Finding 572506 (2024-003)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2024
Accepted
2025-08-04
Audit: 363656
Auditor: Uhy LLP

AI Summary

  • Core Issue: The inventory valuation method used by Second Harvest does not align with the actual values reported by Missouri and Kansas.
  • Impacted Requirements: The lack of reconciliation between the subledger, Primarius, and reported values raises concerns about completeness and accuracy.
  • Recommended Follow-Up: Implement a detailed reconciliation process to ensure inventory records match reported values from the states.

Finding Text

Second Harvest values inventory based on historical Feeding America rates applied to the weight of the food received from TEFAP. This estimation of value is recorded to be the actual value of donated product as report by the states of Missouri and Kansas using an entry to record differences to inventory adjustment accounts. The subledger, Primarius, is not reconciled to the actual values of donated product as reported to Second Harvest by the states of Missouri and Kansas in sufficient detail to ensure the ongoing completeness and accuracy of the subledger.

Corrective Action Plan

We agree with the auditor’s comments and the following action will be taken to improve this situation. As of September 2024, the Director of Logistics has established a system to ensure the accurate values of USDA foods are receipted into Primarius, Second Harvest’s inventory software system. At the beginning of each year, the Department of Social Services sends our Operations team the USDA Foods valuation chart for the calendar year. This valuation chart lists the food value per pound, net case weight and case value by material code. These material codes are input into our inventory software system and reviewed each month to ensure they match the USDA foods code. In preparing for USDA food deliveries, the Director of Logistics will pre-enter information using the USDA Foods Valuation chart to verify the case values & case net weights match in Primarius. Finally, all USDA food valuations will be reviewed at year-end for accuracy and sent to the State Agency for verification that all monthly receipted quantities and values align between the two systems. This corrective action was implemented as of September 30, 2024.

Categories

Equipment & Real Property Management

Other Findings in this Audit

  • 572507 2024-003
    Material Weakness Repeat
  • 572508 2024-004
    Material Weakness Repeat
  • 572509 2024-005
    Significant Deficiency Repeat
  • 572510 2024-006
    Significant Deficiency Repeat
  • 1148948 2024-003
    Material Weakness Repeat
  • 1148949 2024-003
    Material Weakness Repeat
  • 1148950 2024-004
    Material Weakness Repeat
  • 1148951 2024-005
    Significant Deficiency Repeat
  • 1148952 2024-006
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
10.569 Emergency Food Assistance Program (food Commodities) $429,992
10.182 Pandemic Relief Activities: Local Food Purchase Agreements with States, Tribes, and Local Governments $109,031
10.766 Community Facilities Loans and Grants $79,516
10.558 Child and Adult Care Food Program $70,863
10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program $59,854
10.559 Summer Food Service Program for Children $52,906
10.187 The Emergency Food Assistance Program (tefap) Commodity Credit Corporation Eligible Recipient Funds $27,717
14.218 Community Development Block Grants/entitlement Grants $23,750
10.568 Emergency Food Assistance Program (administrative Costs) $14,660