Finding Text
U.S. Department of Agriculture
Federal Financial Assistance Listing # 10.569 All Awards
Food Distribution Cluster
Special Tests and Provisions
Material Weakness in Internal Control over Compliance
Criteria – A good system of internal accounting control should provide for the consistent processes and controls between locations for the receipt, distribution, and counting of inventory at year-end and throughout the fiscal year.
Condition – The Organization does not have consistent and effective controls in place over inventory to properly track, record, and count warehouse inventory at the two main locations.
Cause – This deficiency is due to changes in staff and facility changes, resulting in inconsistent processes and controls between warehouse locations.
Effect – Inadequate controls over the inventory processes have the potential to result in incorrect recording of inventory ending balances.
Questioned Costs – None Reported.
Context/Sampling – Statistical sampling was not utilized for year-end inventory observation procedures. As part of inventory observation procedures at the Fargo warehouse, 12 list to floor USDA selections were counted and 3 additional USDA floor to list selections were counted. As part of inventory observation procedures at the Bismarck warehouse, 14 list to floor USDA selections were counted and 3 additional USDA floor to list selections were counted.
Repeat Finding from Prior Year(s) – No.
Recommendation – It is the responsibility of management to review process and their implementation to ensure consistency and effectiveness throughout the Organization. It is the recommendation that these processes be reviewed and revised regularly, as necessary to ensure the processes are consistent and evolving with the changes of the Organization.
Views of Responsible Officials – Management agrees with the finding.