God's Pantry Food Bank, Inc. Financial Statements Years Ended … · 2020. 12. 23. · Independent...

God's Pantry Food Bank, Inc.

Financial Statements

Years Ended June 30, 2020 and 2019

God's Pantry Food Bank, Inc.Table of ContentsYears Ended June 30, 2020 and 2019

Page

Independent Auditor's Report ......................................................................................................................... 1 - 2


Statements of Financial Position................................................................................................................ 3

Statements of Activities ............................................................................................................................. 4 - 5

Statements of Functional Expenses............................................................................................................ 6 - 7

Statements of Cash Flows.......................................................................................................................... 8

Notes to the Financial Statements ............................................................................................................. 9 - 23

Supplementary Information

Schedule of Expenditures of Federal Awards............................................................................................ 24

Notes to the Schedule of Expenditures of Federal Awards........................................................................ 25 - 26

Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................................................................ 27 - 28

Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with the Uniform Guidance ....................................................................................................................................... 29 - 30

Schedule of Findings and Questioned Costs................................................................................................... 31 - 32

Schedule of Prior Audit Findings and Their Resolution................................................................................. 33

Independent Auditor's Report

To the Board of DirectorsGod's Pantry Food Bank, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of God's Pantry Food Bank, Inc. (a non-profit organization)which comprise the statements of financial position as of June 30, 2020 and 2019, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor 's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independent Auditor's Report (Continued)

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of God's Pantry Food Bank, Inc. as of June 30, 2020 and 2019, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matter - Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards for the year ended June 30, 2020 is presented for purposes of additional analysis as required by the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance") and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2020 on our consideration of God's Pantry Food Bank, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of God's Pantry Food Bank, Inc.'s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering God's Pantry Food Bank, Inc.'s internal control over financial reporting and compliance.

