Finding Text
Federal Agency: U.S. Department of Agriculture Federal Program Name: The Emergency Food Assistance Program (Administrative); Commodity Supplemental Food Program (Administrative) Assistance Listing Number: 10.568 and 10.565 Pass-through Agency: Hunger Free Pennsylvania (HFP); Pennsylvania Department of Agriculture (PDA); Lehigh County (LC); Northampton County (NC); Carbon County (CC) Pass-through Number: 5-07-39-217 (PDA) Award Period: August 5, 2021 – December 31, 2024 (HFP); October 1, 2021 – September 30, 2026 (PDA, LC, NC, CC) Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: For both CSFP and TEFAP, a recipient agency must use its administrative funds for activities for the administration of the programs. Such activities include but are not limited to transporting and storing USDA Foods within the state or within a recipient agency’s service area, determining the eligibility of program applicants, publishing the times and locations of food distribution, and issuing USDA Foods to eligible persons (7 CFR sections 247.25 and 251.8(e)). Condition: The Organization does not have formal procedures in place to determine the Second Harvest Food Bank expenses incurred during the fiscal year that should be allocated to the TEFAP/CSFP administrative revenue received. The Organization has historically recognized revenue based on when cash is received which is not appropriate. Questioned Costs: None. Context: Management does not have a timely process for determining the allocation of eligible expenses for the administrative revenue received for the distribution of commodities. Management was able to provide a reasonable allocation methodology which was used to create the program expenditure detail for the audit period, however, was provided significantly after year-end. Cause: The Organization experienced turnover within the finance department which resulted in no formal procedures in place for the allocation of allowable costs. Effect: If the Organization does not have timely proper allocation procedures, the Organization could potentially recognize revenue that is not appropriately substantiated with allowable costs and activities in compliance with program requirements. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023- 004. Recommendation: We recommend the allocation of allowable costs and activities be completed at a minimum on a quarterly basis. Also, any direct expenses related to program activities should be recorded to the respective identifying program fund number within the accounting software. The amount of revenue recognized for the programs should be reflected of the expenses incurred up to the administrative funds received from the respective funders. View of Responsible Officials and Planned Corrective Action: Please refer to Community Action Committee of the Lehigh Valley, Inc. and Subsidiaries’ Corrective Action Plan.