2025-001 Reporting on USDA Foods Program Information Federal Agency U.S. Department of Agriculture Assistance listing Numbers 10.565, 10.569 Food Distribution Cluster Award Numbers K5726, K5726-2, K6022 Compliance Requirement N – Special Tests and Provisions Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness The Organization is required to maintain accurate records and submit complete and accurate monthly reports supported by underlying program documentation. Reports submitted to the pass-through agency should reconcile to the Organization's internal records and accurately reflect program activity. Federal regulations require recipients to maintain records sufficient to demonstrate compliance with program requirements and support amounts reported to administering agencies. Condition During our testing of monthly reports submitted during the audit period, we identified discrepancies on two monthly reports between amounts reported to the administering agency and the Organization's underlying records due to missing bills of lading that were not included on the appropriate monthly reports. Cause The Organization did not have adequate reconciliation and review procedures in place to ensure information reported to the USDA agreed with supporting records prior to submission. Context The finding appears to be an isolated problem. Effect Inaccurate reporting may also result in questioned costs, inaccurate program statistics, increased monitoring by oversight agencies, and potential noncompliance with Food Distribution Cluster reporting requirements. Recommendation We recommend that management implement formal procedures requiring monthly reports to be reconciled to underlying program records prior to submission. The reconciliation should be documented, reviewed by a secondary individual independent of report preparation, and retained as support for the reported amounts. Additionally, management should provide training to personnel responsible for report preparation to promote consistent and accurate reporting practices. View of responsible officials and planned corrective action Management is in agreement with the finding.
2025-002 Policies and Procedures for Food Inventory Management Federal Agency U.S. Department of Agriculture Assistance listing Numbers 10.565, 10.569 Food Distribution Cluster Award Numbers K5726, K5726-2, K6022 Compliance Requirement N – Special Tests and Provisions Criteria [ ] Compliance Finding [X] Significant Deficiency [ ] Material Weakness Organization’s administering federal programs are expected to establish and maintain effective internal controls over compliance and safeguard assets. Effective internal controls include documented policies and procedures that provide guidance for food inventory management activities, including the receipt, storage, safeguarding, counting, reconciliation, and reporting of food inventory. Documented procedures promote consistency, accountability, and continuity in the performance of control activities. Condition The Organization performed an annual food inventory count and maintained documentation evidencing management's review of count results. However, the Organization has not established formal written policies and procedures governing food inventory management and count processes. Specifically, there are no documented procedures describing count frequency, count methodologies, reconciliation processes, responsibilities of personnel, or required supervisory reviews. Cause Management relied on established practices and institutional knowledge to administer food inventory management activities and conduct inventory counts. As a result, formal written policies and procedures were not developed or implemented. Context The finding appears to be a systemic problem. Effect The absence of documented policies and procedures increases the risk that inventory management and inventory count processes may not be performed consistently, particularly during personnel transitions or periods of staff turnover. Without formal guidance, key control activities may be omitted, performed inconsistently, or not executed in accordance with management's expectations. This increases the risk of inventory inaccuracies, loss of commodities, and noncompliance with program requirements. Recommendation We recommend that management develop and formally adopt written inventory management and inventory count policies and procedures. At a minimum, the procedures should address inventory receipt and storage requirements, physical inventory count frequency, count methodologies, reconciliation requirements, documentation standards, supervisory review responsibilities, investigation of discrepancies, and retention of supporting records. Once implemented, management should communicate the procedures to relevant personnel and periodically review them for continued effectiveness. View of responsible officials and planned corrective action Management is in agreement with the finding.