Lexington, KentuckyNovember 17, 2020

See accompanying notes.-3-


Statements of Financial Position

June 30, 2020 and 2019

2020 2019

Assets

Current assets

Cash and cash equivalents 5,930,631$ 2,154,606$

Certificates of deposit 643,144 315,853

Accounts and other receivables, net 628,397 608,850

Unconditional promises to give, current portion 20,000 10,000

Inventory 5,573,020 4,376,865

Other current assets 4,015 51,582

Total current assets 12,799,207 7,517,756

Investments 125,597 120,934

Unconditional promises to give, net, less current portion 43,899 17,462

Property and equipment, net 3,886,001 3,881,960

Total assets 16,854,704$ 11,538,112$

Liabilities and net assets

Current liabilities

Accounts payable 324,421$ 174,441$

Accrued expenses and other current liabilities 540,254 337,334

Paycheck Protection Program loan, current portion 225,244 -

Capital lease obligations, current portion 46,935 -

Total current liabilities 1,136,854 511,775

Non-current liabilities

Paycheck Protection Program loan, less current portion 281,556 -

Capital lease obligations, less current portion 164,925 -

Total non-current liabilities 446,481 -

Total liabilities 1,583,335 511,775

Net assets

Without donor restrictions

Undesignated 14,753,366 10,807,703

Board designated endowment 4,506 4,654

14,757,872 10,812,357

With donor restrictions

Time or purpose restrictions 433,497 133,980

Perpetual in nature 80,000 80,000

513,497 213,980

Total net assets 15,271,369 11,026,337

Total liabilities and net assets 16,854,704$ 11,538,112$



Statement of Activities

Year Ended June 30, 2020

Without donor With donor

restrictions restrictions Total

Revenues and other support

Contributions and non-federal grants 5,675,939$ 1,425,328$ 7,101,267$

Federal funding 3,005,981 - 3,005,981 Donated food 24,078,457 - 24,078,457

USDA commodities 29,003,369 - 29,003,369

Program service fees 964,653 - 964,653

In-kind contributions 42,217 - 42,217

Other income 1,512 - 1,512

Income from investments 15,539 2,217 17,756

Net unrealized and realized gains

(losses) on investments (612) 2,594 1,982

62,787,055 1,430,139 64,217,194

Net assets released from restrictions due to

Satisfaction of time or purpose restrictions 1,110,822 (1,110,822) -

Capital asset purchases 19,800 (19,800) -

Total revenues and other support 63,917,677 299,517 64,217,194

Expenses

Program services 57,989,330 - 57,989,330

Management and general 938,352 - 938,352

Fundraising 1,044,480 - 1,044,480

Total expenses 59,972,162 - 59,972,162

Change in net assets 3,945,515 299,517 4,245,032

Net assets, beginning of year 10,812,357 213,980 11,026,337

Net assets, end of year 14,757,872$ 513,497$ 15,271,369$



Statement of Activities


Without donor With donor

restrictions restrictions Total

Revenues and other supportContributions and non-federal grants 3,141,089$ 510,105$ 3,651,194$

Federal funding 1,927,300 - 1,927,300

Donated food 26,338,774 - 26,338,774

USDA commodities 23,762,236 - 23,762,236

Program service fees 1,093,208 - 1,093,208

Special event revenue, net of direct

costs of $45,637 133,686 - 133,686

In-kind contributions 60,243 - 60,243

Other income 5,197 - 5,197

Income from investments 12,887 2,109 14,996

Net unrealized and realized gains

(losses) on investments (577) 7,717 7,140

56,474,043 519,931 56,993,974

Net assets released from restrictions due to

Satisfaction of time or purpose restrictions 646,028 (646,028) -

Capital asset purchases 74,466 (74,466) -

Total revenues and other support 57,194,537 (200,563) 56,993,974

Expenses

Program services 54,481,716 - 54,481,716

Management and general 728,066 - 728,066

Fundraising 818,659 - 818,659

Total expenses 56,028,441 - 56,028,441

Change in net assets 1,166,096 (200,563) 965,533

Net assets, beginning of year 9,646,261 414,543 10,060,804

Net assets, end of year 10,812,357$ 213,980$ 11,026,337$


God's Pantry Food Bank, Inc.Statement of Functional Expenses Year Ended June 30, 2020

Program Management

services and general Fundraising Total

Compensation and related expenses 2,511,091$ 710,178$ 416,204$ 3,637,473$

Distribution of food/USDA commodities 54,157,926 - - 54,157,926

Freight 194,782 - - 194,782

Vehicles expense 312,781 5,028 4,297 322,106

Utilities, telephone, and internet 152,113 22,965 23,345 198,423

Postage and direct mailings 2,288 904 253,716 256,908

Office and other equipment/supplies expense 58,824 13,984 28,016 100,824

Computer services and other related expenses 18,001 18,000 18,546 54,547

Printing 9,126 586 7,448 17,160

Memberships and subscriptions 15,518 17,226 907 33,651

Meetings, conferences, and travel 11,964 4,263 1,938 18,165

Repairs, maintenance, and other related expenses 109,351 26,169 3,604 139,124

Property and other insurance 27,693 5,481 884 34,058

Depreciation 398,007 22,111 22,111 442,229

Professional and consulting fees 12,664 71,075 36,864 120,603

Advertising and promotional costs 2,104 17,421 1,356 20,881

Other expenses 401 2,961 225,244 228,606

Bad debts (recoveries) (5,304) - - (5,304)

