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Department of Agriculture Food Distribution Cluster ? Assistance Listing# 10.565, 10.568, 10.569 Award Year - January 1, 2022 to December 31, 2022 Award Number ? 6000001537 Special Tests and Provisions ? USDA/CSFP Food Receipts Testing Type of Finding ? Material Weakness Internal Controls and Noncompliance relating to Inventory Reporting Criteria: Internal Controls should be designed and implemented to ensure USDA/CSFP food receipts are properly reflected in the QuickBooks SMF activity. Additionally, controls should be implemented to ensure all USDA/CSFP food receipts and only USDA/CSFP food receipts are recorded as received under the USDA/CSFP accounts in the QuickBooks SMF activity. Condition: USDA/CSFP food receipts recorded by the Organization differed from food donations reported by the Arkansas Department of Human Services (Arkansas DHS) for the year ended December 31, 2022. This included instances where food items were recorded at different amounts as well as instances where items were recorded as received by the Organization without a corresponding donation by the Arkansas DHS. In addition, some food items reported as donated by the Arkansas DHS were not recorded as received by the Organization. Context: The Organization exercises limited control and review procedures over inventory received, distributed and adjusted within the SMF QuickBooks on a monthly basis. Additionally, no reconciliation is performed on inventory at month-end and inventory reported to Arkansas Department of Human Services. Effect or Potential Effect: USDA/CSFP inventory could be misstated as a result of the limited control and review procedures. Recommendation: All paperwork for product received should be filed in separate folders according to the provider (TEFAP, TM, COVID, and CSFP). On each receiving document, a conversion should be notated to convert from cases to pounds. Receipts for the week should be entered by end of the day each Friday. Additional attention should be made to the proper coding of food items. We recommend all receipt of products from all sources and all distribution of product be verified by a secondary person, with any discrepancies being researched and corrected. We recommend the Organization count all USDA/CSFP inventory at least quarterly to verify the USDA/CSFP inventory amounts in the SMF QuickBooks file are correct. Additionally, after all receipts, disbursements and adjustments are made each month, the accounting system for inventory should be locked down with a password to prevent unintended changes. We also recommend that the reporting to the state be reconciled to the USDA/CSFP inventory on hand at month-end.