FOOD AND NUTRITION SOLUTIONS INC

FOR THE YEAR ENDED DECEMBER 31, 2021 Questioned Current Year Findings Cost Finding 2021-001 Unallowable Cost ? Wages in Excess of Compensation Protocol $82,274 Criteria: CFR 200.303 generally requires that the Organization establish and maintain effective internal control over the Federal award that provides reasonable assurance that Federal awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per the Texas Department of Agriculture?s `Compensation Protocol,? the Organization is required to follow base salary guidance published within the `Compensation Protocol? in order to comply with the requirements of 2 CFR 200.430(b) and FNS 796-2 Rev. 4, which require that compensation costs be necessary, reasonable, and allowable. Condition: During the audit, we noted the Organization did not establish effective controls for complying with the `Compensation Protocol?. We also identified two instances where annual employee compensation exceeded the maximum threshold established under the `Compensation Protocol.? Cause: Management incorrectly applied the salary table guidance applicable to a larger metropolitan area and failed to take into account each employee?s place of employment. Furthermore, Management incorrectly classified additional base compensation as employee benefits. Effect: Ineffective review and application of compensation guidance resulted in the recognition of costs that are not reasonable when compared to rates paid for similar work in like organizations within its locale. Recommendation: We recommend the Organization develop policies and procedures for reviewing government agency guidance in additional depth and take steps to reduce employee salaries to allowable levels. Views of Responsible Officials and Planned Corrective Actions: See management?s corrective action plan at page 21.