Totals 57,989,330$ 938,352$ 1,044,480$ 59,972,162$

Supporting services


God's Pantry Food Bank, Inc.Statement of Functional Expenses


Program Management

services and general Fundraising Total

Compensation and related expenses 2,166,825$ 524,384$ 566,726$ 3,257,935$

Distribution of food/USDA commodities 50,702,398 - - 50,702,398

Freight 403,913 - - 403,913

Vehicles expense 281,115 4,951 3,515 289,581

Utilities, telephone, and internet 126,217 21,009 21,362 168,588

Postage and direct mailings 982 401 129,582 130,965

Office and other equipment/supplies expense 174,954 6,448 43,316 224,718

Computer services and other related expenses 22,486 22,485 23,166 68,137

Printing 15,895 61 - 15,956

Memberships and subscriptions 17,225 24,309 2,451 43,985

Meetings, conferences, and travel 8,867 17,293 1,544 27,704

Repairs, maintenance, and other related expenses 83,453 24,201 3,011 110,665

Property and other insurance 29,747 4,996 949 35,692

Depreciation 368,943 20,497 20,497 409,937

Professional and consulting fees 19,955 45,909 45,647 111,511

Advertising and promotional costs 1,810 8,211 2,530 12,551

Other expenses 15,120 2,911 - 18,031

Bad debts 41,811 - - 41,811

54,481,716 728,066 864,296 56,074,078

Expenses included with revenues and

other support - - (45,637) (45,637)

Totals 54,481,716$ 728,066$ 818,659$ 56,028,441$

Supporting services


God's Pantry Food Bank, Inc.Statements of Cash FlowsYears Ended June 30, 2020 and 2019

2020 2019

Cash flows from operating activities

Change in net assets 4,245,032$ 965,533$

Adjustments to reconcile change in net assets to net cash

provided by (used in) operating activities

Provision for dad debts 380 26,311

Provision for (recoveries of) uncollectible unconditional promises to give (5,684) 15,500

Non-cash receipts of donated food and USDA commodities inventory (53,081,826) (50,101,010)

Non-cash distributions of donated food and USDA commodities inventory 52,445,376 48,669,453

Donated investments (50,188) (73,189)

Net unrealized and realized gains on investments (1,982) (7,140)

Contributions and non-federal grants restricted for purchases of

property/equipment (19,800) (6,994)

Donated property/equipment - (24,325)

Depreciation 442,229 409,937

Changes in assets and liabilities

Accounts and other receivables (13,863) (373,636)

Unconditional promises to give (36,817) 15,377

Inventory (559,705) 70,762

Other current assets 47,567 (30,504)

Accounts payable 149,980 33,979

Accrued expenses and other current liabilities 202,920 25,222

Net cash provided by (used in) operating activities 3,763,619 (384,724)

Cash flows from investing activities

Proceeds from sales of investments 50,188 73,131

Net (purchases) redemptions of certificates of deposit (327,291) 44,817

Purchases of investments (2,681) (2,737)

Purchases of property/equipment (222,912) (215,717)

Net cash used in investing activities (502,696) (100,506)

Cash flows from financing activities

Proceeds from contributions and non-federal grants restricted

for purchases of property/equipment 19,800 6,994

Proceeds from Payroll Protection Program loan 506,800 -

Payments on capital lease obligations (11,498) -

Net cash provided by financing activities 515,102 6,994

Change in cash and cash equivalents 3,776,025 (478,236)

Cash and cash equivalents, beginning of year 2,154,606 2,632,842

Cash and cash equivalents, end of year 5,930,631$ 2,154,606$

Supplemental disclosures

Cash paid for interest 1,290$ -$

In-kind contributions 42,217 60,243

Purchases of property/equipment financed with capital leases 223,358 -

God's Pantry Food Bank, Inc.Notes to the Financial StatementsYears Ended June 30, 2020 and 2019

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Note A - Nature of Organization and Operations

God's Pantry Food Bank, Inc. (the "Food Bank" or "GPFB") is a non-profit organization which was founded in 1955. The mission of GPFB is to reduce hunger in Kentucky through community cooperation, making the best possible use of all available resources. As a member of both Feeding America, a nationwide network of food banks and the leading domestic hunger-relief charity throughout the United States, and Feeding Kentucky, a partner of Feeding America in the state of Kentucky (see also Note R), GPFB distributes food and grocery products, strives to increase public awareness of domestic hunger, and advocates for policies that benefit hungry Americans. In addition to its Lexington, Kentucky facility, GPFB operates a warehouse in Winchester, Kentucky, as well as distribution centers in London, Kentucky, Morehead, Kentucky, and Prestonsburg, Kentucky. GPFB is primarily supported by contributions/grants, including federal funding and the receipts of food, including U.S. Department of Agriculture commodities.

