Audit 11593

Finding 2023-001: Special Tests and Provisions - Material Weakness in Internal Control Over Compliance and Instance of Noncompliance Federal Program: The Emergency Food Assistance Program (TEFAP) (Assistance Listing #10.569) Federal Agency: U.S. Department of Agriculture Award Year: 2022–2023 Criteria: Management is responsible for establishing and maintaining an effective control over compliance. A strong internal control system ensures that compliance requirements are met. Condition: Management is required to maintain an appropriate accounting for USDA Foods, provide an annual physical inventory and reconcile the inventory annually. During audit inquiries, management disclosed there is not an inventory management system in place until February 2023. During our audit procedures over food receipts, management was unable to provide receipt requisition forms for the first 4 of 40 samples selected. We stopped testing on remaining food receipts samples selected. During our audit procedures we noted that in addition to food recipients picking up food at MRCC’s distribution site that MRCC delivers food to various locations with eligible food recipients. Management was unable to provide distribution supports for the first 4 of 40 distributions sampled. We stopped testing on remaining distribution samples selected. Cause: Management did not have a food inventory system to record food receipt requisitions and food distributions for the entire year. Management does not perform reconciliation of changes in inventory using food receipt requisitions and food distributions. Effect: Failure to maintain a food inventory system to monitor and record food inventory in accounting records could allow for misappropriation of food inventory to occur. Context: Management does not have internal controls over inventory management as required by TEFAP. Questioned costs: $0 Repeat Finding: 2022-001 Recommendation: We recommend management to implement an inventory management system and establish oversight controls to ensure compliance requirements are met. Views of responsible officials: The impact of COVID on the Mercy Brown Bag program's execution and associated inventory documentation was significant. It necessitated the restructuring of historical food distribution practices with recipients and the increase in food provided through the TEFAP program. Priority was given to distributing food to recipients, despite limited staffing caused by the increased operational workload and social distancing requirements. Starting in FY23, the program management initiated semi-annual inventory counts, which will continue into FY24 and beyond. Additionally, an Inventory Management System was implemented at the end of FY23 and will be used throughout FY24, starting on July 1, 2023.

Finding 2023-002: Special Tests and Provisions - Material Weakness in Internal Control Over Compliance and Material Noncompliance for Eligibility Federal Program: The Emergency Food Assistance Program (TEFAP) (Assistance Listing #10.569) Federal Agency: U.S. Department of Agriculture Award Year: 2022–2023 Criteria: Management is responsible for establishing and maintain an effective control over compliance. A strong internal control system ensures that compliance requirements are met. Condition: During audit procedures we noted the total number of food recipients during the reporting period July 1, 2022 to June 30, 2023 was 63,060, which was vouched to the Link2Feed website database. Management also tracks a separate spreadsheet the number of bags of food delivered to offsite locations where food recipients pick up a bag of food, which totaled 129,150, which is a difference of 66,090 food recipients not being tracked within the Link2Feed website. Cause: Due to the COVID-19 pandemic, deliveries were being made via delivery services and directly to offsite locations with populations of food recipients that were not being tracked via Link2Feed by manual entry by management. Effect: Failure to track recipients that received food distributions from the program is not compliant with the TEFAP program and could cause ineligible food recipients to receive support from this program. Context: Management did not implement effective internal controls over distributions of USDA Foods to food recipients within the required method via the Link2Food website. Questioned costs: $0 Repeat Finding: 2022-002 Recommendation: We recommend management to establish oversight controls to ensure compliance requirements are met. Views of responsible officials: Given the change in distribution approach, the large number of partner sites, and partner site employee turnover, it was challenging to enforce compliance with the use of the Link2Feed website by food recipients. In addition to strides made in FY23 towards correcting the documentation of recipients in Link2Feed, Brown Bag has continued to address it in FY24 by performing the following: 1) Build communication and relationships with the remaining sites still not documenting (16 of our current 77) 2) Issued emails and phone calls asking sites to update their records. 3) Making appointments and visiting all sites still not in compliance to make an in-person plea to comply. 4) As of November 1, issue written communications warning any remaining sites that food deliveries will cease at the end of the year for any remaining sites not in compliance. No exceptions. Participants will be invited to go to the closest open MBBP site in their area. 5) Management is actively trying to close the loop on the remaining MOU’s, including SAHA, which remains unsigned. Deliveries will cease to any sites not covered with an MOU at the end of the calendar year. No exceptions.

