KATY CHRISTIAN MINISTRIES

Finding #2024-004 – Reporting – Significant Deficiency and Other Noncompliance. Applicable federal programs: All programs. Criteria: Financial management – Management is responsible for establishing a system of internal control over financial reporting that includes identifying, in its accounts, all federal awards received and expended in accordance with Uniform Guidance §200.302. Management is also responsible for preparing a schedule of expenditures of federal awards (SEFA) and for ensuring expenditures are reported in accordance with Uniform Guidance §200.510. Condition and context: The SEFA originally provided by management erroneously included a program that was not subject to Uniform Guidance and did not include two programs that were subject to Uniform Guidance. Additionally, an adjustment of approximately $165,000 was required to properly report the value of commodity expenditures in accordance with KCM’s valuation policy. Cause: As a result of turnover, management, including key accounting and grant management positions, was new to the organization and was not familiar with all federal grants at the commencement of the audit. The grants and accounting personnel worked with the audit team to collect the information needed for the SEFA and to reconcile the federal expenditures in the general ledger to that of the final SEFA. Effect: Failure to adequately establish and maintain a system of internal controls over preparation of the SEFA adversely affected KCM’s ability to correctly identify and summarize federal awards for reporting in accordance with the Uniform Guidance. Recommendation: Strengthen policies and procedures to ensure all federal grant expenditures subject to Uniform Guidance are properly recorded and classified in the general ledger system by class code. Reconcile federal expenditures to the SEFA using the class code reports. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2024-005 – Reporting – Significant Deficiency and Other Noncompliance. Applicable federal program: U. S. Department of Agriculture, Passed through The Houston Food Bank, Emergency Food Assistance Program – Food Commodities (Food Distribution Cluster), Assistance Listing #: 10.569, Contract Number: 30517, Contract Year: 01/01/24 – 12/31/24. Criteria: Reporting. Same as finding #2024-001. Condition and context: The adjustment reported in Finding #2024-001 to update the value of food commodities increased the Emergency Food Assistance Program (TEFAP) distributions by approximately $14,000. Additionally, the exceptions reported as finding #2024-001 included one understated receipt of 4,360 pounds TEFAP commodities. Cause: Same as finding #2024-001. Effect: Failure to establish and maintain an adequate system of internal control over food commodities inventory tracking resulted in a misstatement in the SEFA. Recommendation: Same as finding #2024-001. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2024-006 – Eligibility – Material Weakness and Other Noncompliance. Applicable federal program: U. S. Department of Agriculture, Passed through The Houston Food Bank, Emergency Food Assistance Program – Food Commodities (Food Distribution Cluster), Assistance Listing #: 10.569, Contract Number: 30517, Contract Year: 01/01/24 – 12/31/24. Criteria: Eligibility – KCM is responsible for having internal control procedures over its client intake process to ensure that only eligible clients are provided with food assistance. Condition and context: In a sample of 40 clients served during the year, we noted nine served clients had no documentation to support their eligibility to receive food assistance. Effect: Failure to follow eligibility guidelines could result in the distribution of federal food commodities to ineligible households. Recommendation: Strengthen policies and procedures to ensure the documentation and retention of eligibility determinations. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.