Finding 390534 (2023-001)

Significant Deficiency

Requirement

Questioned Costs

Year

2023

Accepted

2024-03-30

Audit: 301284

Organization: Jacobs & Cushman San Diego Food Bank (CA)

Auditor: Considine & Considine

AI Summary

Core Issue: Indirect payroll costs were not allocated correctly for the last three quarters, leading to inaccuracies in expense reporting.
Impacted Requirements: The cost allocation plan was not updated as required, resulting in a $132,257 overstatement in expenses for the food distribution cluster.
Recommended Follow-Up: Implement or adjust review procedures to ensure regular updates and accuracy of cost allocations moving forward.

Finding Text

Criteria: The Organization allocates payroll costs using an allocation that is updated on a quarterly basis based on the pounds of food distributed by category. Condition: During audit testing it was noted that indirect payroll costs did not follow the cost allocation plan for the final three quarters of the fiscal year. Cause: Cost allocation percentages were not reviewed and updated for transactions in the final three quarters of the fiscal year which allowed expenses to be recorded at the incorrect allocation among programs. Effect: The incorrect allocation being used amounted to a $132,257 overstatement of expenses being allocated to the food distribution cluster. Questioned costs: $132,157 (total payroll transactions incorrectly allocated based on finding above). Context: A non-statistical sample of 4 payroll periods were selected out of a population of 26 for testing. It was noted that three of the payrolls tested the costs allocation was not accurate. Upon further review by the Organization it was noted that error impacted three of the four quarters. Recommendation: We recommend that the Organization ensure review procedures are implemented or adjusted to include the review of the cost allocation used. Views of responsible official and planned corrective action: Management's response is reported in "Management's View and Corrective Action Plan" included at the end of this report.

Corrective Action Plan

The Food Bank is aware of the issue brought to them by external auditors during the expense testing phase of the audit for the fiscal year ended June 30, 2023. The issue under review is that the indirect payroll costs did not follow the cost allocation plan for three quarters of the fiscal year. Staff turnover within the finance department during the period contributed to this error. To avoid this error going forward, the Food Bank has filled open positions so that the department is fully staffed and has brought on a Chief Financial Officer. In addition, processes have been set in place for managerial review of allocations on a quarterly basis. Actions to correct the finding have been completed. For inquiries regarding this finding, please contact Allyson Tutor, CFO at 858-863-5114 who is responsible for the corrective action.

Other Findings in this Audit

390535 2023-001

Significant Deficiency
390536 2023-001

Significant Deficiency
390537 2023-001

Significant Deficiency
390538 2023-001

Significant Deficiency
390539 2023-001

Significant Deficiency
966976 2023-001

Significant Deficiency
966977 2023-001

Significant Deficiency
966978 2023-001

Significant Deficiency
966979 2023-001

Significant Deficiency
966980 2023-001

Significant Deficiency
966981 2023-001

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
10.569	Emergency Food Assistance Program (food Commodities)	$8.45M
10.565	Commodity Supplemental Food Program	$6.22M
10.568	Emergency Food Assistance Program (administrative Costs)	$838,057
97.024	Emergency Food and Shelter National Board Program	$284,480
10.561	State Administrative Matching Grants for the Supplemental Nutrition Assistance Program	$59,224
14.218	Community Development Block Grants/entitlement Grants	$15,000
21.027	Coronavirus State and Local Fiscal Recovery Funds	$5,000