FOOD BANK OF ABILENE INCNon-Profit

Finding 2020-001 ? Material weakness in internal control over the USDA food commodity inventory a. Condition: The year-end physical inventory that was performed by the Organization was not performed accurately and thoroughly, and the results of the reconciliation of the physical inventory count to the USDA food records resulted in numerous discrepancies. b. Criteria: The Organization is required by the USDA to maintain appropriate accounting for USDA foods, to perform an annual physical inventory, and to reconcile the physical inventory with the inventory records. c. Cause: A new warehouse manager was hired at the beginning of the fiscal year, and he was not properly trained on the Organization?s internal controls in the performance of accurate and timely physical inventory counts. Supervisory oversight was also not appropriate to ensure that the Organization?s procedures were followed. These weaknesses in the Organization?s internal controls over its USDA food inventory during the year caused the discrepancies noted between the annual physical inventory count and the inventory subsidiary records. In previous years in accordance with the Organization?s policies, the Organization performed quarterly physical inventory counts of all inventory and weekly spot checks on USDA food inventory to help ensure that inventory records were accurate and that abuse and fraud were prevented. Also, due to the COVID-19 pandemic during the 2020 year, the amount of food the Organization received increased 15-20%, there was higher demand for food distribution, and the Organization?s employee workforce was affected due to pandemic shut-downs and work at home requirements. The Organization?s normal policies and procedures were not always able to be followed, as providing food to the needy through-out the year was the focus of the Organization. d. Effect: Accurate inventory records were not maintained through-out the year, and the physical inventory was not properly maintained in order to prevent potential abuse or fraud. There were no material questioned costs to report. e. Recommendation: The Organization should ensure that its internal control procedures over the USDA food commodity inventory are followed, that the warehouse manager and staff are properly trained to follow established inventory procedures, and that management provide adequate oversight to ensure adherence to internal control procedures. f. Response: The Organization has accomplished the following procedural corrections since identification of the inventory control issues. Staff have been retrained on proper inventory counting and documentation procedures. Inventory was conducted on a monthly basis during the second quarter of the year to re-emphasize and retrain on all procedures. Inventory results were within tolerance each time. Inventory will be conducted on a monthly basis for the remainder of calendar year 2021 beginning September 30 to further emphasize correct procedures, cross train existing staff and onboard new staff.