Audit 399931

Finding 2023‐005—Allowability—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: Emergency Food Assistance Program (Administrative Costs) & The Emergency Food Assistance Program (“TEFAP”) (Food Commodities)—Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2023 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank and CAPK Food Bank. Criteria—In accordance with 2 CFR 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency and must be included in determining Federal awards expended under this part. Condition and Context—We selected 60 food commodity delivery receipts to sub-recipients (Sub—ERA’s) for testing; 11 selections did not have evidence of review, indicating a gap in the related internal controls. The delivery receipt includes the quantity of the food commodities distributed to sub-recipients. The monetary value of those food commodities is included in the Schedule. We also made 2 sign-in-sheet selections which contained the quantity of food commodity items that were distributed which were then used to populate the Schedule. The 2 sign-in-sheet selections did not have evidence of review. The monetary value of those food commodities is then included in the Schedule. Cause—Management did not have a control in place to ensure that evidence pertaining to the of review of the distribution of the food commodity items were required to be maintained. Effect—Lack of sufficient and appropriate recordkeeping can lead to food theft or misuse as well as incorrect information being communicated to the grantor which may lead to the eventual cessation of grant funding. Questioned Costs—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend that management implements a control to ensure that proper evidence of review is maintained. View of Responsible Officials—See Corrective Action Plan.

Finding 2023-006 Eligibility—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND MATERIAL NON-COMPLIANCE Federal Program: Emergency Food Assistance Program (Administrative Costs) & The Emergency Food Assistance Program (“TEFAP”) (Food Commodities)—Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2023 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank and CAPK Food Bank. Criteria—In accordance with the Code of Federal Regulations, a sub recipient must be either a public agency or a private entity possessing tax-exempt status under the Internal Revenue Code and must enter into a written agreement with the state agency, or with another recipient agency where permitted, binding it to perform the duties of a recipient agency (7 CFR sections 247.4, 247.7(a), 251.3(d), and 251.5(a)). Individual recipients must sign the Certificate of eligibility form (EFA-7), which is a self-declaration that they meet all the eligibility requirements to participate in in the program. Specifically, the participants are required to self-declare their household’s gross income is at or below the applicable TEFAP income guideline amount and they are prohibited from selling, bartering, or trading food received through this program. Condition and Context—We made a total of 6 selections for the agreements signed with the sub-recipients (“Sub ERAs”), of which 2 Sub ERAs did not have signed agreements. To test the eligibility of individual recipients, we made a total of 60 selections of individuals who received food commodities from warehouses that maintained self-declaration forms. Of the 60 selections, there was no evidence that 7 of the individuals signed the self-declaration form. Additionally, the Division managed distribution sites that collectively distributed approximately $956,107 worth of food commodities that did not require or maintain self-declaration forms for the participants. Cause—Management did not have a control in place to ensure that the agreements with the sub recipients are required to be maintained and certain distributions sites did not have controls in place to implement the grant requirements requiring individuals to self-certify their eligibility. Effect—Ineligible Sub-recipients or individual participants could receive grant funded food commodities, which can lead to the grantor withholding future funding. Questioned Costs—$956,107. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management to implement a control to ensure sub-recipient agreements are retained and the distribution sites maintain sign-in sheets requiring participants to self-certify they meet the grant eligibility requirements. View of Responsible Officials—See Corrective Action Plan.

Finding 2023‐007—Special Test-Accountability for USDA Foods—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND MATERIAL NON-COMPLIANCE Federal Program: Emergency Food Assistance Program (Administrative Costs) & The Emergency Food Assistance Program (“TEFAP”) (Food Commodities)—Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2023 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank and CAPK Food Bank. Criteria—Accurate and complete records must be maintained with respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from USDA Foods in TEFAP. Failure to maintain records required by 7 CFR section 250.19 is considered prima facie evidence of improper distribution or loss of USDA Foods and the agency processor or entity is liable for the value of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Condition and Context—There was no documentation of inventory reports or evidence that inventory counts were performed for the period under audit. Cause—Management did not have a control in place to ensure that the retention of the documentation evidencing the performance of inventory counts was required. Effect—Failure to maintain records required by 7 CFR section 250.19 could result in the Entity being held liable for the costs of the related food commodities. Questioned Cost—Cannot be determined due to the lack of inventory reports. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management implements a control to ensure the documentation related to inventory counts are maintained. View of Responsible Officials—See Corrective Action Plan.