HomeResourcesAudit Database Project Compliance RecommendationsMission Could Not Determine Whether Food Storage and Distribution Costs Were Reasonable - ADS 596.3.1 - Food for Peace Act - Office of Management and Budget Circular A-122, “Cost Principles for Non-Profit Organizations,” Attachment A

Mission Could Not Determine Whether Food Storage and Distribution Costs Were Reasonable - ADS 596.3.1 - Food for Peace Act - Office of Management and Budget Circular A-122, “Cost Principles for Non-Profit Organizations,” Attachment A

ADS section 596.3.1 states that USAID “must develop and implement appropriate, cost-effective internal controls” to help ensure that costs comply with applicable laws and regulations and that assets are not wasted.

One applicable regulation is that eligible uses for funding under the Food for Peace Act must be reasonable, allowable, and allocable and must support costs associated with the provision of Title II commodities to the final distribution point, including household or local warehouse.

Office of Management and Budget Circular A-122, “Cost Principles for Non-Profit Organizations,” Attachment A, states: “A cost is reasonable if, in its nature or amount, it does not exceed that which would have been incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur costs.”

General Recommendations

  • Coordinate an independent cost analysis to determine whether internal transport, storage, and handling costs have been correctly classified and to ascertain the most cost-effective method of transporting and distributing commodities.

SOURCE: AUDIT REPORT NO. 4-611-10-007-P SEPTEMBER 1, 2010

The recommendations are derived from audit reports of the Office of the Inspector General. The source refers to the audit report, which is available on this site as part of the Audit Database Project: an educational tool for compliance with USAID regulations.  Please see the disclaimer of this site before using recommendations.

Tags: Financial Management and Budgets

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