Audit 367698

Finding: 2024-001 ALN 10.559, USDA Summer Food Service Program (SFSP) Known/Likely Questioned Costs: $151,099.42 Criteria: Federal regulations require that costs charged to the program be necessary, reasonable, and properly documented (2 CFR 200.403–200.404). In addition, procurement must follow open and competitive bidding procedures (2 CFR 200.318), and contracts must be executed and approved before charging costs to the program. Deviation/Condition: The Organization paid $151,099.42 of SFSP program funds to UTA of Boro Park for outsourced payroll services without following federal procurement requirements and without an executed, approved contract. Cause: Inadequate internal controls over procurement and contract approval. Effect: Use of program funds for unallowable costs, resulting in questioned costs of $151,099.42. Perspective: The issue represents a material exception, as the entire amount of outsourced payroll services ($151,099.42) charged to the SFSP was deemed unallowable due to noncompliance with procurement and contract approval requirements. Reporting Period: 1/1/2024-12/31/2024 Repeat Finding: No Recommendation: The Organization should reimburse the SFSP program fund in the amount of $151,099.42 from its non-federal operating funds. In addition, the Organization should establish procedures to ensure all future service contracts are competitively procured, executed in writing, and approved by the State agency before being charged to the program. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding, has reimbursed $151,099.42 to the SFSP account, and will strengthen procurement controls through competitive bidding and contract approvals to ensure compliance.