Finding 583048 (2022-003)

Type of finding: Federal Award Situation: Significant deficiency; Compliance with federal regulations. Assistance Listing No: 10.576 Federal Program: Seniors Farmers’ Market Nutrition Program Name of federal agency: Department of Agriculture Covid-19 Program: No Compliance Requirements: Special Test and Provisions- Coupon, Market and CSA Program Management Prior-Year(s) Audit Finding(s): None Questioned Costs: Not determined. Condition: We noted the following exceptions regarding redeemed coupons: 1. In two of the coupons selected, the stamp was not present, therefore we could not tie in the coupon with the farmer that redeemed the coupon. 2. For one of the selected farmer files for which the coupon was redeemed, we observed that the farmer agreement was not signed by an Agency’s representative. Context: As part of our audit procedures, we selected 60 redeemed coupons and tied them with the farmer that redeemed the coupon to ascertain that AEDA complied with the Coupon, Market and CSA Program Management provisions. We noted the exceptions described above. As part of the approval of the farmer to the program, the Agency assigns a stamp number to each farmer per program year. This stamp number must be placed in the coupon when received by the farmer and is the only mechanism in place to validate that the coupon was redeemed by an authorized farmer. In two of the coupons selected, the stamp was not present, therefore we could not tie in the coupon with the farmer that redeemed the coupon. Criteria: 7 CFR Part 249.10 Coupon, market, and CSA program management states that only farmers, farmers' markets, and/or roadside stands authorized by the State agency may redeem SFMNP coupons. Only farmers authorized by the State agency or having a valid agreement with an authorized farmers' market, may redeem coupons. The State agency must design and implement a system of review of SFMNP coupons to detect errors. At a minimum, the errors the system must detect are: a missing participant signature (if such signature is required by the State agency), a missing farmer and/or market identification, and redemption by a farmer outside of the valid date. The State agency must have procedures in place to reduce the number of errors in transactions. The State agency shall identify the disposition of all SFMNP coupons as validly redeemed, lost or stolen, expired, or not matching issuance records. Validly redeemed SFMNP coupons are those that are issued to a valid participant and redeemed by an authorized farmer, farmers' market, and/or roadside stand within valid dates. 7 CFR Part 249.10 Coupon, market, and CSA program management states that The State agency shall ensure that all participating farmers' markets, roadside stands, and/or CSA programs enter into written agreements with the State agency. State agencies that authorize individual farmers shall also enter into written agreements with the individual farmers. The agreement must be signed by a representative who has legal authority to obligate the farmer, farmers' market, roadside stand, and/or CSA program. Cause: Although AEDA has a system of review of SFMNP coupons in place and internal controls procedures related to the documentation of written agreements, it was not able to trace the redeemed coupon to the authorized farmer for the two exceptions noted nor ascertain that the farmer agreement was signed by a State Agency representative for the exception noted. Effect: As per 7 CFR Part 249.10 (h), SFMNP coupons that were redeemed but cannot be traced to a valid participant or authorized farmer, farmers' market, and/or roadside stand shall be subject to claims action in accordance with § 249.20. As per CFR Part 249.20, FNS is authorized to establish claims against a State agency for unreconciled SFMNP coupons, and/or for failure to comply with the terms of duly executed CSA program contracts or agreements. When a State agency can demonstrate that all reasonable management efforts have been devoted to reconciliation and 99 percent or more of the SFMNP coupons issued, or of the eligible foods contracted for delivery by the CSA program, have been accounted for by the reconciliation process, FNS may determine that the reconciliation process has been completed to satisfaction. Auditor’s recommendation: Management should strengthen their existing system of review of SFMNP coupons in order to reduce the number of errors in transactions, where possible. Management should also continue to implement internal control procedures to ascertain continued compliance with its responsibility for the fiscal management of SFMNP-related activities. Views of Responsible officials and corrective actions: We designated and trained personnel to work with the bank statements to identify timely any voucher in which the farmer identifier is not stamped. In those cases, a copy of the voucher must be sent to the Auxiliary Market Director to proceed to identify the farmer appropriately and request from the farmer a certification attesting that he/she redeemed the voucher. Also, we instructed the Auxiliary Market Director to review all the farmer files to ensure they are completed and signed by the farmer and an Agency representative. Audit Status: In process of compliance.