Audit 75713

Finding 2022-001: 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: 2021?2022 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: 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 no inventory management system. During our audit procedures over food receipts, management was unable to provide receipt requisition forms for 17 of 40 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. Of the 40 distributions sampled, 8 were distributions made by the mobile unit and 1 was delivery to Mercy Retirement and Care Center Grocery Shop. We noted that none of these 9 selected distributions retained evidence of receipt by the destination location to support inventory management. Cause: Management does not have a food inventory system to record food receipt requisitions and food distributions. Management does not perform an inventory count or reconciliation of changes in inventory using food receipt requisitions and food distributions. For the 17 of 40 sampled where there was no receipt requisition, the requisition was placed via a phone call, but not documented as a receipt requisition. For the 9 of 40 sampled distributions to offsite locations there was no documentation retained of receipt by the receiving offsite location on behalf of food recipients. 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: 2021-001 Recommendation: We recommend management to implement an inventory management system and establish oversight controls to ensure compliance requirements are met. Views of responsible officials: COVID impacts on the Mercy Brown Bag program?s execution and associated inventory documentation was profound, given the need to restructure historical food distribution practices with recipients and the increase of the food provided through TEFAO program. Priority was given to distribution of the food to recipients, with limited staffing caused by the increased operational workload and social distancing requirements. Program management will implement written documentation standards and processes to ensure all inventory movement is documented and retained, effective immediately. Additionally, periodic inventories will be conducted to ensure that all transactions have been captured. Exploration of a technology solution to enable these processes will be conducted and implemented if determined to be cost-effective.

Finding 2022-002: 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: 2021?2022 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, 2021 to June 30, 2022 was 45,829, 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 127,474, which is a difference of 81,615 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: 2021-002 Recommendation: We recommend management to establish oversight controls to ensure compliance requirements are met. Views of responsible officials: Given the change in distribution approach, use of the Link2Feed website by food recipients was hard to enforce compliance. However, effective immediately, processes will be put in place to ensure all food recipients register in Link2Feed as required.

Finding 2022-001: 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: 2021?2022 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: 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 no inventory management system. During our audit procedures over food receipts, management was unable to provide receipt requisition forms for 17 of 40 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. Of the 40 distributions sampled, 8 were distributions made by the mobile unit and 1 was delivery to Mercy Retirement and Care Center Grocery Shop. We noted that none of these 9 selected distributions retained evidence of receipt by the destination location to support inventory management. Cause: Management does not have a food inventory system to record food receipt requisitions and food distributions. Management does not perform an inventory count or reconciliation of changes in inventory using food receipt requisitions and food distributions. For the 17 of 40 sampled where there was no receipt requisition, the requisition was placed via a phone call, but not documented as a receipt requisition. For the 9 of 40 sampled distributions to offsite locations there was no documentation retained of receipt by the receiving offsite location on behalf of food recipients. 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: 2021-001 Recommendation: We recommend management to implement an inventory management system and establish oversight controls to ensure compliance requirements are met. Views of responsible officials: COVID impacts on the Mercy Brown Bag program?s execution and associated inventory documentation was profound, given the need to restructure historical food distribution practices with recipients and the increase of the food provided through TEFAO program. Priority was given to distribution of the food to recipients, with limited staffing caused by the increased operational workload and social distancing requirements. Program management will implement written documentation standards and processes to ensure all inventory movement is documented and retained, effective immediately. Additionally, periodic inventories will be conducted to ensure that all transactions have been captured. Exploration of a technology solution to enable these processes will be conducted and implemented if determined to be cost-effective.

Finding 2022-002: 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: 2021?2022 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, 2021 to June 30, 2022 was 45,829, 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 127,474, which is a difference of 81,615 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: 2021-002 Recommendation: We recommend management to establish oversight controls to ensure compliance requirements are met. Views of responsible officials: Given the change in distribution approach, use of the Link2Feed website by food recipients was hard to enforce compliance. However, effective immediately, processes will be put in place to ensure all food recipients register in Link2Feed as required.