Oregon Food Bank

2025-003 – Material Weakness in Internal Controls over Compliance – Activities Allowed or Unallowed and Allowable Costs/Cost Principles US Department of Agriculture / Oregon Department of Human Services Federal Assistance Listing Number: 10.565, 10.568, 10.569, 10.182 Federal Program Name: Food Distribution Cluster, Local Food Purchase Agreements Criteria – 2 CFR §200.430(g) – Standards for Documentation of Personnel Expenses require that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and are supported by a system of internal control which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Estimates determined before services are performed do not qualify as support. Condition/context –The Organization allocates personnel expenses to federal awards using estimates, not records that accurately reflect the work performed. The Organization estimates how much time each employee spends on activities allowable for each grant, but these estimates are not supported by records that reflect the work performed. The Organization has an electronic timekeeping system, but the system does not track the activities an employee performs. Employees are not required to complete certifications or Personnel Activity Reports (PARs) to support the hours worked on allowable activities. Total payroll costs charged to grants were $1,722,096. Management was able to substantiate $1,111,400 of payroll costs charged to these grants as 100% of personnel in this group worked 100% on food movement related work, which was backed up by job descriptions, employee attestations signed at year-end, and timesheets that show total hours worked. Remaining questioned costs of $610,696 relate to employees with time allocated across programs that were not substantiated with timecards that track which activities were performed. Questioned costs – ALN 10.568 - $533,410, ALN 10.182 - $77,286 Total questioned costs for all programs – $610,696, which is the payroll expenditures for employees who had allocated estimates charged to the food distribution cluster grants. Cause/effect – The Organization has not developed a system of internal control which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Personnel expenses charged to federal awards are not supported by records that reflect the work performed. Repeat finding – Yes, prior year finding 2024-003. Recommendation – We recommend the Organization establish a system of time and effort reporting that meets the standards for documentation of personnel expenses, and a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Views of responsible officials and planned corrective actions – Oregon Food Bank acknowledges this repeat finding and agrees with the auditors' assessment. Ben Ardell, Director of Finance, is the party responsible. Since the prior audit period, management has taken steps to develop and implement a time and effort reporting system that meets federal documentation standards, such as activating the electronic timekeeping system to track actual work performed and testing adoption of reporting procedures across departments and teams. Finance will continue implementing the corrective actions necessary to establish an effective and compliant time and effort reporting system, including providing training for employees and regularly monitoring for effective system utilization. These actions will strengthen internal controls and ensure personnel costs are accurately recorded and appropriately allocated. The anticipated completion date remains June 30, 2027.

2025-004 – Significant Deficiency in Internal Controls over Compliance – Activities Allowed or Unallowed and Allowable Costs/Cost Principles US Department of Agriculture / Oregon Department of Human Services / Farmers Market Fund Federal Assistance Listing Number: 10.565, 10.568, 10.569, 10.182 Federal Program Name: Food Distribution Cluster, Local Food Purchase Agreements Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. During the FY24 audit, we observed numerous inconsistencies in the application of indirect costs by the Oregon Food Bank, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. During the FY25 audit, indirect costs were not subjected to testing as the total amounts charged were less than program materiality. Due to the timing of the completion of the FY24 single audit, this finding remains applicable in the year under audit. Questioned costs – $19,788 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – Yes, prior year finding 2024-004. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained. Views of responsible officials and planned corrective actions – Oregon Food Bank acknowledges this repeat finding and agrees with the auditors' assessment. Ben Ardell, Director of Finance, is the party responsible. Since the prior audit period, management has taken steps to establish procedures and internal controls to ensure consistent application, billing, and reporting of indirect cost rates across all federal awards. Such steps include defining and documenting roles and responsibilities for applicable staff members during each phase of the grants management lifecycle, as well as implementing procedures and tools to ensure compliance with subrecipient monitoring requirements. These steps involve multiple levels of review for accurate and consistent application of indirect cost rates. Finance will continue implementing the corrective actions necessary to achieve effective controls over compliance with indirect cost rate requirements. Policy and procedures on allowable and allocable costs will be drafted to clearly document how direct and indirect costs will be billed to federal awards. Training will be provided to relevant staff members to ensure accurate implementation and ongoing compliance. These actions will improve our ability to manage indirect costs effectively and ensure compliance with federal requirements. The anticipated completion date remains June 30, 2026.

