Finding Text
Finding 2025‐001–Allowable Costs and Cost Principles and Activities Allowed and Unallowed—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.568 and 10.569 Year(s): 2025 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—In accordance with 2 CFR 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt, or the assessed value provided by the Federal agency, and must be included in determining Federal awards expended and reported on the Schedule. Condition and Context— We selected 60 food commodity delivery receipts for food commodities delivered to sub-recipients (Sub-ERAs) in order to test the controls related to food distributions to Sub-ERAs at the Division's Modesto Corps. Of the 60 selections, 51 selections did not have evidence of review, indicating a deficiency in the related internal controls. The delivery receipt includes the quantity, and thus the monetary value, of the food commodities distributed to Sub - ERAs. The monetary value of those food commodities is included in the Schedule. In addition, 4 sign-in-sheet selections related to the monthly control over food directly distributed to individuals at the Modesto Corps were provided. The sign-in sheets contained the quantity of food commodities that were distributed, which were then used to populate the Schedule. The 4 sign-in-sheet selections did not have evidence of review. The quantity of food commodities is measured in the number of food boxes, with each weighing either 13 or 50 pounds, and the monetary value of those food commodities is then included in the Schedule. Cause— Management is in the process of maintaining evidence pertaining to the review of the distribution of the food commodities. The process was not fully established as of the period under audit. Effect— Without evidence of proper reviews, discrepancies could exist between the amount of actual food commodities distributed and the amount recorded on the Schedule, which could lead to incorrect information being communicated to the grantor and the possible cessation of grant funding. Questioned Costs—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure that proper review is performed, and evidence of such reviews is maintained. View of Responsible Officials—See Corrective Action Plan.