SOUTHEAST TEXAS FOOD BANK, INC.

2024‐001 – TEFAP Reach and Resiliency Grant (ALN 10.568) United States Department of Agriculture, Passed through the Texas Department of Agriculture. Compliance – Office of Management and Budget Guidance for Grants and Agreements Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 Code Federal Regulations (CFR) Part 200 Procurement Standards (2 CFR 200). Criteria: The Food Bank is required to adhere to procurement guidelines reflected in the applicable state and federal regulations and conform to 2 CFR 200 procurement requirements. Condition and Context: The Food Bank did not follow Texas Department of Agriculture’s or the 2 CFR 200 required Methods of Procurement. Deviations include lack of adherence to required Formal Procurement Methods for purchases over the simplified acquisition threshold (SAT) (advertisement, sealed bids, etc.), specifically, competitive bidding for purchases over the SAT threshold. Cause: The Food Bank experienced turnover in key management positions. Sufficient training and transition of responsibilities, procurement policies and procedures applicable to compliance with 2 CFR 200 was not conducted until after the Organization entered into the contract with the vendor. Effect: The entity did not follow state and federal procurement requirements, consequently, purchases were made during 2024 that were not in compliance with state and federal requirements. Repeat Finding: See prior year finding 2023-001. Recommendation: Management should take steps to ensure that the Food Bank identifies, assigns responsibility, and adheres to procurement requirements for federal funding. If procurement requirements for a pass through entity and grantor differ, the more restrictive procurement requirements should be followed. View of Responsible Party: Management concurs with recommendation. See corrective action plan.

2024‐002 – TEFAP Reach and Resiliency Grant (ALN 10.568) United States Department of Agriculture, Passed through the Texas Department of Agriculture. Internal Control – Monitoring Criteria: Monitoring should be such that there is an assurance that control activities are being performed in a timely manner. Condition and Context: The policies and procedures in place during 2024 did not include proper monitoring of the program policies and procedures. Cause: The Food Bank experienced turnover in key management positions. Sufficient training and transition of responsibilities related to the monitoring of compliance with 2 CFR 200 was not conducted until after the Organization entered into the contract with the vendor. Effect: As a result of this lack of monitoring, deficiencies in Program Compliance including procurement and other instances of noncompliance that do not rise to the level of a finding were not recognized and corrected on a timely basis Repeat Finding: See prior year finding 2023-002. Recommendation: Management should consider implementation of a contemporaneous monitoring process over procurement with federal and state funding. View of Responsible Party: Management concurs with recommendation. See corrective action plan.

2023‐001 – COVID‐19 Coronavirus State and Local Recovery Funds – Food Bank Capacity Grant (ARPA) (ALN 21.027) United States Department of Agriculture, Passed through the Texas Department of Agriculture. Compliance – Office of Management and Budget Guidance for Grants and Agreements Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 Code Federal Regulations (CFR) Part 200 Procurement Standards (2 CFR 200). Criteria: The Southeast Texas Food Bank is required to adhere to procurement guidelines reflected in the applicable state and federal regulations and conform to 2 CRF 200 procurement requirements. Condition and Context: The Food Bank did not follow Texas Department of Agriculture’s or the 2 CFR 200 required Methods of Procurement. Deviations include lack of adherence to required Formal Procurement Methods for purchases over the simplified acquisition threshold (SAT) (advertisement, sealed bids, etc.), competitive bidding for purchases over the SAT threshold, unavailable supporting documents demonstrating compliance with Small Purchase Procedures for purchases over the micro purchase threshold and under the SAT, and formal procurement requirements and other instances of noncompliance that do not rise to the level of a finding. Cause: Southeast Texas Food Bank experienced turnover in key management positions. Sufficient training and transition of responsibilities, procurement policies and procedures applicable to compliance with 2 CRF 200 was not conducted. Effect: The entity did not follow state and federal procurement requirements, consequently, purchases were made during 2023 that were not in compliance with state and federal requirements. Repeat Finding: See prior year finding 2022-001. Recommendation: Management should take steps to ensure that the Food Bank identifies, assigns responsibility, and adheres to procurement requirements for federal funding. If procurement requirements for a pass through entity and grantor differ, the more restrictive procurement requirements should be followed. View of Responsible Party: Management concurs with recommendation. See corrective action plan.

2023‐002 – COVID‐19 Coronavirus State and Local Recovery Funds – Food Bank Capacity Grant (ARPA) (ALN 21.027) United States Department of Agriculture, Passed through the Texas Department of Agriculture. Internal Control – Monitoring Criteria: Monitoring should be such that there is an assurance that control activities are being performed in a timely manner. Condition and Context: The policies and procedures in place during 2023 did not include proper monitoring of the program policies and procedures. Cause: Southeast Texas Food Bank experienced turnover in key management positions. Sufficient training and transition of responsibilities related to the monitoring of compliance with 2 CRF 200 was not conducted. Effect: As a result of this lack of monitoring, deficiencies in Program Compliance including procurement and other instances of noncompliance that do not rise to the level of a finding were not recognized and corrected on a timely basis Repeat Finding: See prior year finding 2022-002. Recommendation: Management should consider implementation of a contemporaneous monitoring process over procurement with federal and state funding. View of Responsible Party: Management concurs with recommendation. See corrective action plan.