During 2020, GPFB distributed approximately 41 million pounds of food, including approximately 10 million pounds of fresh produce, through its approximately 400 partner agencies and programs, serving a 50-county service area in central and eastern Kentucky.

Note B - Summary of Significant Accounting Policies

1. Basis of Accounting: The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Accounting Standards Codification ("ASC") as produced by the Financial Accounting Standards Board ("FASB") is the sole source of authoritative GAAP.

2. Basis of Presentation: The accompanying financial statements are presented in accordance with the ASC. Under the provisions set forth therein, net assets, revenues, gains (losses), and other support are classified based on the existence or absence of donor-imposed restrictions as follows:

Net Assets Without Donor Restrictions: Net assets that are not subject to donor-imposed restrictions and may be expended for any purpose in performing the primary objectives of the Food Bank. These net assets may be used at the discretion of the Food Bank's management and the Board of Directors. From time to time, the Board of Directors designates a portion of these net assets for specific purposes which make them unavailable for use at management's discretion.

Net Assets With Donor Restrictions: Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the Food Bank or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds must be maintained in perpetuity.

3. Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

4. Cash and Cash Equivalents: For purposes of the statement of cash flows, the Food Bank considers all highly liquid instruments, not designated for investment purposes, with a maturity when purchased of three months or less to be cash equivalents.

5. Certificates of Deposit: Certificates of deposit are carried at cost adjusted for accumulated interest earned through year-end.

God's Pantry Food Bank, Inc.Notes to the Financial Statements (Continued) Years Ended June 30, 2020 and 2019

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Note B - Summary of Significant Accounting Policies (Continued)

6. Accounts and Other Receivables: Accounts receivable are recorded at net invoice amounts and are typically due 30 days after the date of the transaction in accordance with the underlying payment terms. A receivable is considered past due if payment has not been received within the stated terms. The Food Bank generally does not require collateral and does not accrue interest on accounts receivable. When applicable, the Food Bank provides an allowance for doubtful accounts based on historical collection experience and a review of the current status of existing receivables. The allowance represents an amount, which, in management's judgment, will be adequate to absorb future losses on existing receivables that may become uncollectible. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to the receivable. The allowance for doubtful accounts totals $2,621 and $3,001 at June 30, 2020 and 2019, respectively.

7. Unconditional Promises to Give: Unconditional promises to give (a pledge) expected to be collected within one year are reported at their net realizable value. Unconditional promises to give expected to have collection periods in excess of a year are recorded after discounting such amounts to the present value of future cash flows using a risk-free interest rate. The related allowance, an estimated amount, which, in management's judgment, is considered to be adequate to absorb future losses on pledges that may become uncollectible, is generally based on historical collection experience and a review of the current status of each individual pledge.

8. Inventory: Inventory consists of food that has been donated, U.S. Department of Agriculture ("USDA") commodities passed-through to the Food Bank by the Kentucky Department of Agriculture Division of Food Distribution, and food purchased by the Food Bank. Donated food, donated produce, and USDA commodities inventory (see also Note G) are valued at an approximate average wholesale value of one pound of donated product based on an annual study performed by Feeding America. Purchased food inventory is valued at cost determined on a first-in, first-out basis.

9. Investments: The Food Bank carries investments in marketable securities with readily determinable fair values and all investments in debt securities at their fair values, as determined by quoted market prices.

Investment income on donor-imposed restricted investments is reported as support without donor restriction if the restriction is met in the same period the income is received or earned. Unrealized and realized gains and losses are included in the change in net assets on the accompanying statements of activities.

All investment securities are subject to the risks common to financial markets, including interest rate risk, credit risk, and overall market risk. Due to the level of risk associated with all investments, it is at least reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported on the accompanying financial statements.

Investments are monitored by the Food Bank's Board of Directors. Though the market value of investments is subject to fluctuations on a year-to-year basis, management believes the Food Bank's investment policies are prudent for the long-term welfare of the Food Bank.

10. Property and Equipment: Property and equipment is stated at cost at the date of acquisition or estimated fair value at the date of donation in the case of gifts.

