YOUTH LEADERSHIP ACADEMY DBA GAR GAAR FAMILY SERVICES

Section III: Findings and Questioned Costs ? Major Federal Programs 2021-03 Federal Agency: U.S. Department of Agriculture Federal Programs: 10.558 Child and Adult Care Food Program Pass-Through Agency/Organization: Minnesota Department of Education and Feeding Our Future Pass-Through Numbers: 064754757 and 080545373 Compliance Requirement: Allowable Costs/Cost Principles/Reporting Type of Finding: Material Noncompliance and Material Weakness in Internal Control Statement of Condition The auditor was unable to obtain sufficient supporting documentation for allowable food and non-food costs for the short period of time that the Organization was operating the CACFP sites under the pass-through entity, Feeding our Future. Current management was unable to obtain requested records from former management who had supervised CACFP. Criteria or Specific Requirement CACFP program recipients are required to maintain adequate supporting documentation for a nonprofit food service program to determine if expenditures were made for allowable costs Questioned Costs Not applicable. Refer to explanation under ?Cause? below. Effect The Organization was unable to provide sufficient supporting documentation to show that their CACFP food service program complied with the reporting requirements established by the Federal Agency and was likewise unable to demonstrate that adequate internal controls existed for the CACFP program during this timeframe operated under former management, resulting in material noncompliance. Cause The Organization was unable to provide necessary documentation due to former management being uncooperative or truly not having possession of requested records that could provide sufficient supporting documentation. Inadequate internal controls allowed necessary records not to be stored for agency and audit purposes. Recommendation The Organization should ensure that necessary supporting records and documents are maintained and stored safely for use for expected audits and related purposes. The Organization should closely monitor compliance with reporting requirements established by the Federal Agency. Upon any management transition, care should be exercised to transfer all records over to new management. Views of Responsible Officials and Corrective Action Plan Current management cooperated fully in attempting to locate and obtain requested records. They understand that lacking those necessary records that material noncompliance for the CACFP program must be reported. Current management has been careful to maintain required records for the SFSP program that they have been involved in managing and improving internal control procedures to ensure that all necessary records will be retained in the future.

Section III: Findings and Questioned Costs ? Major Federal Programs (Continued) 2021-04 Federal Agency: U.S. Department of Agriculture Federal Programs: 10.559 Summer Food Service Program for Children Pass-Through Agency/Organization: Minnesota Department of Education Pass-Through Numbers: 064754757 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Noncompliance and Significant Deficiency in Internal Control Statement of Condition The Organization spent government funds to purchase a vehicle during the year, this is not allowed with the funding from the above federal programs received through the Minnesota Department of Education. Criteria or Specific Requirement The purchase of a vehicle or any other capital assets is not allowed according to FNS instruction 796-4 which states, ?FNS has determined other costs for which SFSP funds may not be disbursed. These costs include the following: Other capital assets including vehicles.? In doing this the organization has been noncompliant with government funds. Questioned Costs Direct capital expenditure (truck). Effect The Organization purchased a truck, which is a capital asset, and not an allowable cost according to Agency guidelines. The truck was used for meal distribution purposes. Cause Management was unaware of this restriction and purchased the truck to assist in better serving meals at distribution sites. Recommendation The Organization should closely monitor compliance requirements established by the Federal Agency. If vehicles, or other capital assets are needed for operations, the Organization should rent or lease such equipment. Views of Responsible Officials and Corrective Action Plan Management is now aware of this restriction and will make sure to fully understand spending rules established by the Federal Agency, especially when considering and large or unusual purchase.

