FEEDING SOUTH FLORIDA, INC.

Finding 2024-002: Failure to Follow Recordkeeping Requirements for Expenditures (Material Weakness) Federal Agency: United States Department of Agriculture Federal Program Name: COVID-19 - Pandemic Relief Activities: Local Food Purchase Agreements with States, Tribes, and Local Governments Assistance Listing Number: 10.182 Pass-Through Entity: State of Florida Department of Agriculture Compliance Requirement: Allowable Costs/Cost Principles Criteria: 2 CFR Section 200.334, requires recipients and subrecipients to retain all Federal award records for three years from the date of submission of their final financial reports (quarterly or annually). Records include, but are not limited to, financial records, supporting documentation, and statistical information. Additionally, 2 CFR Section 200.403, requires that costs must meet certain criteria to be allowable under federal awards, specifically 2 CFR Section 200.403(g), requires adequate documentation of those costs. Condition: During our testing, the Organization was unable to provide appropriate supporting documentation that evidenced a proper activity was conducted using federal funding, and further we could not determine if the costs incurred were allowable. Additionally, we noted that the Organization did not establish adequate internal controls to ensure supporting documentation was maintained to evidence that compliance was achieved. Cause: The Organization’s internal controls were not effectively designed over recordkeeping of food purchases. Known Questioned Costs: $166,610 Context: The total sample size was 100 items of expense, which was determined to be a statistically valid sample. 10 out of the 100 items tested were not supported by appropriate documentation. 5 out of 100 items tested included freight costs that were included in the food costs. Freight should have been separated and classified as an administrative cost. These items resulted in the questioned costs calculated above and the noncompliance reported. The total population of expenditures charged to the federal program, from which our sample was selected, was $14,401,876. Effect: Federal funds may have been used for unallowable costs and therefore the purpose of the award may not have been met. Overall, this results in noncompliance with federal award requirements. Recommendation: We recommend the Organization evaluate its internal controls over allowable costs, recordkeeping and recording of federal expenditures and implement internal control procedures to ensure documentation is appropriately maintained for the required timeframe. Ongoing monitoring of the controls designed should be established to ensure future failures are minimized.

Food Distribution Cluster ? ALN 10.565, 10.569 2020-01: Inventory Reconciliation Process: Condition and Criteria: During the year, the Organization transitioned to a new inventory management system. As the Organization adjusted to the new system?s reporting capabilities, this transition led to delays in posting inventory-related journal entries and reconciling inventory to the general ledger. In addition, there was an increase in the amount of time between when inventory receipts and distributions were posted to the Organization?s inventory management system and when they were posted to the Organization?s general ledger. Cause: The Organization?s inventory adjustments were not posted timely and monthly reconciliations of inventory to the general ledger were not performed. Effect: There is a risk that governmental food commodities may not be timely reported to the Food Nutrition service and restitution may not be made for losses. Recommendation: We recommend that the Organization perform a monthly reconciliation of its book inventory to the distributions report, receipt report, and inventory on-hand report from the inventory management system. We recommend that all inventory counts be reconciled to the book inventory and all inventory reconciliations be signed off by the VP of Finance and CEO. In addition, we recommend that inventory be tracked by federal program in order for management to accurately reconcile federal expenditures by program and that management continue to improve inventory related policies and procedures. Management?s Response: As inventory receipts and distributions revert to similar levels as those prior to the pandemic, the Organization has tightened controls over warehouse inventory counts including continued quarterly inventory, weekly cycle counts, and implementation of a new warehouse management system specifically tailored towards food banks. These improvements have been designed to prevent anomalies before they occur. Management is confident that inventory counts will continue to become more accurate throughout the current fiscal year and beyond.

Food Distribution Cluster - ALN 10.565, 10.569 2021-01: Eligibility: Condition and Criteria: During the year, there was an increase in demand for food assistance in the community due to COVID-19. Due to staffing shortages and social distancing, the Organization implemented a simplified process to determine TEFAP eligibility for drive-through no-touch food distribution sites that distributed food from both governmental and other (donated or purchased) sources. Cause: The Organization has procedures in place to determine eligibility for TEFAP food recipients, however, the simplified application was not required for each participant receiving food from the drive through sites, and in some instances may not have collected enough information to determine eligibility in accordance with the income eligibility criteria established by the state agency. Effect: There is a risk that TEFAP food commodities were distributed to recipients who were not eligible to receive TEFAP foods. Recommendation: We recommend that the Organization implement a control process to ensure that the Organization?s forms contain sufficient information to determine eligibility in accordance with the criteria established by the state agency. Management?s Response: Drive through food recipients who did not declare TEFAP eligibility information or provided incomplete eligibility information on the simplified applications were provided food from other non-governmental sources. During fiscal year 2022, approximately 52 million of the 64 million pounds of food distributed was donated or purchased food. Effective October 2022, access to TEFAP food under the CARES Act was eliminated and the territories currently assigned to the Organization for TEFAP that contained mass distributions were also eliminated. This will remain the case for fiscal year 2023 and beyond.