The Food Bank capitalizes all expenditures for fixed assets which are in excess of $1,000. Depreciation is computed on the straight-line basis over the estimated useful lives of the fixed assets, which range from three to forty years. Repairs and maintenance that do not improve or extend the useful lives of the respective fixed assets are expensed as incurred.


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11. Revenue Recognition: The Food Bank adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), as of and for the year ended June 30, 2020. ASU 2014-09 was adopted using the modified retrospective method. The Food Bank applied the provisions of ASU 2014-09 to all contracts with customers at the July 1, 2019 effective date and all contracts with customers entered into thereafter. The Food Bank has not recorded any material impact related to the adoption of ASU 2014-09. The adoption of ASU 2014-09 however results in an increased level of note disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the Food Bank's contracts with customers.

The Food Bank's primary sources of revenue/support are contributions and grants (see Note B.12.), including Federal funding, revenue from the receipts of donated food and USDA commodities (see Notes B.12. and G), and program service fees revenue (see Note B.13.). Contributions and grants revenue, as well as income from investments and net unrealized and realized gains/losses on investments, is scoped out of ASU 2014-09.

The Food Bank also adopted ASU 2018-08, Not-for-Profit Entities (Topic 605): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made ("ASU 2018-08"), as of and for the year ended June 30, 2020. ASU 2018-08 was adopted using the modified prospective method. ASU 2018-08 provides guidance with respect to (1) evaluating whether transactions should be accounted for as contributions (non-reciprocal transactions) within the scope of ASC Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance, and (2) determining whether a contribution is conditional. The Food Bank has not recorded any material impact related to the adoption of ASU 2018-08.

12. Contributions and Grants: The Food Bank recognizes contributions when cash/cash equivalents, investments, or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions are recorded at fair value when received. An unconditional promise to give (see Note B.7.) is recognized in the year the respective pledge is made. Conditional promises to give, that is, those with a measurable performance or other barrier and a right of return, are not recognized until the conditions on which they depend have been met.

A portion of the Food Bank's revenue is derived from cost-reimbursable federal grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Such federal funding consists principally of the funding received under the Commodity Supplemental Food Program ("CSFP") and the Emergency Food Assistance Program ("TEFAP"). The Food Bank receives and distributes commodities it receives from the U.S. Department of Agriculture ("USDA") under CSFP and TEFAP. Both federal programs are administered at the state level by the Kentucky Department of Agriculture Division of Food Distribution ("Division"). Generally each month the Division reimburses the Food Bank for the costs (not to exceed the total amount of costs under each program approved for a two-year period to the extent funds are available at the state level) associated with warehousing, transporting, and distributing such commodities based on the number of CSFP recipients served or the number of pounds of TEFAP food distributed. Amounts received are recognized as revenue when the Food Bank has incurred expenditures in compliance with the specific grant or contract provisions.

Contributions and grants received without donor stipulations are reported as revenue and net assets without donor restrictions. Contributions and grants received with donor stipulations that limit their use are reported as revenue and net assets with donor restrictions. Contributions or grants which impose restrictions that are met in the same fiscal year the contribution or grant is received are included in revenue without donor restrictions. When a donor stipulated time restriction ends or the purpose of the restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported on the accompanying statements of activities as net assets released from restrictions. The Food Bank reflects the non-cash donations of food and USDA commodities as support without donor restrictions.


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13. Shared Maintenance and Purchased Product Revenue: The Food Bank works in partnership with several 501(c)(3) organizations in order to reach its 50-county service area. These partner agencies support the operation of the Food Bank by paying up to a $.19 per pound service fee with respect to the donated product such agencies receive. This service fee is collected to offset a portion of the costs incurred by the Food Bank to warehouse, handle, and transport such product. The Food Bank recognizes the services fee as shared maintenance revenue at the point in time when such product is distributed to and received by the agency.

Purchased product is also available through the cooperative buying program ("COOP"). This includes items seldom donated, but that partner agencies request to be stocked. COOP product is priced at cost plus up to a 10% mark-up to cover the costs incurred by the Food Bank to warehouse, handle, and transport such product. The Food Bank recognizes the purchased product revenue at the point in time when such product is distributed to and received by the agency.

