Central Texas Food BankNon-Profit

U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Administrative Costs), 10.568 – Emergency Food Assistance Program (Administrative Costs) Award Number: 01576 Criteria or Specific Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principles – Costs charged to Federal awards must be necessary, reasonable, consistently treated, adequately documented, and allocable to the program in proportion to the benefits received. (2 CFR §200.403 and §200.405) Condition: During testing of administrative cost allocations for the Food Distribution Cluster, we identified an error in the entity’s allocation spreadsheet used to distribute administrative costs among Texas Emergency Food Assistance Program (TEFAP), Commodity Credit Corp (CCC)-funded TEFAP operations, and Commodity Supplemental Food Program (CSFP). This error caused TEFAP's share of administrative costs to be overstated by $188,459. Reimbursement requests for these overstated amounts were submitted between October and January. Although TEFAP reimbursement caps prevented any actual overpayment for the nine-month period, the early over‑allocation exhausted TEFAP funds sooner, leaving later allowable costs unreimbursed. Cause: A formula error in the allocation spreadsheet double-counted CCC amounts in the TEFAP base, inflating TEFAP’s percentage of shared administrative costs. Effect or Potential Effect: The error caused TEFAP to be assigned more in shared administrative costs than warranted by program benefit. Although reimbursement caps prevented an actual overpayment for the fiscal year, the misallocation exhausted TEFAP funds earlier, leaving later allowable costs unreimbursed. Without correction, the entity could continue to recognize TEFAP administrative and operational reimbursements earlier than warranted in future periods. Questioned Costs: Assistance Listing Number 10.568 – $188,459. Calculated difference between TEFAP funds billed versus actual allocated cost that should have been billed between October and January. Context: The allocation spreadsheet design error caused CCC amounts to be doublecounted in the TEFAP base, inflating TEFAP’s share of pooled administrative costs. Repeat Finding: No Recommendation: Correct the allocation methodology to ensure CCC amounts are not double-counted in TEFAP bases and that each program bears costs in proportion to benefit per 2 CFR §200.405. Implement a documented secondary review of the monthly allocation spreadsheet before posting. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and recommendation. While the misallocation resulted in overstated TEFAP administrative costs by $188,459, the program’s reimbursement cap and the entity’s actual incurred costs prevented any overbilling or excess Federal draw. See further information on the corrective action plan provided by management.

U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Food Commodities), 10.569 – Emergency Food Assistance Program (Food Commodities) Award Number: 01576 Criteria or Specific Requirement: Special Test and Provisions – Accountability for USDA Foods – Non-cash assistance must be valued at USDA‑approved valuation methods which include cost‑per‑pound, WBCSXI catalog price, or rolling average (7 CFR §250.58(e) and U.G. §200.502(a)). Condition: USDA donated foods are recorded in the accounting system at standard cost based on the first product received, rather than using an approved valuation method (Fair Market Value at receipt or USDA‑determined values such as cost‑per‑pound, WBCSXI catalog price, or rolling average per 7 CFR §250.58(e) and U.G. §200.502(a)). The entity has not formally selected or documented an approved method. The Food Bank does not maintain written procedures for conducting the required annual physical inventory and reconciliation to USDA Foods records. Procedures are communicated verbally before the count. Cause: The organization had not fully implemented USDA valuation requirements due to the absence of a documented policy. Inventory practices developed informally over time, and standard operating procedures were never formalized or approved. Effect or Potential Effect: Potential misstatement of USDA Foods value for Schedule of Expenditures of Federal Awards and inconsistent valuation across periods. Inventory risk increased likelihood of count errors, timing differences, or unexplained adjustments; exposure to liability for unreconciled differences. Questioned Costs: None Context: The methodology used to value food commodities was not a USDA‑approved valuation method. Repeat Finding: No Recommendation: Select and document an approved USDA valuation method and apply it consistently. Develop and implement formal written standard operating procedures for annual physical inventory and reconciliation, including: 1. Pre‑count preparation and cut‑off 2. Tag control and independent recounts 3. Reconciliation steps and documentation of adjustments, and 4. Record retention per 7 CFR §250.19 Views of Responsible Officials and Corrective Action: Management concurs with the finding and recommendation. See further information on the corrective action plan provided by management.

Type: Significant Deficiency Criteria: Management did not follow the procurement policy for purchases that exceed $50,000, which should have resulted in the use of competitive sealed bids and public advertisement to an adequate number of known providers. Condition: CTFB purchased a 2022 freightliner tractor for the amount of $109,401 on 12/16/2021 invoice #7302 from North Jersey Truck Center Inc. However, CTFB did not receive more than two bids for this purchase per their procurement process which they need at least two bids. Context: We selected 3 vendors with purchases greater than $50,000 and 1 of the vendors did not go through the normal procurement process. Cause: The procurement policy was not followed for this purchase. Effect: There could have been a better price or a better quality of product available. Questioned Costs: $109,401 Recommendation: We recommend that management review and follow the procurement policy set forth and that purchasing not approve invoices for payment that did not have proper documentation of the procurement process.