Finding Text
Section II – Financial Statements Findings (Continued)
Finding No. 2023-002
Type of Finding: Material Weakness on Internal Controls over Financial Reporting Requirements
Deficiencies in Physical Inventory and Documentation for TEFAP
Criteria
In accordance with federal program specific requirements, 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)). 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)).
Statement of Condition
During the audit process, we found that physical inventory was not presented for our review, and we were unable
to obtain alternate supporting documentation to perform audit procedures or to perform analytical procedures or
ascertain the validity of the required annual physical inventory. This causes inventory presented in financial
statement date were not audited. Also, management did not present evidence of the uses/distribution of USDA
Foods.
Cause of Condition
Management did not comply with the physical inventory at year end or maintained supporting documents for those
procedures to validate the amount presented for inventory its financial statements.
Effect of Condition
The overall effect is that complete and accurate financial information is not available to support a significant
amount of its financial statements.
Recommendation
Management should ensure that the physical inventory is taken at the year end, compare and reconcile such amount
to the financial statements, make the corresponding adjustments and corrections to present complete and accurate
information of its financial statements. Also, supporting documentation for the uses/distribution of inventory
should be maintained.
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Section II – Financial Statements Findings (Continued)
Management Response
Management concurs with the findings. We will establish procedures to take and document a physical annual
inventory and to maintain support for inventory distributions.
Responsible Officials
Mr. Marcos Rivera
CEO