Shared maintenance and purchased product revenue is included in program service fees revenue on the accompanying statements of activities.

14. Special Event Revenue: The Food Bank typically (due to the Global Novel Coronavirus Disease 2019, the event was canceled with respect to the year ended June 30, 2020; see also Note T) holds its annual Taste of the Bluegrass event. Special event revenue is recognized at the point in time when the event occurs and the related performance obligations are satisfied. Special event revenue is reported net of the applicable direct costs on the accompanying statements of activities.

15. In-kind Contributions: Donated services are recognized as contributions if the services (a) create or enhance non-financial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Food Bank. No amounts are recorded for the volunteers who have donated their time to the Food Bank throughout the year since the recognition criterion is not met, (see also Note P).

16. Freight Costs: Freight costs, the costs associated with having donated and purchased food delivered to its warehouse, are expensed by the Food Bank as incurred. Such costs total $194,782 and $403,913 for the years ended June 30, 2020 and 2019, respectively.

17. Advertising and Promotional Costs: The Food Bank expenses advertising and related promotional costs as incurred. Such costs total $20,881 and $12,423 for the years ended June 30, 2020 and 2019, respectively.

18. Functional Allocation of Expenses: The costs of providing various programs and other activities are summarized on a functional basis on the accompanying statements of functional expenses. Directly identifiable expenses are charged to the applicable programs and supporting services. Expenses related to more than one function are allocated among the programs and supporting services benefited based on a reasonable allocation of either time and effort (compensation and related expenses) or square footage (utilities, telephone, and internet; repairs, maintenance, and other related expenses; property and other insurance; depreciation). Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Food Bank.

19. Income Taxes: The Food Bank has been granted exempt status by the Internal Revenue Service under Internal Revenue Code Section 501(c)(3) as a non-profit organization that is not a private foundation.

When applicable, the Food Bank recognizes uncertain income tax positions using the "more-likely-than-not"approach as defined in the ASC. No such uncertain tax positions have been reflected on the accompanying financial statements.

20. Subsequent Events: The Food Bank has evaluated events occurring subsequent to year-end through the date of the Independent Auditor's Report, the date the accompanying financial statements were available to be issued.


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21. Recent Accounting Pronouncements: In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires all leases with lease terms over 12 months to be capitalized as a right-of-use asset and lease liability on the balance sheet at the date of lease commencement. Leases will be classified as either finance or operating. This distinction will be relevant for the pattern of expense recognition in the statement of activities. This standard will be effective for the fiscal year ending June 30, 2023.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the statement of activities will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard will be effective for the fiscal year ending June 30, 2024.

The Food Bank is currently evaluating the impact of adoption of ASU 2016-02 and ASU 2016-13 on the financial statements.

Note C - Liquidity and Availability of Resources

The Food Bank has a goal to maintain financial assets as part of its liquidity management. These assets generally consist of cash/cash equivalents, certificates of deposit, money market accounts, and various short-term investments. As described in Note M, the Food Bank has a $400,000 line of credit which is also available to meet liquidity needs.

The Food Bank's endowment funds consist of donor-restricted endowments that are not available for general expenditure. In the event of an unanticipated liquidity need, the Food Bank could draw upon its Board designated endowment net assets.

Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the statement of financial position date, are as follows at June 30, 2020 and 2019:

2020 2019

Financial assetsCash and cash equivalents 5,930,631$ 2,154,606$

Certificates of deposit 643,144 315,853Accounts and other receivables 628,397 608,850Unconditional promises to give, net 63,899 27,462Investments 125,597 120,934

Total financial assets 7,391,668 3,227,705

Less amounts not available to be used within one year orwithout board approval

Non-current portion of unconditional promises to give, net 43,899 17,462

Board designated endowment 4,506 4,654Endowment net assets to be maintained in perpetuity 80,000 80,000

Total financial assets not available to be used within one year or without board approval 128,405 102,116

Total financial assets available for general expenditure within one year 7,263,263$ 3,125,589$


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Note D - Concentrations

At various times throughout the year the Food Bank may maintain balances, including with respect to certificates of deposit, in excess of federally insured limits.

