Finding Text
Finding 2025‐003—Special Test—Accountability for USDA Foods—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—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. Failure to maintain records required by 7 CFR section 250.19 is considered evidence of improper distribution or loss of USDA Foods and the agency processor is liable for the value of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Condition and Context— For the distribution site at the Division's Modesto Corps, supporting documentation of the inventory counts performed by the warehouse personnel and used by the management to prepare the inventory reports was not maintained. Even though the inventory reports were submitted to the grantor, there were no reviews of the inventory reports prior to being submitted. Cause—Management is in the process of implementing a control to ensure the inventory reports are reviewed for accuracy and completeness and that the backup documentation of inventory counts is maintained. The process was not fully established as of the period under audit. Effect—The inventory reports submitted to the grantor could contain discrepancies. This could lead to incorrect information being communicated to the grantor and possibly result in the agency processor being liable for the value of the food or replacement of the food in kind. Questioned Cost—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure the documentation related to inventory counts are maintained and the inventory reports are reviewed prior to being submitted to the grantor. View of Responsible Officials—See Corrective Action Plan.