2025-002 Suspension and Debarment Finding Type: Material Weakness in Internal Controls over Compliance and Compliance Federal Program Title and AL Number: The Food Distribution Cluster (10.565, 10.568, 10.569). Criteria: Per Title 2 CFR § 180.300, non-federal entities that enter into a covered transaction with an entity at a lower tier are required to verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. Covered transactions includes all non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount. Condition and context: As part of our suspension and debarment testing, and in order to determine compliance with the requirements, we verified that the suspension or debarment verification check for subrecipient agencies were performed prior to entering into agreements with these agencies. For all four non-statistical samples, the verification check was performed subsequent to when the Food Bank entered into the contract with the agency. None of the agencies selected were suspended or debarred. Cause: The Food Bank did not have controls in place to ensure the suspension or debarment verifications were performed when entering into agreements with agencies. Effect: The Food Bank was not able to demonstrate compliance with 2 CFR § 180.300. Questioned Costs: None Repeat finding: No Recommendation: We recommend that the Food Bank implement controls to ensure covered transactions with agencies at a lower tier are not suspended or debarred. Views of responsible officials and planned corrective actions: Management concurs with the finding and recommendation. Please see the attached corrective action plan. Management Response and Planned Corrective Action: The Los Angeles Regional Food Bank (“Food Bank”) is a non-federal entity that enters into transactions with its agency partners covered under Title 2 CFR § 180.300. This section requires the Food Bank to verify that its agency partners are not suspended or debarred or otherwise excluded from participating in transactions covered by this section. The Food Bank will modify its Agency Agreement template to include language requiring the Agency Partner to self-certify that they are neither suspended, nor debarred, nor otherwise excluded from participating in Federal Programs covered under Title 2 CFR § 180.300. The modified Agency Agreement will also require the Agency Partner to notify the Food Bank should they be placed on the federal suspension and debarment list. This modified Agency Agreement will be placed into service on or before June 1, 2026. All new Agency Partners onboarding after June 1, 2026, will use this new Agency Agreement. For all existing Agency Partners of record as of June 1, 2026, the Food Bank will begin a process of replacing their existing Agency Agreements with the new Agency Agreement described above. This process will be completed on or before December 31, 2026. For all existing Agency Partners of record as of June 1, 2026, the Agency Relations Department will continue performing the federal suspension and debarment check on the Agency Partners, specifically those onboarded to receive commodities under federal programs, on a quarterly basis. This action will be completed on or before December 31, 2026. The Director of Compliance and Administration will oversee the modification of the Agency Agreement. Individuals responsible for corrective action: Elizabeth Cervantes – Sr. Director of Product Acquisition and Agency Relations 323.974.0073 Steven Meisberger – Chief Financial Officer 323.318.0319