Material Weakness in Internal Control over Compliance Finding 2022-001 ? Inventory Obsolescence Name of Contact Person: Dean Wooten The Foodbank identified a problem in our USDA inventory management after the departure of several employees over the last year. During Covid it had become more difficult to distribute USDA product as many partner agencies no longer participated in the program. In addition, a weekly distribution held at the Foodbank had to be terminated due to social distancing standards. Consequently, some frozen inventory was retained longer than allowed. Once identified, management immediately self-disclosed the error to the Virginia Department of Agriculture and Consumer Services (VDACS) and the USDA. Management immediately began working with both parties to address the issue. Management also disclosed the situation to auditors at the beginning of the 2022 audit engagement. USDA inventory is now reviewed on a regular basis by the Warehouse Manager to identify any items that are not ?moving?. The inventory list is also provided to the Director of Agency & Program Services who works closely with the Warehouse Manager and the USDA partner agencies to make sure product is being utilized in a timely manner. The Foodbank has also enlisted more USDA participating partners which has increased the demand for USDA product. This increased demand will help ensure that product is not remaining in the warehouse beyond the allowed time. The Foodbank is also in the process of a software system upgrade that will add bar code scanning capability to the inventory management system which will enhance inventory control. The Foodbank will also be hiring an inventory position that will report directly to the Finance department and will serve as an internal auditor of the inventory to ensure adherence to accuracy and compliance standards. VDACS is also working closely with the Foodbank to ensure product is moving and being evaluated on a regular basis. In the first two months (July and August), since implementing these changes, the foodbank has increased its USDA food distribution by 100% compared to the previous year, from 191,664 pounds to 384,590 pounds. Proposed Completion Date: Prior to fiscal year end, June 30, 2023.