Family Pathways

Condition: During our audit, we noted that management did not implement internal controls over participant eligibility. It was noted while testing key control over the sampled population of participants for the major program tested. The sampled population was determined to be statistically valid. Criteria: The Organization must establish and maintain effective internal controls over the financial award that provides reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal Statutes, regulations, and the terms and conditions of the Federal award per CFR § 200.303. These requirements detail the information that must be included in the Organization's internal controls. Cause: Management did not design and implement internal controls to review participant eligibility. Effect: The absence of controls over participant eligibility incurred lead to an increase risk of errors and noncompliance in the financial statements which could misrepresent the Organization's financial statements. Recommendation: We recommend the organization implements a process to ensure that individuals income eligibility is being verified and that the food staff working for the organization understand their responsibilities. Views of Responsible Officials: Management agrees with the finding.

Planned Action: Family Pathways Food Access and Finance staff will communicate the audit finding to the appropriate authoritative TEFAP bodies: the Minnesota Department of Human Services, as administrator of Minnesota’s TEFAP program and issuer of Minnesota’s TEFAP Policy and Operations Manual, as well as Second Harvest Heartland, as pass-through agent and contractor of TEFAP food distribution. In addition to communicating the audit finding, Family Pathways will confirm what authorities exist for Family Pathways, as a TEFAP provider, to implement additional internal controls, including but not limited to: modifying current DHS TEFAP forms and applications, and/or requiring additional client application forms. Family Pathways would like to note that the current DHS TEFAP Policy and Operations Manual 2023, effective for the audit period indicated above, states that “additional eligibility criteria cannot be imposed on participants” and that “TEFAP Providers agree to make it as easy as possible for those in need to access food.”

Condition: Family Pathways included sales tax in award expenditures. This was determined by viewed disbursement records,noting certain invoices where the Organization's exemption from sales tax was not properly obtained from vendors. Criteria:The Uniform Guidance allows and disallows certain costs for grant expenditures. Sales tax is not allowed (per 45 CFR75.470(b)(1)(I)). Questioned Costs: Known questioned costs are $61 related to supplies and food purchases. Context We tested 40 transactions charged to the grant. We noted 3 transactions charged to the grant that included sales tax. Cause:Family Pathways has been transitioning staff and updating disbursement policies and practices. Prior employees were not aware of the requirements. Staff are redesigning and implementing policies to address issues as they arise. Effect:Costs noted in "questioned costs" were charged to the grant that should not have been charged. Recommendation: The Organization and staff understand the finding and take appropriate action. We recommend that the staff continue to ensure that unallowable costs are ducted before being allocated to grants.

Family Pathways will correct this significant deficiency by establishing procedures to monitor purchaces and the exclusion of sales tax. The procedures will include monitoring of credit card statements and procurement of supplies.

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