Section III: Findings and Questioned Costs ? Major Federal Programs (Continued) 2021-05 Federal Agency: U.S. Department of Agriculture Federal Programs: 10.559 Summer Food Service Program for Children Pass-Through Agency/Organization: Minnesota Department of Education Pass-Through Numbers: 064754757 Compliance Requirement: Cash Management/Allowable Costs/Cost Principles Type of Finding: Noncompliance and Significant Deficiency in Internal Control Statement of Condition The auditor noted two instances of payments to vendors without specific invoices which the Organization believes were overpayments to those vendors that they are attempting to recover. The uncertainty of collection could result in the loss of these dollars and the future realization of bad debt expense. This demonstrates improper cash management by putting funds at-risk that may be needed for program operations. Criteria or Specific Requirement Cash management policies should be properly followed to preserve sufficient liquidity for program operations. Unallowable costs are costs for which program funds may not be used. They include bad debts. Questioned Costs Vendor overpayments of $316,800 to Afro Produce and $56,331 to US Halal. Effect The Organization had adequate cash flow had sufficient other cash flows to allow time to collect these overpaid amounts. Should the overpayments to vendors not prove to be collectible or applied towards future program food costs, the amounts may then be considered future bad debts or other unallowable costs and may eventually strain the Organization?s liquidity. Cause Inadequate internal controls over this function, as noted in Section II findings, allowed such overpayments to occur during times when time constraints forced the Organization to bypass procedures in order to be able to provide the meals to the needy recipients Recommendation Management needs to insist that internal control procedures be correctly followed, even during frantic moments in providing meals. Vendors should be required to provide adequate invoices along with the food received to inspect and improve before making payment. No advance payments should be made for food that has not been delivered satisfactorily. Views of Responsible Officials and Corrective Action Plan The Organization has issued letters demanding repayment of these amounts from the two vendors and will continue to follow through with actions to collect the amounts owed. Management understands that even in the most challenging moments the Organization needs to follow its procedures which were created for important safeguards. The Organization?s staff will continue to record monthly all allowable food program expenses for meal reimbursements provided by Minnesota Department of Education. After all expenses are then recorded any outstanding invoices or payments are then looked at by management to make sure they are accurate and compliant. This should help solve the issue of overpaying venders for food costs that were not compliant with the Federal Agency.

Section III: Findings and Questioned Costs ? Major Federal Programs (Continued) 2021-06 Federal Agency: U.S. Department of Agriculture Federal Programs: 10.559 Summer Food Service Program for Children Pass-Through Agency/Organization: Minnesota Department of Education Pass-Through Numbers: 064754757 Compliance Requirement: Cash Management Type of Finding: Noncompliance and Significant Deficiency in Internal Control Statement of Condition The Organization made a loan to a vendor in the form of an earnest money payment which was an improper, albeit temporary, use of funds. The loan was repaid by the vendor in the following year. Criteria or Specific Requirement Cash management policies should be properly followed to preserve sufficient liquidity for program operations. Questioned Cost Temporary loan of $231,100 to vendor. Effect Making an improper loan put Organization funds at-risk rather than safely preserving any excess funds to meet future cash flow needs. Cause Inadequate internal controls allowed a decision to be improperly made to extend a loan to a vendor. Recommendation Management should refresh themselves on their own Accounting Policies and Procedures they approved and recognize improper loans such as this from being made. Views of Responsible Officials and Corrective Action Plan Management agrees to review their own Accounting Policies and Procedures and make sure to properly monitor compliance. Any significant proposed transactions such as this will be greatly scrutinized and verified as an allowed use of cash before approving such action. In this instance, the amount was repaid in full within the following year.

Section III: Findings and Questioned Costs ? Major Federal Programs (Continued) 2021-07 Federal Agency: U.S. Department of Agriculture Federal Programs: 10.558 Child and Adult Care Food Program and 10.559 Summer Food Service Program for Children Pass-Through Agency/Organization: Minnesota Department of Education and Feeding Our Future Pass-Through Numbers: 064754757 and 080545373 Compliance Requirement: Reporting Type of Finding: Noncompliance and Significant Deficiency in Internal Control Statement of Condition The Uniform Guidance report for the year ended December 31, 2021 was not submitted until after its due date of September 30, 2022. Criteria or Specific Requirement The Uniform Guidance Report is due nine months after the Organization?s fiscal year-end. In addition, the Federal Audit Clearinghouse filing is due thirty days after the receipt of the auditor?s report or nine months after the end of the fiscal year, whichever is earlier. Questioned Costs Not applicable. Effect The Organization did not comply with the reporting requirements established by the Federal Agency. Cause The Uniform Guidance audit for the year ended December 31, 2021 was delayed for a variety of reasons, including management?s necessary focus on responding to correspondence from the Minnesota Department of Education, and not wanting to rush completion of the audit without adequate time to review and respond. Recommendation The Organization should closely monitor compliance with reporting requirements established by the Federal Agency. Views of Responsible Officials and Corrective Action Plan The Organization will set a goal to have a signed audit engagement letter by their December 31st fiscal year-end each year to ensure timely audit completion and compliance with federal reporting requirements.