2025-005 – Significant Deficiency in Internal Controls over Compliance and Noncompliance – Procurement US Department of Agriculture / Oregon Department of Human Services / Farmers Market Fund Federal Assistance Listing Number: 10.565, 10.568, 10.569, 10.182 Federal Program Name: Food Distribution Cluster and Local Food Purchase Agreements Criteria – 2 CFR §200.317 to 327 – Procurement Standards. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §200.317 through §200.327. Condition/context – The Organization’s procurement policy that complied with Federal regulations was implemented in October 2024. Procurements before this date did not have sufficient documentation as to the significant history of procurements that would show compliance with the policy. We observed that the Organization awarded contracts to vendors but did not have a procurement policy that matched Federal procurement standards. Questioned costs – None reported. Cause/effect – The Organization did not have policies or controls throughout the whole year to ensure compliance with Federal regulations regarding procurements. Documentation as to the significant history of procurements, including from vendors, was not available to show compliance with procurement standards. Repeat finding – Yes, prior year finding 2024-005. Recommendation – The Organization should develop a procurement policy that matches Federal procurement standards and internal controls to ensure the policy is followed. The Organization should also retain documentation as to the significant history of procurements to show that the procurement policy was followed. Views of responsible officials and planned corrective actions – Oregon Food Bank acknowledges this repeat finding and agrees with the auditors' assessment. Ben Ardell, Director of Finance, is the party responsible. Since the prior audit period, management has taken steps to review and revise OFB’s procurement policy and procedures, in alignment with federal procurement standards. Finance will continue implementing the corrective actions and establishing the internal controls to ensure adherence to the policy, retaining documentation of the procurement process to demonstrate compliance. These recent and planned improvements will enhance transparency, strengthen accountability, and reduce compliance risk, ensuring a more efficient and well-documented procurement process that supports the organization’s long-term financial integrity and operational effectiveness. The anticipated completion date remains June 30, 2026.

Criteria – 2 CFR §200.430(g) – Standards for Documentation of Personnel Expenses require that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and are supported by a system of internal control which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Estimates determined before services are performed do not qualify as support. Condition/context – A sample of 9 payroll expenditures was selected for testing. The total population of payroll expenditures charged to the food distribution cluster grants was $1,396,059. For all 9 selections, the Organization was unable to provide evidence of actual time spent on each grant. The Organization allocates personnel expenses to federal awards using estimates, not records that accurately reflect the work performed. The Organization estimates how much time each employee spends on activities allowable for each grant, but these estimates are not supported by records that reflect the work performed. The Organization has an electronic timekeeping system, but the system does not track the activities an employee performs. Employees are not required to complete certifications or Personnel Activity Reports (PARs) to support the hours worked on allowable activities. Our sample was not, and was not intended to be, statistically valid. Questioned costs – ALN 10.565 - $8,192, ALN 10.568 - $1,323,021, ALN 10.182 - $64,846 Total questioned costs for all programs – $1,396,059, which is the total payroll expenditures charged to the food distribution cluster grants. Cause/effect – The Organization has not developed a system of internal control which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Personnel expenses charged to federal awards are not supported by records that reflect the work performed. Repeat finding – No. Recommendation – We recommend the Organization establish a system of time and effort reporting that meets the standards for documentation of personnel expenses, and a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated.

Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. We observed numerous errors in the application of indirect costs by the Organization, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. Questioned costs – $27,467 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – No. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained.

