AR & KA TASTY FOODS

2020-001 ? Accounting System Criteria: Prepare financial statements in conformity with generally accepted accounting principles (GAAP). Condition: There is a lack of sufficient financial accounting system. Cause: Lack of need for sophisticated accounting system before unforeseen explosive growth of program. Effect: Management is unable to prepare financial reports in accordance with GAAP. It is a manual system without an overarching system of reconciliation. Repeat Finding from Prior Year: No Recommendation: We recommend that the Company invest in a computerized trial balance software. Management Response: Management agrees and had already considered and implemented amendments prior to the audit. Corrective Action Plan: Management has hired a Chief Financial Officer and intends to outsource bookkeeping to a QuickBooks provider.

2020-002 ? Segregation of Duties Criteria: Duties should be segregated as much as possible to provide reasonable assurance that transactions are handled appropriately. Condition: There is a lack of segregation of duties among Company personnel. Cause: Small staff. Effect: Transactions could be mishandled and/or inaccurately recorded or processed. Repeat Finding from Prior Year: No Recommendation: We recommend that the Company involve the Board of Directors to take responsibility for review of expenditures, revenues, bank balances and other fiscal matters on frequent periodic basis in order to partially compensate for this weakness. Management Response: Management agrees that a larger staff is needed now that the program has grown substantially. Corrective Action Plan: Management has already started to expand its financial staff, including the hiring of a Chief Financial Officer and outsourcing bookkeeping. Management is also considering adding regular, periodic Board of Directors review and dual check signing requirements.

2020-003 ? Allowable Costs/Cost Principles - Material Weakness in Internal Control over Compliance Criteria: The Food and Nutrition Service Instruction 796-4, Rev 4 prohibits expenditures for certain capital assets including vehicles. Condition: Lack of approval process and adequate supporting documentation for capital purchases prior to incurring. Cause: Control and mitigating control processes and procedures not fully developed and documented. Effect: Potentially disallowed direct capital expenditures could be made. Questioned Costs: None reported. Perspective/Context: All components subject to the requirement were subject to testing. Repeat Finding from Prior Year: No. Recommendation: We recommend that management more fully inform itself of all requirements of the grant, state, and federal requirements and institute control policies over allowable costs and cost principles. Management Response: Management agrees that it had not implemented a robust system of internal control over compliance. Corrective Action Plan: Management has already started to expand its financial staff, including the hiring of a Chief Financial Officer, which will afford the expertise and bandwidth to implement and document control procedures. Management is also considering adding Board of Directors review and approval for certain classes of transactions.

2020-004 ? Cash Management ? Material Weakness in Internal Control over Compliance Criteria: Non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 (2 CFR section 200.302(b)(6)). Condition: Immaterial differences were found between accumulated expenses and supporting documentation. Cause: There was lack of oversight to ensure sufficient, appropriate audit evidence to support some contractor payments. Effect: Inaccurate amounts could be requested by and provided to the Company. Questioned Costs: None reported. Perspective/Context: All payments were subject to testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management implement controls to ensure all checks are written directly to each payee with the purposes and allocations carefully detailed when there are multiple expenses in a single payment. Management Response: Management agrees that it had not implemented a robust system of internal control over compliance. Corrective Action Plan: With the addition of an external bookkeeping professional, Management will implement more detailed oversight of spending records and allocations.