Recent headlines surrounding the organization Feeding Our Future and alleged fraud in the State of Minnesota raise an important question for public agencies, grant recipients, and auditors alike:
Where were the auditors?
Because Feeding Our Future received more than $750,000 in federal grants, both a financial statement audit and a Uniform Guidance (Single Audit) would have been required and publicly available through the Federal Audit Clearinghouse. A search for those filings, however, did not locate any completed audits. Instead, the most detailed account of oversight failures appears in a June 2024 report from the Minnesota Office of the Legislative Auditor titled Minnesota Department of Education: Oversight of Feeding Our Future.
That report outlines a series of breakdowns that ultimately enabled what authorities allege was a $250 million fraud scheme, including significant deficiencies in audit oversight.
Rapid Growth and Escalating Risk
Beginning in 2017, Feeding Our Future became a sponsor organization for two federally funded programs, the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP). Payments to the organization grew dramatically:
2019: $1.4 million
2020: $4.8 million
2021: $140.3 million
2022: $98.4 million
Such rapid expansion should have triggered heightened scrutiny, particularly around internal controls, governance, and audit compliance.
Missed Warning Signs
In October 2020, the Minnesota Department of Education (MDE) notified Feeding Our Future that its 2019 audit was overdue. The organization responded that pandemic-related extensions pushed the deadline to December 31, 2020.
That same month, MDE reviewed Feeding Our Future’s 2021 CACFP application and noted serious concerns, including inadequate documentation of internal controls and a lack of dedicated accounting personnel. Despite these red flags, the application was approved.
When the December 31 deadline passed without submission of the required audit, MDE again sought information and ultimately designated the organization as seriously deficient. A copy of the 2019 audit was finally provided in late January 2021, but it raised additional concerns. The audit had not been uploaded to the Federal Audit Clearinghouse, was missing required elements, was conducted by an unlicensed auditor, and lacked basic contact information for the audit firm.
Escalating Deficiencies and Audit Failures
MDE again declared Feeding Our Future seriously deficient in March 2021 and initiated termination proceedings from the CACFP program. The organization responded by engaging a new auditor to redo the 2019 audit, though the engagement letter did not reference federal audit requirements.
In May 2021, yet another audit was submitted. That version still omitted required components, including sections addressing internal controls over financial reporting, compliance, and program-specific requirements under CACFP.
MDE did not contact the auditor regarding these deficiencies. Had it done so, the agency likely would have learned that the auditor failed to perform a sufficient risk assessment, did not adequately consider fraud risks, and did not conduct required inquiries of management and others.
In January 2023, the Minnesota Board of Accountancy concluded that the audit failed to comply with generally accepted auditing standards and contributed to the misappropriation of public funds. In May 2024, the Board revoked the CPA’s license, citing risk to the public.
Lessons for Governments, Grant Recipients, and Auditors
This case underscores several critical takeaways:
Stronger subrecipient oversight matters. Government agencies must carefully evaluate the operations and internal controls of organizations receiving pass-through federal funds.
Audits are essential safeguards. Independent audits remain one of the most effective tools for ensuring that public dollars are used as intended.
Compliance is nonnegotiable. Auditors of federally funded organizations must fully adhere to Uniform Guidance and professional standards.