Criteria – 2 CFR §200.317 to 327 – Procurement Standards. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §200.317 through §200.327. Condition/context – The Organization did not have a procurement policy that complied with Federal regulations and did not retain documentation as to the significant history of procurements that would show compliance with the policy. We observed that the organization awarded contracts to vendors but did not have a procurement policy that matched Federal procurement standards. Questioned costs – None reported. Cause/effect – The Organization did not have policies or controls to ensure compliance with Federal regulations regarding procurements. Documentation as to the significant history of procurements, including from vendors, was not available to show compliance with procurement standards. Repeat finding – Yes, prior year finding 2023-001. Recommendation – The Organization should develop a procurement policy that matches Federal procurement standards and internal controls to ensure the policy is followed. The Organization should also retain documentation as to the significant history of procurements to show that the procurement policy was followed.

2023-001 Finding – Federal Award Type: Subrecipient Monitoring – Material Non-Compliance and Weakness in Internal Control Over Compliance. Identification of Federal Program: 21.027 – Coronavirus State and Local Fiscal Recovery Funds 10.182 – Food Bank Network Criteria / Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2CFR§200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Condition / Context: Oregon Food Bank, Inc. passed through $4,027,781 in funding to subrecipients under Assistance Listing 21.027 and $1,825,785 in funding to subrecipients under Assistance Listing 10.182. During our audit, we noted that Oregon Food Bank, Inc. did not have formal written procedures or controls in place to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) subrecipient monitoring requirements. Per review of subaward contracts, required federal contract information was not clearly identified. Further, there was not adequate documentation that subrecipients were evaluated for risk of non-compliance. Subrecipients were not sufficiently monitored as procedures were informal and were not applied consistently. Cause: Procedures are not in place to ensure that Oregon Food Bank, Inc. is providing adequate subaward contracts or maintaining proper subrecipient monitoring for each federal subrecipient. Effect: Failure to maintain sufficient subrecipient contracts and monitoring may result in the wrongful use of federal funds and non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs: None. Recommendation: Oregon Food Bank, Inc. should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s response: Management concurs with the audit finding.

2023-002 Finding – Federal Award Type: Federal Award – Material Weakness and Material Noncompliance – Procurement, Suspension and Debarment Identification of Federal Program: 21.027 – Coronavirus State and Local Fiscal Recovery Funds 10.182 – Local Food Purchase Agreements with State, Tribes, and Local Governments Criteria/Requirement: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. According to 2 CFR section 180, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. Condition/Context: OFB passed through $4,027,781 in funding to subrecipients under Assistance Listing 21.027 and $1,825,785 in funding to subrecipients under Assistance Listing 10.182. During our audit, we noted that Oregon Food Bank, Inc did not verify subrecipients for suspension or debarment. Cause: The organization’s policy does not include language regarding verifying if a vendor or subrecipient is suspended or debarred. Effect: A suspended or debarred vendor subrecipient may receive federal funding. Questioned Costs: None Recommendation: Revise policies to include language for verifying if vendor or subrecipient is suspended or debarred before entering contracted transactions. Management’s Response: Management concurs with the finding and has developed a corrective action plan.

2022-001 Finding ? Federal Award Type of Finding: Federal Award ? Other non-compliance over Special Tests and Provisions AL Numbers: U.S. Department of Agriculture passed through ODHS 10.565, 10.568, 10.569, Food Distribution Cluster Repeat of Prior Year Finding: 2021-003 Criteria/Requirement: The commodity receipts and distributions recorded in the general ledger as revenue and expense should reconcile to the recording of inventory transactions. Verifiable records should be maintained pursuant to 27 CFR 250.19. According to section 2 CFR 200.303, the Organization should have internal controls in place to comply with requirements of the award and federal requirements regarding the accuracy of inventory activity. Condition/Context: Receipts recognized as commodity revenue and distributions recognized as expenses did not agree to the inventory transactions as recorded in the Primarius inventory system. Large inventory adjustments were recorded within Primarius to reconcile inventory amounts. Cause: The Organization relies on the inventory system to generate entries for the accounting system. The inventory system has known shortcomings that may create variances. Effect: Total USDA commodity inventory receipts and distributions recorded may not be accurate. Questioned Costs: None Recommendation: The Organization should incorporate another level of review or reconciliation process over the monthly USDA inventory receipts and distributions to agree inventory movement with recorded revenue and expense each period.

