2023-001 Internal Control Systems Over Special Tests and Provisions (Accountability for USDA Foods)
– U.S. Department of Agriculture Food Distribution Cluster, Passed Through the State of Nevada Department of Agriculture
Criteria: In accordance with 2 CFR 200.303(a), the auditee must maintain a sys...
2023-001 Internal Control Systems Over Special Tests and Provisions (Accountability for USDA Foods)
– U.S. Department of Agriculture Food Distribution Cluster, Passed Through the State of Nevada Department of Agriculture
Criteria: In accordance with 2 CFR 200.303(a), the auditee must maintain a system of internal controls to provide reasonable assurance that accurate and complete records are maintained with respect to the receipt, distribution, and inventory of USDA foods.
Condition: Three Square’s internal controls, as designed, require an individual to verify that the weight of each product recorded in the inventory system is accurate. During inventory observation and testing audit procedures, twelve items were sampled. Of the twelve items, a discrepancy was discovered in the weight of one product when compared to the weight of the product recorded in the inventory system.
Context: Of the twelve products selected for testing, the weight of one product was improperly recorded within Three Square’s inventory system.
Cause: Internal controls over accountability for USDA foods were not operating effectively.
Effect: Improper implementation of internal controls could result in improper tracking and reporting of costs of USDA foods.
Recommendation: We recommend that management ensure that the system of internal controls over accountability for USDA foods is followed as designed.
Views of Responsible Officials and Planned Corrective Actions:
The weight of inventory is recorded within Three Square’s inventory management system as part of the receiving process. To ensure that all weight is properly recorded, Three Square will implement a verification process. Inventory control specialists, who are not part of the receiving process, will verify 10% of all items received weekly. This verification process will include independent weighing of items, and a review of the item description, quantity and dimensions recorded in the inventory management system. Any discrepancies will be reported to team leads to be rectified. Three Square is committed to ensuring that the system of internal controls is sufficient to ensure all records are accurate and complete.