Finding Text
U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Food Commodities), 10.569 – Emergency Food Assistance Program (Food Commodities) Award Number: 01576 Criteria or Specific Requirement: Special Test and Provisions – Accountability for USDA Foods – Non-cash assistance must be valued at USDA‑approved valuation methods which include cost‑per‑pound, WBCSXI catalog price, or rolling average (7 CFR §250.58(e) and U.G. §200.502(a)). Condition: USDA donated foods are recorded in the accounting system at standard cost based on the first product received, rather than using an approved valuation method (Fair Market Value at receipt or USDA‑determined values such as cost‑per‑pound, WBCSXI catalog price, or rolling average per 7 CFR §250.58(e) and U.G. §200.502(a)). The entity has not formally selected or documented an approved method. The Food Bank does not maintain written procedures for conducting the required annual physical inventory and reconciliation to USDA Foods records. Procedures are communicated verbally before the count. Cause: The organization had not fully implemented USDA valuation requirements due to the absence of a documented policy. Inventory practices developed informally over time, and standard operating procedures were never formalized or approved. Effect or Potential Effect: Potential misstatement of USDA Foods value for Schedule of Expenditures of Federal Awards and inconsistent valuation across periods. Inventory risk increased likelihood of count errors, timing differences, or unexplained adjustments; exposure to liability for unreconciled differences. Questioned Costs: None Context: The methodology used to value food commodities was not a USDA‑approved valuation method. Repeat Finding: No Recommendation: Select and document an approved USDA valuation method and apply it consistently. Develop and implement formal written standard operating procedures for annual physical inventory and reconciliation, including: 1. Pre‑count preparation and cut‑off 2. Tag control and independent recounts 3. Reconciliation steps and documentation of adjustments, and 4. Record retention per 7 CFR §250.19 Views of Responsible Officials and Corrective Action: Management concurs with the finding and recommendation. See further information on the corrective action plan provided by management.