2021-001 Finding ? Federal Award Type: Federal Award ? Material Weakness/Material Noncompliance over Allowable Costs AL Number: U.S. Department of Agriculture passed through Oregon Department of Human Services (ODHS) 10.565, 10.568, 10.569, Food Distribution Cluster Criteria/Requirement: The payroll expenses charged to the program were not properly supported in accordance with regulations. According to section 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: ? The system for establishing the estimates produces reasonable approximations of the activity actually performed; ? Significant changes in the corresponding work activity (as defined by the non-Federal entity?s written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and ? The non-Federal entity?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. The Organization should have internal controls in place to comply with requirements of the award and federal requirements to ensure amounts charged to Federal awards are allowable, accurate and properly allocated. Condition/Context: Payroll charged to the Federal award was based on budget estimates and was not reconciled to actual payroll records during the audit year. The Organization performed this reconciliation in early 2022 pursuant to an audit request. Cause: Payroll expenses are budgeted to the Federal award based on the dollar amount of administrative expenditures allowed under the award. The payroll charged to the Federal award was not reconciled to actual payroll expenditures. Effect: Payroll charged to the Federal award may not be allowable, accurate or properly allocated. Questioned Costs: $2,544,224, which is the full amount of payroll expenses charged to the award. Recommendation: The Organization should develop a process to timely reconcile the payroll charged to the Federal award to actual payroll records that reflect the work performed to ensure amounts charged are allowable, accurate, and properly allocated. Such reconciliations should be performed throughout the audit year on a regular basis. While the Organization was able to provide the reconciliation in 2022, there was not a process in place to ensure it be completed. Management?s Response: Management concurs with the auditor's finding and has developed a process for reconciling payroll charged to federal grants monthly. OFB will create a monthly report from ADP detailing the warehouse salaries, benefits, and taxes, all of which are allocable to federal grants. From the total costs, OFB will then identify the costs assigned to the federal grants to ensure costs assigned do not exceed the related warehouse expenses, and are equitably assigned to funding sources in reasonable proportion to benefits received.

2021-002 Finding ? Federal Award Type: Federal Award ? Significant Deficiency over Allowable Costs AL Number: U.S. Department of Agriculture passed through ODHS 10.565, 10.568, 10.569, Food Distribution Cluster Repeat of Prior Year Finding: 2020-002 Criteria/Requirement: Packing slips should be signed by agency representatives receiving food commodities. According to section 2 CFR 200.303, the Organization should have internal controls in place to comply with requirements of the award and federal requirements to making sure there is oversight of amounts distributed. Condition/Context: Seven of 35 packing slips examined as part of 2021 audit did not include a signature on the packing slip by the receiving agency. The seven transactions were processed at various locations. Cause: The Organization processes a significant volume of transactions at multiple locations and did not always obtain a signature or retain the original signed packing slips. Effect: Food commodities may be reported as distributed without proof of agency receipt. Food commodities could be diverted to ineligible or fictitious entities or sold for profit. Questioned Costs: None Recommendation: The Organization should emphasize to all staff the importance of documenting receipt of delivery by the receiving agency at the time goods are received and retaining signed packing slips. Packing slips should be retained with the invoice copy. Management?s Response: OFB requires all packing slips to be signed, both for incoming and outgoing shipments. There was a misunderstanding regarding the requirement for signatures, and this has been corrected.

