NORTH COUNTRY FOOD BANK, INC

2025-002 (Significant Deficiency) – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: AL 10.565, 10.568, and 10.569 Food Distribution Cluster Criteria: Per Uniform Guidance 2 CFR section 200.442, costs for fundraising that are not specifically related to the federal award are unallowable. Condition: Costs of t-shirts used for fundraising was included in the population of expenses allocated to the grant. Cause: Management oversight Effect: The Organization charged unallowable expenses to the grant. Context: As part of the single audit testing, 40 transactions were selected for testing. One invoice tested was for t-shirt costs for the Organization’s 40th Anniversary. Half the t-shirts were used for fundraising purposes. This is considered unallowable costs as it is costs for fundraising that is not specifically related to the federal award. Questioned Costs: $841 – half of invoice amount for 40th celebration t-shirts. Repeat Finding: Yes. Prior audit finding 2024-002. Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only charge allowable expenses. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses

2024-002 (Significant Deficiency) – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: AL 10.565, 10.568, and 10.569 Food Distribution Cluster Criteria: Per Uniform Guidance 2 CFR section 200.421, costs for public relations that are not specifically related to the federal award are unallowable. Condition: Food for the Organization’s community event was included in the population of expenses allocated to the grant. Cause: Management oversight Effect: The Organization charged unallowable expenses to the grant. Context: As part of the single audit testing, 40 transactions were selected for testing. One invoice tested was for food costs for the Organization’s 40th Anniversary community event. This is considered unallowable costs as it is costs for a public relations event that is not specifically related to the federal award. Questioned Costs: Immaterial Repeat Finding: No Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only charge allowable expenses. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses to grants to ensure only allowable expenses are charged to the grant.

Federal Program: AL 10.565, 10.568, and 10.569 Food Distribution Cluster Criteria: Per CSFP Eligibility requirements – section 247.9a, to be eligible for CSFP, individuals must be at least 60 years of age and meet the income eligibility requirements. The Organization makes the determination based on information obtained through applications submitted by participants. The Organization has an internal control policy of completing a file checklist for TEFAP Agency files to ensure all documents are in the file. Condition: The Organization was not able to locate one application selected for testing and the file checklist was not completed for one TEFAP Agency file. Cause: Management oversight Effect: The Organization could have made the wrong eligibility determination for one CSFP participant and could have missed required documentation for a TEFAP agency. Context: 40 CSFP applications were selected for testing. The Organization was unable to find one application selected for testing. 7 TEFAP Agency files were selected for testing. The file checklist was not completed for one file. However, all the required documents were in the file. Questioned Costs: None Repeat Finding: No Recommendation: The Organization should review their policies and procedures to ensure all applications are maintained and the file checklist is completed for all TEFAP Agency files. View of Responsible Officials: Management agrees with the recommendation and will review their procedures to ensure all applications are maintained and the file checklist is completed for all TEFAP Agency files.

2023-002 (Significant Deficiency) – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: AL 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per Uniform Guidance 2 CFR section 200.438, costs for entertainment including social activities and any associated costs are unallowable. The “Basic Guidelines” section of 2 CFR Part 230, Attachment B Paragraph 8 requires charges to grants for salaries and wages to be based on documented payrolls approved by the Organization. Condition: Food for an employee Christmas Party was included in the population of expenses allocated to the grant. One payroll timesheet tested was missing the approval signature. Cause: Management oversight Effect: The Organization charged unallowable expenses and a payroll expense that was missing approval documentation to the grant. Context: As part of the single audit testing, 40 transactions were selected for testing. One invoice tested was for food costs for a Christmas Party. This is considered unallowable costs as it is costs for a social activity. One payroll timesheet tested was missing the approval signature. Questioned Costs: Immaterial Repeat Finding: No Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only charge allowable expenses and ensure that all expenses charged are properly approved and the approval documentation is maintained. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses to grants to ensure only allowable expenses are charged to the grant and all expenses are properly approved and the approval documentation is maintained.

2022-002 (Significant Deficiency) ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance Federal Program: AL 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per Uniform Guidance 2 CFR sections 200.308, 200.309 and 200.403(h), a non-federal entity may charge only allowable costs incurred during the federal award?s period of performance or grant period. Expenses incurred before the grant period can only be charged to the grant if the passthrough entity authorizes those pre-award costs. Condition: The grant period for this grant award began in March 2022. The Organization charged a portion of expenses incurred from October 2021 to February 2022 to this grant. Cause: The Organization failed to consider the grant period start date in their allocation of distribution costs to this grant. Effect: The Organization charged expenses incurred before the grant?s period of performance, which makes these expenses unallowable for this grant. Context: Most of the expenses charged to this federal award was for food purchases incurred during the grant period. Only 7% of the expenses charged were for distribution costs. The Organization followed their regular process for allocating distribution costs to grants using the costs incurred during their fiscal year of October 1, 2021 to September 2022 as their population of total expenses, failing to consider that this grant award period only began in March 2022. However, the Organization was only able to charge a small amount of this allocated distribution costs as most of the grant was reserved for food purchases. The Organization did have sufficient eligible expenses incurred during the grant period. Questioned Costs: None. Repeat Finding: No Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only allocate expenses incurred during the grant period. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses to grants to ensure only expenses incurred during the grant period are charged to grants.

2022-003 (Significant Deficiency) ? Suspension and Debarment Federal Program: AL 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per Uniform Guidance 2 CFR section 180.220, non-federal entities are prohibited from contracting with parties that are suspended or debarred under covered transactions. ?Covered transactions? include contracts for goods or services that are expected to equal or exceed $25,000. Condition: The Organization did not check for suspension and debarment before making purchases that equaled or exceeded $25,000. Cause: The Organization was not aware of this requirement to check for suspension and debarment. Effect: The Organization could have made purchases from vendors that are suspended and debarred. Context: The Organization made several food purchases during the year that exceeded $25,000, but did not check for suspension and debarment before making the purchase as they weren?t aware of this requirement. Questioned Costs: None. Repeat Finding: No Recommendation: The Organization should review their policies and procedures to ensure that suspension and debarment is checked before entering into any contracts/purchases that are expected to equal or exceed $25,000. View of Responsible Officials: Management agrees with the recommendation and will ensure that suspension and debarment is checked before entering into any contracts/purchases that are expected to equal or exceed $25,000.

Program: Food Distribution Cluster (Commodity Supplemental Food Program, CFDA No. 10.565; Emergency Food Assistance Program (Administrative Costs), CFDA No. 10.568; Emergency Food Assistance Program (Food Commodities), CFDA No. 10.569) Criteria: The Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Food Bank did not update their procurement policies to be in conformance with the Uniform Guidance procurement standards. Questioned Costs: Undeterminable Context: It was noted that the Food Bank did not update their Procurement Policy for the Uniform Guidance procurement standards. Cause: Oversight by Management. Effect: The Food Bank might have a conflict of interest and might not have followed competitive bidding procedures when entering into contracts over the various procurement thresholds. Repeat Finding: First year for finding. Recommendation: The Food Bank should review and update their policies and procedures for procurement. Responsible Officials: The Food Bank agrees with the recommendation and will correct immediately.

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