Regional East Texas Food BankNon-Profit

Planned Corrective Action: ETFB procurement policy to be reviewed and updated to include internal controls for compliance with contract costs and price guidelines as outlined in the Uniform Guidance. -Add CEO or Officer review of contract costs and price guidelines for federal contracting agreements toensure accordance with the Uniform Guidance for General Procurement Standards. -Add obtaining and reacting to suspension and debarment certifications.

Please find the corrective action plan (CAP) detailing the processes that will ensure correction to the significant deficiencies identified during the audit of the East Texas Food Bank financial statements for the fiscal year ended June 30, 2020 as follows: Finding 2.020-001: Condition: The auditee-prepared Schedule of Expenditures of Federal Awards (SEFA) omitted programs and incorrectly reported Catalog of Federal Domestic Assistance (CFDA) titles and numbers. As these omissions were identified through the audit process, we referred management to guidance and resources that enabled them to alleviate the issues and missions identified and present a materially correct SEFA. We believe that this significant deficiency was caused by the auditee's internal controls over financial reporting not being sufficient to detect, correct, and prevent errors in the SEFA. This breakdown in internal controls was caused by staffing and training needs in response to elevated federal award activity related to COVID-19. Recommendation: Management promptly engage a consulting firm to evaluate the needs of the accounting and finance functions at the Food Bank and provide an analysis to the Board regarding the expected additional resources required to effectively manage federal and state programs, develop complete and accurate reports related to federal and state programs, and coordinate the processes of the accounting and finance functions to effectively produce, review, and maintain the documentation necessary to support reports required by relevant standards. Corrective Action Plan: Management has reviewed the auditor's recommendations with the Food Bank's Finance Committee. The ETFB Finance Committee will solicit proposals for the services of qualified nonprofit finance consulting firms. Corrective Action Plan Timeline: The Finance Committee will engage the work of a qualified nonprofit finance consultant to perform the recommended analysis and report to the Board by March 31, 2021. Dennis Cullinane, CEO will be responsible for this CAP. Finding 2020-002: Condition: While performing the audit, we encountered multiple instances of inconsistent documentation provided in response to our audit requests. The most significant documentation inconsistencies resulted in the identification of two instances of revenue overstatements that were corrected through the audit process. Many of the documentation inconsistencies were related to transactions that were entered into in response to COVID-19. We believe that this significant deficiency was caused by the auditee's internal controls over accounting processes not being sufficient to detect, correct, and prevent errors in key subsidiary reports and ledgers that support the general ledger balances. This breakdown in internal controls was caused by a lack of timely and effective reviews of key subsidiary reports and ledgers. We believe that the effects of any documentation inconsistencies were materially corrected through audit adjustments. Recommendation: Our recommendation for this finding is consistent with our recommendation for Finding 2020-001. In addition, management's response to this finding is consistent with their response to Finding 2020-001. Corrective Action Plan: Management has reviewed the auditor's recommendations with the Food Bank's Finance Committee. The ETFB Finance Committee will solicit proposals for the services of qualified nonprofit finance consulting firms. Corrective Action Plan Timeline: The Finance Committee will engage the work of a qualified nonprofit finance consultant to perform the recommended analysis and report to the Board by March 31, 2021. Dennis Cullinane, CEO will be responsible for this CAP. Thank you for your attention to this matter. If you have any questions please call or write me at (903)617-2005 or dcullinane@easttexasfoodbank.org.