentsused ^)$! toauthorizeissuanceoffoodstampbenefits. D*%"  SuggestedAuditProcedures  +B'#   XE.` ` hp x (#X(#Ea. ` Observethephysicalsecurityoverfoodstamps,ATPcards,EBTcards,and/or   othernegotiableinstrumentsusedintheissuanceprocess.  b. ` Verifythatfoodstampcoupons,ATPcards,andEBTcardsreturnedfromthe D PostalServicearereturnedtoinventoryordestroyed. *z   X?( ` hp x (#` X(#?&  4. ` PhysicalInventory   ( E.` hp x (#` X(#E ComplianceRequirement 󀄀Eachcouponissuerandbulkstoragepointthatdistributes   foodstampsisrequiredtoprepareaFoodCouponAccountabilityReport(FNS250)to l  reportmonthlycouponissuanceandinventory(7CFRsection274.4(b)).EachState R  agencymustassurethatdaytodayoperationsofallcouponissuerscomplywith 8  regulationsbyperformingatriennialonsitereview,includingphysicalinventory,of n  eachcouponissuerandbulkstoragesiteunderitsdirection(7CFRsection274.1(c)). T   AuditObjective 󀄀DeterminewhethertheStateagencyhasconductedrequiredtriennial   onsitereviews,includingphysicalinventories,atcouponissuersandbulkstoragepoints.'  "W   & F SuggestedAuditProcedures  F  DeterminebyinquiryorinspectionofrecordsthattheStateagencyconductstherequired D triennialreviewsofcouponissuersandbulkstoragepointstoensurephysicalinventories * areappropriate,inventoriesaremadeasrequired,anddifferencesbetweenrecordedand  actualinventoriesarereconciled.'FF[  ?( ` hp x (#X(#? 5. ` FoodCouponInventoryLevels  T E.` hp x (#` X(#E ComplianceRequirement 󀄀Stateagenciesmustmonitorthecouponinventoriesof R couponissuersandbulkstoragepointstoensurethatinventoriesareneitherexcessive 8 norinsufficienttomeettheissuanceneedsandrequirements.Inventorylevelsarenotto  exceeda sixmonthsupply,takingintoaccountcouponsonhandandonorder(7CFR  section274.7(a)(1)).StateagenciesmustreviewtheFNS250andotherreports  includingshippingandtransfers,returnedand/orreplacedmailissuances,improperly   manufacturedormutilatedcoupons,andreportsofshortageoroverageoffoodcoupon f! bookstoensuretheaccuracyofmonthlyinventories,compliancewithrequiredinventory L" levels,andaccuracyandreasonablenessofcouponorders. 2#  AuditObjective 󀄀Determinewhetherfoodstampcouponlevelsareneitherexcessive $0  norinsufficienttomeettheissuersrequirements. %! &  SuggestedAuditProcedures  t'" VerifythattheStateagenciesdeterminethatinventorylevelsatcouponissuersandbulk ")r$ storagepointsareneitherexcessivenorinsufficienttomeettheissuanceneedsand *X%  requirements,andthatinventorylevelsdonotexceedasixmonthsupply,takinginto *>&! accountcouponsonhandandonorder. +$'" ?( ` hp x (#X(#? 6. ` QualityControlUnit 't'b -(# E.` hp x (#` X(#E ComplianceRequirement 󀄀TheStateorlocalgovernmentmustestablishaquality  controlunitthatisindependentofprogramoperations(7CFRsection275.2(b)).   AuditObjective 󀄀Determinewhetherthequalitycontrolunitisorganizationally D independentofprogramoperations. *z  SuggestedAuditProcedures   (  Ascertainthatthequalitycontrolunitisorganizationallyindependentofprogramoperations.    XE. ` hp x (#X(#E  4   jekf   UNITEDSTATESDEPARTMENTOFAGRICULTURE      ?( hp x (# X(#? CFDA10.553 SCHOOLBREAKFASTPROGRAM(SBP) ^ CFDA10.555 NATIONALSCHOOLLUNCHPROGRAM(NSLP) D CFDA10.556 SPECIALMILKPROGRAMFORCHILDREN(SMP) *z  CFDA10.559 SUMMERFOODSERVICEPROGRAMFORCHILDREN(SFSPC)   ` H.` hp x (# X(#H I.  PROGRAMOBJECTIVES    Theobjectivesofthechildnutritionclusterprogramsareto:(1)assistStatesinadministering l  foodservicesthatprovidehealthful,nutritiousmealstoeligiblechildreninpublicandnonprofit R  privateschools,residentialchildcareinstitutions,andsummerrecreationprograms;and(2) 8  encouragethedomesticconsumptionofnutritiousagriculturalcommodities. n   II.  PROGRAMPROCEDURES     GeneralOverview  z  AttheFederallevel,theseprogramsareadministeredbytheFoodandNutritionService(FNS) (x  oftheU.S.DepartmentofAgriculture(USDA).FNSgenerallyadministerstheseprograms ^  throughgrantstoStateagencies.EachStateagency,inturn,entersintoagreementswith D subrecipientorganizationsforlocallevelprogramoperationandthedeliveryofprogrambenefits * andservicestoeligiblechildren.Thetypesoforganizationsthatreceivesubgrantsundereach  programaredescribedbelowunder ProgramDescriptions.IncaseswhereaStateagencyis  notpermittedorisnotavailabletoadministertheprogram(s),theyareadministereddirectlyby  FNSregionaloffices.Theregionalofficesthenperformtheadministrativefunctionsforlocal r programoperatorsthatarenormallyperformedbyaStateagency(7CFRsections210.3,215.3, X 220.3,and225.3).Forpurposesofthisdiscussion,StateagenciesandFNSregionalofficesare > referredtocollectivelyas administeringagencies. $t Under7CFRpart250(GeneralRegulationsandPoliciesFoodDistribution),USDAmakes " donatedagriculturalcommoditiesavailableforuseintheoperationofallchildnutrition  programsexcepttheSMP.FNSentersintoagreementswithStatedistributingagenciesforthe   distributionofUSDAdonatedcommodities.TheStatedistributingagencies,inturn,enterinto ! agreementswithlocalprogramoperators,whicharedefinedcollectivelyas recipientagencies. j" AStatemaydesignatearecipientagencytoperformitsstorageanddistributionduties.AState P# distributingagencymayengageacommercialfoodprocessortousethecommoditiesinthe 6$ manufactureoffoodproducts,andthendeliversuchmanufactur