(1) An institution may be eligible to receive a grant from the department for the purpose of reimbursing the institution for all or part of the CACFP portion of an audit. To qualify for a grant, an institution must meet the following minimum requirements:

(a) An audit must be a condition for participation or continued participation in the CACFP.

(b) The professional services of the auditor or auditors must be performed in accordance with all applicable state and federal laws, regulations, and policies relating to procurement of professional services.

(c) Complete and return the annual Audit Questionnaire and Grant Application to be provided by the department for the purpose of complying with the accounting and audit requirements of the federal Office of Management and Budget (OMB) Circular A-133, "Audits of States, Local Governments, and Nonprofit Organizations", and the provisions of OMB Circular A-122, "Cost Principles for Nonprofit Institutions", concerning the use of the funds provided by the contractual agreement.

(d) Prior to beginning an audit, the institution must submit to the department for approval:

(i) a completed request for partial reimbursement of audit expenses;

(ii) a signed copy of the audit proposal, including the proposed audit cost, the resume of the on site auditor or auditors, and certification that the audit will include tests of the CACFP in accordance with the current federal "Office of Management and Budget (OMB)" circular A-133 and the USDA OMB supplement for the "Catalog of Federal Domestic Assistance (CFDA)" 10.558, Child and Adult Care Food Program, dated March 2002; and

(iii) evidence the supervising auditor is a certified public accountant.

(e) Prior to beginning the audit, the institution must:

(i) provide a copy of the current state CACFP audit policy to the auditor engaged to perform the audit; and

(ii) obtain prior written approval for the audit from the department.

(f) The audit must be completed no later than nine months after the end of the fiscal year being audited.

(2) If an audit grant is awarded, the institution must submit to the department within 30 days following completion of the audit:

(a) two copies of the audit (including management letters referenced in the audit report);

(b) a copy of the final invoice from the auditor, documenting the cost of an OMB circular A-133 audit;

(c) a time log documenting actual direct costs of auditing the program; and

(d) an invoice on the institution's letterhead requesting reimbursement of the CACFP portion of the audit expense.

(3) The department may authorize a grant for up to the actual direct cost of auditing the program.