Finding Text
2025-003: Significant Deficiency – Reporting – Relating to the Food Distribution Cluster – (10.568/10.569). Criteria: Per the Organization’s grant agreements with the Tennessee Department of Agriculture (TDA) and the Mississippi Department of Human Services (MDHS), recipients of USDA-donated foods must maintain complete and accurate records of all commodity receipts, distributions, shortages, and balances, and must submit required financial and performance reports. Monthly inventory, the Emergency Food Assistance Program (TEFAP) distribution, and cost reports submitted to the States must accurately reflect activity recorded in the Organization’s internal inventory management system, reconcile to State-confirmed receipts, and include timely receipt confirmations as required by State program rules. Condition and Context: During compliance testing of reporting requirements under the Food Distribution Cluster for both Tennessee and Mississippi, we identified multiple instances where USDA reporting was not fully accurate, reconciled, or timely: • Inventory and receipt reconciliation: Comparison of monthly USDA inventory reports submitted to TDA to State confirmations of USDA foods allocated and received identified insignificant variances in three months (August 2024, January 2025 and April 2025) between reported quantities or items and State-confirmed data. • Distribution reporting to States: Testing of USDA food distributions reported under TEFAP noted discrepancies between amounts reported to the States and the underlying CERES records: o In Tennessee, 15 of 40 distribution transactions tested showed insignificant differences in quantities or item descriptions between submitted reports and CERES. o In Mississippi, 3 of 40 distribution transactions tested showed insignificant differences in quantities or item descriptions between submitted reports and CERES. • Unrecorded shortages: For Mississippi TEFAP distributions, we noted two instances where signed agency invoices documented shortages of USDA foods received; however, no corresponding credit memo or inventory adjustment was recorded in CERES. • Timeliness of receipt confirmations: testing of USDA commodity receipts identified two instances out of 40, where required 48-hour receipt confirmation emails were either submitted late or not submitted to Tennessee and Mississippi. Cause: The deficiencies appear to result from the absence of a comprehensive, formalized reconciliation and supervisory review process to ensure that USDA receipts, distributions, shortages, and confirmations are accurately recorded in CERES, reconciled to State documentation, and submitted timely in accordance with program requirements. Effect: Without consistent reconciliation and review procedures, there is an increased risk that USDA reports submitted to TDA and MDHS may be inaccurate, incomplete, or untimely. This reduces the States’ ability to effectively monitor USDA commodity activity. Questioned Costs: None noted. Repeat Finding: Partial repeat finding. The instances of untimely 48-hour confirmations were part of the original finding 2018-005 and the prior year finding was 2024-001. Recommendation: We recommend that management implement a comprehensive monthly reconciliation and review process over USDA reporting, including: • Review of confirmed USDA receipts to internal inventory records. • Reconciling all TEFAP distribution reports submitted to the States to CERES data prior to submission. • Ensuring shortages noted on signed agency invoices are promptly documented through credit memos or inventory adjustments in CERES. • Establishing a tracking mechanism to ensure all required 48-hour receipt confirmations are submitted timely and retained. • Assignment of clear responsibility for report submission, with documented supervisory review. Supervisory review should be documented to confirm reconciliations are completed, differences are investigated and resolved, and reporting complies with Federal and State requirements. View of Responsible Official: See Management’s Corrective Action Plan.