Finding Text
U.S. Department of Agriculture Pass-through Entity: South Carolina Department of Agriculture Program Name: Food Distribution Cluster Federal Assistance Listing Number: 10.568-CL Significant Deficiency and Non-Material Noncompliance – Special Tests Finding 2024-002 Criteria: 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. The Organization must perform an annual physical inventory of all storage facilities. Such inventory must be reconciled annually with the Organization’s inventory records and maintained on file by the Organization. Condition: While the Organization maintains clean and organized warehouses and performs annual physical inventory counts, these counts are not properly reconciled to the inventory records within the financial system and accurate and complete reporting cannot be obtained with respect to the receipt, distribution/use, and inventory of USDA foods. Cause: The Organization experienced significant turnover in the finance department during the year, and therefore, the Organization was unable to implement adequate internal controls over the inventory process. Additionally, the system implementation was not successful, and there were several script errors and inventory reporting was inconsistent and inaccurate. Effect: Inventory balances were materially misstated prior to the audit adjusting entries. Questioned Costs: USDA food distributed was understated by $22,901 after all adjusting entries were made. Context: The annual inventory counts were not reconciled to the inventory records. Several adjustments were posted to the inventory accounts to correct incorrect quantities and prices. Identification as a Repeat Finding: 2023-003 Auditor’s recommendation: Inventory counts should be properly reconciled to the inventory records, and inventory records should be maintained separately for USDA foods to properly report the required information in the consolidated financial statements and the SEFA. Views of Responsible Officials: See Corrective Action Plan.