Finding 2023-001: Special Tests and Provisions - Material Weakness in Internal Control Over Compliance and Instance of Noncompliance Federal Program: The Emergency Food Assistance Program (TEFAP) (Assistance Listing #10.569) Federal Agency: U.S. Department of Agriculture Award Year: 2022–2023 Criteria: Management is responsible for establishing and maintaining an effective control over compliance. A strong internal control system ensures that compliance requirements are met. Condition: Management is required to maintain an appropriate accounting for USDA Foods, provide an annual physical inventory and reconcile the inventory annually. During audit inquiries, management disclosed there is not an inventory management system in place until February 2023. During our audit procedures over food receipts, management was unable to provide receipt requisition forms for the first 4 of 40 samples selected. We stopped testing on remaining food receipts samples selected. During our audit procedures we noted that in addition to food recipients picking up food at MRCC’s distribution site that MRCC delivers food to various locations with eligible food recipients. Management was unable to provide distribution supports for the first 4 of 40 distributions sampled. We stopped testing on remaining distribution samples selected. Cause: Management did not have a food inventory system to record food receipt requisitions and food distributions for the entire year. Management does not perform reconciliation of changes in inventory using food receipt requisitions and food distributions. Effect: Failure to maintain a food inventory system to monitor and record food inventory in accounting records could allow for misappropriation of food inventory to occur. Context: Management does not have internal controls over inventory management as required by TEFAP. Questioned costs: $0 Repeat Finding: 2022-001 Recommendation: We recommend management to implement an inventory management system and establish oversight controls to ensure compliance requirements are met. Views of responsible officials: The impact of COVID on the Mercy Brown Bag program's execution and associated inventory documentation was significant. It necessitated the restructuring of historical food distribution practices with recipients and the increase in food provided through the TEFAP program. Priority was given to distributing food to recipients, despite limited staffing caused by the increased operational workload and social distancing requirements. Starting in FY23, the program management initiated semi-annual inventory counts, which will continue into FY24 and beyond. Additionally, an Inventory Management System was implemented at the end of FY23 and will be used throughout FY24, starting on July 1, 2023.

Finding 2023-002: Special Tests and Provisions - Material Weakness in Internal Control Over Compliance and Material Noncompliance for Eligibility Federal Program: The Emergency Food Assistance Program (TEFAP) (Assistance Listing #10.569) Federal Agency: U.S. Department of Agriculture Award Year: 2022–2023 Criteria: Management is responsible for establishing and maintain an effective control over compliance. A strong internal control system ensures that compliance requirements are met. Condition: During audit procedures we noted the total number of food recipients during the reporting period July 1, 2022 to June 30, 2023 was 63,060, which was vouched to the Link2Feed website database. Management also tracks a separate spreadsheet the number of bags of food delivered to offsite locations where food recipients pick up a bag of food, which totaled 129,150, which is a difference of 66,090 food recipients not being tracked within the Link2Feed website. Cause: Due to the COVID-19 pandemic, deliveries were being made via delivery services and directly to offsite locations with populations of food recipients that were not being tracked via Link2Feed by manual entry by management. Effect: Failure to track recipients that received food distributions from the program is not compliant with the TEFAP program and could cause ineligible food recipients to receive support from this program. Context: Management did not implement effective internal controls over distributions of USDA Foods to food recipients within the required method via the Link2Food website. Questioned costs: $0 Repeat Finding: 2022-002 Recommendation: We recommend management to establish oversight controls to ensure compliance requirements are met. Views of responsible officials: Given the change in distribution approach, the large number of partner sites, and partner site employee turnover, it was challenging to enforce compliance with the use of the Link2Feed website by food recipients. In addition to strides made in FY23 towards correcting the documentation of recipients in Link2Feed, Brown Bag has continued to address it in FY24 by performing the following: 1) Build communication and relationships with the remaining sites still not documenting (16 of our current 77) 2) Issued emails and phone calls asking sites to update their records. 3) Making appointments and visiting all sites still not in compliance to make an in-person plea to comply. 4) As of November 1, issue written communications warning any remaining sites that food deliveries will cease at the end of the year for any remaining sites not in compliance. No exceptions. Participants will be invited to go to the closest open MBBP site in their area. 5) Management is actively trying to close the loop on the remaining MOU’s, including SAHA, which remains unsigned. Deliveries will cease to any sites not covered with an MOU at the end of the calendar year. No exceptions.