If you’re a CACFP sponsor, you’ve probably heard about the new auditing rules for CACFP sponsor finances. But what actually happens when the state agency asks for your records? Here’s a practical, easy-to-follow guide—no Program jargon—so you know what to expect and how to be ready.
The Audit Process
1. You’ll Get A Notice
For this type of audit, the state agency typically sends you an email or letter requesting your bank statement(s) for a month. They’ll also ask for a list of other supporting documentation, including:
- Detailed lists showing what you spent money on
- Reports showing your actual spending
- Dated receipts that list out every item purchased
- Copies of checks
- Records showing what was bought with credit cards and/or cash
- Employee payroll records
- Proof of payments made to sites you sponsor
- Notes or records explaining how you split your admin costs for each site
💡 PRO TIP: Don’t wait until you get this notice to prepare your records. Reconciling and organizing your financials on a monthly basis will save loads of stress when it’s time to pull them for an audit.
2. Your CACFP Bank Account Gets Scrutinized
Auditors will ask for a specific month’s bank statements. They’ll want to see:
- Clear records for every deposit and expense
- Documentation for each transaction (like receipts or invoices)
- Proof that CACFP expenses are allowable for the Program
They’ll review your supporting documentation and compare it to the transactions on your bank statements. They’ll also compare expenses with what’s approved on your CACFP budget.
If they can’t tell what a payment or deposit is for, they’ll ask questions. Missing or unclear documentation can have serious financial consequences—like requiring you to pay funds back.
💡 PRO TIP: Set up a separate bank account for CACFP reimbursements and expenses. Don’t mix these with your other business expenses.
If managing all these details feels overwhelming, CACFP accounting services can help you stay organized and audit-ready—LEARN MORE HERE.
3. Admin Cost Review: The 15% Rule
Remember, you can only keep up to 15% of your sites’ total CACFP reimbursement for admin costs. Auditors will:
- Double-check your math on admin costs.
- Ask for proof (itemized receipts, dated invoices, canceled checks).
- Compare admin costs with the reimbursement payments to your sites
- Make sure you’re not keeping too much.
💡 PRO TIP: Keep an easy-to-follow spreadsheet showing your admin cost percentage each month.
4. They’ll Pick Random Expenses
Auditors don’t just look at totals—they’ll pick individual expenses to check:
- Who was paid?
- What was bought or paid for?
- Is it really a CACFP-allowed expense?
💡 PRO TIP: Have your backup documentation ready. Save and organize receipts, invoices, and proof of payment for everything you spend for the Program.
5. They’ll Ask About Your Processes
Sometimes, auditors will interview you or your staff. They may ask things like:
- How do you make sure only CACFP expenses come out of the CACFP account?
- How do you track your sponsor admin costs?
- How do you train your staff on handling CACFP receipts and documentation?
After the Audit: What Happens Next?
You’ll get a report with any findings (missing paperwork, unallowable expenses purchased with Program funds, over-the-limit admin costs, etc.)
If the findings are serious enough, you may end up having to pay some funds back to the state agency.
Quick-Start Checklist
- Keep a separate bank account that’s only for CACFP funds.
- Organize receipts & invoices by month and CACFP category.
- Track your admin costs and make sure you stay under 15%.
- Train your staff and make sure they know the correct procedures.
Need help streamlining your CACFP sponsor finances? CONTACT US HERE.
Why It Matters
State agencies aren’t trying to trip you up—they just want to make sure CACFP funds are used correctly. Regular audits keep everyone accountable and your Program running smoothly.
Want to make audits stress-free? Don’t miss our upcoming post, “Stay Audit-Ready: Financial Tips for CACFP Sponsors,” packed with practical advice you can use right away.