Accounting Procedures Used by the Department of Agriculture's Food and Nutrition Service for the Child Nutrition Programs

GAO was requested to review certain changes in accounting procedures used by the Department of Agriculture's Food and Nutrition Service (FNS) for the child nutrition programs. Specific questions were raised as to: (1) whether the shortfall in the child nutrition programs for fiscal year 1980 will be greater than the $243 million that was transferred to the Food Stamp Program, as permitted by the Supplemental Appropriations and Rescission Act of 1980; (2) what extent the new accounting methods for the child nutrition programs will be inconsistent with existing accrual accounting law and with the accounting principles and standards prescribed by the Comptroller General; and (3) whether the change in cash management procedures implemented by FNS could have been accomplished without the other accounting changes, which were inconsistent with accrual accounting law and the principles and standards of the Comptroller General. In response, GAO stated that: (1) the shortfall in the nutrition programs for fiscal year 1980 is currently estimated to be $204 million; (2) changes in the timing of obligations made by FNS for funds made available to states will change the fiscal year in which the amount of some obligations and costs will be recognized and recorded; and (3) the improvements in cash management procedures have been adopted by FNS without sacrificing accrual accounting procedures. The implementation of sound cash management practices does not require accounting changes that are inconsistent with accrual accounting law and the principles and standards prescribed by the Comptroller General.