2021-003 Finding ? Federal Award Type: Federal Award - Significant Deficiency over Special Tests and Provisions AL Number: U.S. Department of Agriculture passed through ODHS 10.565, 10.568, 10.569, Food Distribution Cluster Repeat of Prior Year Finding: 2020-004 Criteria/Requirement: The commodity receipts and distributions recorded in the general ledger as revenue and expense should agree to the recording of inventory transactions. Verifiable records should be maintained pursuant to 27 CFR 250.19. According to section 2 CFR 200.303, the Organization should have internal controls in place to comply with requirements of the award and federal requirements regarding the accuracy of inventory activity. Condition/Context: Receipts recognized as commodity revenue and distributions recognized as expenses did not agree to the inventory transactions as recorded in the Primarius inventory system. Large inventory adjustments were recorded within Primarius to reconcile inventory amounts. Cause The Organization relies on the inventory system to generate entries for the accounting system. The inventory system has known shortcomings that may create variances. Effect: Total USDA commodity inventory receipts and distributions recorded may not be accurate. Questioned Costs: None Recommendation: The Organization should incorporate another level of review or reconciliation process over the monthly USDA inventory receipts and distributions to agree inventory movement with recorded revenue and expense each period. Management?s Response: OFB?s current data systems for inventory (Primarius) and finance (Great Plains) do not permit the direct transfer of data, leading to a cumbersome manual process that is prone to error. Oregon Food Bank, Inc. will correct this problem in the coming year by upgrading both systems, to Primarius II and Sage Intacct.

Finding # 2020-001: Type: Federal Award - Significant Deficiency over Allowable Costs CFDA Number: U.S. Department of Agriculture 10.565, 10.568, 10.569, Food Assistance Cluster Criteria/Requirement: The quantity recorded on the packing list should agree to the invoice amount including any changes in quantity noted on the packing list. According to section 2 CFR 200.303, the Organization should have internal controls in place to comply with requirements of the award and federal requirements to make sure amounts distributed are accurate. Condition/Context: Two of forty testing selections included differences between the quantity noted on the packing list and the invoice. Controls were not effective to identify differences between packing lists and actual quantities distributed. Cause: When orders are distributed, the actual quantity delivered is handwritten on the packing list next to the original packing list amount. These changes were not recorded in the inventory system and reflected on the final invoice. Effect: Total USDA commodity inventory distributions recorded may be inaccurate. Questioned Costs: None Recommendation: The Organization should develop a process to record variances between original order and actual quantity delivered to agencies. Controls should be established to indicate on the packing list that changes have been recorded. Management?s Response: In the situations described where the packing slip can differ slightly from the invoice, our current process is to produce a credit memo or new invoice for the recipient. However, the tracking and maintenance of these need to be improved, and we plan to implement new processes within our Operations department that better track these adjustments and allow them to be referenced easily.

Finding # 2020-002: Type: Federal Award - Significant Deficiency over Allowable Costs CFDA Number: U.S. Department of Agriculture 10.565, 10.568, 10.569, Food Assistance Cluster Criteria/Requirement: Packing lists should be timely signed by agency representatives receiving food commodities. According to section 2 CFR 200.303, the Organization should have internal controls in place to comply with requirements of the award and federal requirements to making sure there is timely oversight of amounts distributed. Condition/Context: Seven of forty packing lists examined either did not include a signature on the packing list by the receiving agency supporting delivery of commodities or contained signatures and dates after being selected for audit testing. Two of the seven exceptions noted were after the Organization modified the internal policy to no longer require a signature due to impact of COVID-19. Cause: The Organization processes a significant volume of transactions and did not always retain the original signed packing lists. Effect: Orders may be reported as distributed without support indicating agency receipt. Questioned Costs: None Recommendation: The Organization should emphasize to all staff the importance of documenting receipt of delivery by the receiving agency at the time goods are received and retaining signed packing lists. Packing lists should be retained with the invoice copy. Management?s Response: At our Ontario location, we have historically not required packing slip signatures, in lieu of agencies being required to report back any discrepancies to the Inventory Specialist so that the order can be adjusted accordingly. This process developed organically over the years as Ontario has a small staff of three that fill and distribute all orders, and the location only distributes 1.6% of OFB?s yearly pounds. We will be working with our Partnerships & Programs and Operations departments to implement new processes and procedures to address this finding.