2020-01: Food Distribution Cluster ? CFDA 10.565, 10.569 Condition and Criteria: During the year, the Organization received a large increase in donated food and governmental food commodities to meet an increase in demand for food assistance in the community due to COVID-19. Due to staffing shortages and social distancing requirements during the early stages of the Pandemic, the Organization temporarily suspended monthly reconciliations of inventory counts to the general ledger. In addition, there was an increase in the amount of time between inventory receipts and distributions and when they were posted to the Organization?s inventory management system. Cause: The Organization?s inventory adjustments were not posted timely and monthly reconciliations of inventory to the general ledger were not performed due to staffing shortages during the COVID-19 Pandemic. Effect: There is a risk that donated food losses of governmental food commodities may not be timely reported to the Food Nutrition service and restitution may not be made for losses. Feeding South Florida -2- April 14, 2022 Recommendation: We recommend that the Organization perform a monthly reconciliation of its book inventory to the inventory summary, receipt summary and distribution summary reports provided by Primarius. We noted in the Organization?s TEFAP corrective action plan that the Organization will conduct quarterly, full inventory counts. We recommend that the quarterly inventory counts be reconciled to the book inventory and the quarterly reconciliations be signed off by the VP of Finance and CEO. In addition, we recommend that inventory be tracked by federal program in order for management to accurately reconcile federal expenditures by program and that management continue to improve inventory related policies and procedures. Management?s Response: The Organization submits monthly inventory reports to the USDA Food and Nutrition Service to ensure tracking of all commodities. The Organization has a schedule of monthly inventory counts and inventory reconciliation. To enhance diligence and accuracy, different pick locations are also cycle counted daily with any variances rectified immediately. All physical counts are reviewed and approved by warehouse management and the finance department.

2021-01: Food Distribution Cluster ? CFDA 10.565, 10.569 Condition and Criteria: During the year, there was an increase in demand for food assistance in the community due to COVID-19. Due to staffing shortages and social distancing, the Organization implemented a simplified process to determine TEFAP eligibility for drive-through no-touch food distribution sites that distributed food from both governmental and other (donated or purchased) sources. Cause: The Organization has procedures in place to determine eligibility for TEFAP food recipients, however, the simplified application was not required for each participant receiving food from the drive through sites, and in some instances may not have collected enough information to determine eligibility in accordance with the income eligibility criteria established by the state agency. Effect: There is a risk that TEFAP food commodities were distributed to recipients who were not eligible to receive TEFAP foods. Recommendation: We recommend that the Organization implement a control process to ensure that the Organization?s forms contain sufficient information to determine eligibility in accordance with the criteria established by the state agency. Management?s Response: Drive through food recipients who did not declare TEFAP eligibility information or provided incomplete eligibility information on the simplified applications were provided food from other non-governmental sources. During 2021, the Organization distributed approximately 105 million pounds of donated and purchased food, primarily through these drive-through no-touch sites.

Findings and Questioned Costs - Major Federal Programs and Major State Project United States Department of Agriculture - Trade Mitigation Program ? CFDA 10.178 and Coronavirus Pandemic 19 Program ? CFDA 21.019. Significant Deficiency 2020-01: Inventory Reconciliation Process: Condition and Criteria: During the year, the Organization received a large increase in donated food and donated governmental food commodities to meet an increase in demand for food assistance in the community due to COVID-19. Due to staffing shortages and social distancing requirements during the early stages of the Pandemic, the Organization temporarily suspended monthly reconciliations of inventory counts to the general ledger. In addition, there was an increase in the amount of time between inventory receipts and distributions and when they were posted to the Organization?s inventory management system. Cause: The Organization?s inventory adjustments were not posted timely and monthly reconciliations of inventory to the general ledger were not performed due to staffing shortages during the COVID- 19 Pandemic. Effect: There is a risk that donated food losses of governmental food commodities may not be timely reported to the Food Nutrition service and restitution may not be made for losses. Recommendation: We recommend that the Organization perform a monthly reconciliation of its book inventory to the inventory summary, receipt summary and distribution summary reports provided by Primarius. We noted in the Organization?s TEFAP corrective action plan that the Organization will conduct quarterly, full inventory counts. We recommend that the quarterly inventory counts be reconciled to the book inventory and the quarterly reconciliations be signed off by the Finance Director and CEO. In addition, we recommend that inventory be tracked by federal program in order for management to accurately reconcile federal expenditures by program and that management continue to improve inventory related policies and procedures.

Findings and Questioned Costs - Major Federal Programs Audit and Others United States Department of Agriculture - Emergency Food Assistance Program (Food Commodities) - CFDA 10.569, Emergency Food Assistance Program (Administrative Costs) - CFDA 10.568, Commodity Supplemental Food Program - CFDA 10.565, and Trade Mitigation Program ? CFDA 10.178 Significant Deficiency 2019-01: Time and Effort Reporting: Condition and Criteria: During the year, the Organization received funding under multiple federal awards. It was noted that the Organization should improve its support for time and effort reporting for costs charged to federal awards. Improvements include the following: a clear segregation of federal and non-federal expenditures should be maintained within the financial system, a written allocation policy for expenditures should be followed, and the review of budget and fiscal reports by key staff during the year should be expanded and improved. Cause: The Organization?s accounting system was recently modified but was not fully implemented during the year. Effect: There is a risk that the Organization may charge expenditures to the improper category and/or program. Recommendation: The Organization should fully implement written policies for the recording and allocation of expenses in the general ledger system. Management?s Response: The Organization has a successful procedure for ensuring all time and effort reporting for costs charged to federal awards; however, the procedure has not been documented as a written policy. The Organization has documented the policy for fiscal year 2020. There is no risk to the Organization.