Finding # 2020-003: Type: Federal Award - Significant Deficiency over Allowable Costs CFDA Number: U.S. Department of Agriculture 10.565, 10.568, 10.569, Food Assistance Cluster Criteria/Requirement: The Organization has an internal policy requiring administrative expense reimbursements to be submitted within 90 days. This internal policy is to help ensure appropriate cut-off of expenses charged to the contract. Condition/Context: Three of the nine testing selections included reimbursement requests from subrecipients with expenses dated older than 90 days. There were no documented allowable exceptions to this policy. Cause: The Organization relies on agencies to submit promptly for reimbursement. Effect: Reimbursements may not be recorded timely in accordance with Organization policy to support recording in the proper period of service. Questioned Costs: None Recommendation: The Organization should review any reimbursement requests to confirm the reimbursement agrees with current internal policies. Management?s Response: Due to COVID-19 and the massive disruptions to our network and the food industry, Oregon Food Bank gave subrecipients more time to submit reimbursement requests. We have seen reimbursement requests become more timely from our partners in the new fiscal year.

Finding # 2020-004: Type: Federal Award - Significant Deficiency over Special Provisions CFDA Number: U.S. Department of Agriculture 10.565, 10.568, 10.569, Food Assistance Cluster Criteria/Requirement: The commodity receipts and distribution reports should agree to the recalculation of ending inventory. According to section 2 CFR 200.303, the Organization should have internal controls in place to comply with requirements of the award and federal requirements regarding the accuracy of inventory activity. Condition/Context: The formula for ending inventory, beginning inventory, plus receipts, less distributions did not agree with the recorded ending inventory. Controls over month end reconciliations did not detect the difference prior to the audit testing. Cause: The Organization relies on the inventory system to generate entries for the accounting system. The inventory system has known potential inconsistencies that may create variances. Effect: Total USDA commodity inventory receipts and distributions recorded may not be accurate. Questioned Costs: Known variance was approximately $56,500 (3% of USDA inventory) Recommendation: The Organization should incorporate another level of review or reconciliation process over the monthly USDA inventory receipts and distributions to agree with ending inventory each period. Management?s Response: Technical issues with our inventory software contributed to this finding. The differences noted in this finding could be caused by client computer malfunctions, network malfunctions, or interruptions while processing a transaction. We have taken steps to begin implementing a new cloud-based version of our inventory system that will lessen these types of technical issues. We will also be implementing additional procedures in our inventory reconciliation process that include quarterly year to date reconciliations, in addition to monthly reconciliations.

Finding # 2020-005: Type: Federal Award - Significant Deficiency CFDA Number: U.S. Department of Agriculture 10.565, 10.568, 10.569, Food Assistance Cluster Criteria/Requirement: The Organization?s accounting system should allow capturing federal expenditures with minimal adjustments in accordance with 2 CFR 200.302. Condition/Context: The Organization provided several versions of the Schedule of Expenditures of Federal Awards (SEFA); each with significant changes. Cause: The Organization received additional funding due to COVID-19 increasing the complexities of tracking by specific components of the award. A significant portion of the tracking is maintained in manual spreadsheets outside of the accounting system. Effect: Total expenses by federal funding source may not be properly classified and reported. Questioned Costs: None Recommendation: The Organization should implement additional procedures and controls to accurately capture all the expenses under federal awards and preparing the SEFA. Management?s Response: Oregon Food Bank experienced disruption due to COVID-19 that had impacts on capacity. We are in the process of hiring additional staffing in our Fiscal department to help implement additional controls and procedures.