For the year ended June 30, 2020, 83% of total revenues and other support consists of the revenue from donated food and USDA commodities received (38% and 45%, respectively). For the year ended June 30, 2019, 88% of total revenues and other support consists of the revenue from donated food and USDA commodities received (46% and 42%, respectively).

Note E - Certificates of Deposit

At June 30, 2020 and 2019, certificates of deposit are as follows:

2020 2019

Maturing within one year

First National Bank (0.60%; matured July 2019) -$ 255,842$

Central Bank (2.32%; matured June 2020) - 60,011

First National Bank (0.40%; matures July 2020) 123,996 -

Fifth Third Bank (1.24%; matures July 2020) 71,330 -

Bank of the Bluegrass (1.75%; matures February 2021) 200,000 -

Central Bank (0.16%; matures June 2021) 247,818 -

643,144$ 315,853$

Note F - Unconditional Promises to Give, Net

At June 30, 2020 and 2019, net unconditional promises to give consist of the following:

2020 2019

Estimated to be collected in less than one year 20,000$ 10,000$

Estimated to be collected in one to five years 50,000 25,000

70,000 35,000

Less discounts to net present value (6,101) (1,854)

Less allowance - (5,684)

Unconditional promises to give, net 63,899 27,462

Less current portion (20,000) (10,000)

Unconditional promises to give, net, less current portion 43,899$ 17,462$

The discount rate with respect to outstanding unconditional promises to give which are estimated to be collected in one to five years is 5.00%.


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Note G - Inventory

At June 30, 2020 and 2019, inventory consists of the following:

2020 2019

USDA commodities 3,938,222$ 3,430,031$

Donated food 947,182 632,828

Purchased food 687,616 314,006

5,573,020$ 4,376,865$

The majority of the food that is distributed by the Food Bank has either been donated or has been received from the USDA under federal financial assistance programs (see also Note D).

The approximate average wholesale value of one pound of USDA commodities at the national level was determined by Feeding America to be $1.49 and $1.52 for the years ended June 30, 2020 and 2019, respectively. The approximate average wholesale value of one pound of donated food at the national level was determined by Feeding America to be $1.74 and $1.62 for the years ended June 30, 2020 and 2019, respectively. The approximate average wholesale value of one pound of donated produce at the national level was determined by Feeding America to be $0.70 and $0.78 for the years ended June 30, 2020 and 2019, respectively. Revenue from donated food, donated produce, and USDA commodities received, as well as the related values of donated food, donated produce, and USDA commodities distributed and undistributed donated food, donated produce, USDA commodities inventory as of year-end, are estimated by valuing the respective number of pounds at the per pound value provided by Feeding America.

The following table presents a summary of the number of pounds and the estimated values of donated food (excluding produce) received and distributed during the years ended June 30, 2020 and 2019:

Pounds Value Pounds Value

Received 9,684,920 16,851,761$ 10,106,559 16,372,626$

Distributed 9,627,870 16,752,494$ 10,432,691 16,900,959$

2020 2019

The following table presents a summary of the number of pounds and the estimated values of donated produce received and distributed during the years ended June 30, 2020 and 2019:


Received 10,323,852 7,226,696$ 12,777,113 9,966,148$

Distributed 10,373,022 7,261,115$ 12,790,665 9,976,719$

2020 2019


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Note G - Inventory (Continued)

The Food Bank receives and distributes commodities it receives from the USDA under CSFP and TEFAP. Both federal programs are administered at the state level by the Division. The USDA commodities are actually passed-through to the Food Bank by the Division to be distributed to the intended recipients.

CSFP provides a monthly box of nutritious food products to elderly persons of at least sixty years of age. The food received under TEFAP is designated for non-profit agencies serving low-income individuals and families through their emergency meal and pantry programs. Generally, each month the Division reimburses the Food Bank for the costs (not to exceed the total amount of costs under each program approved for a two-year period to the extent funds are available at the state level) associated with storing, transporting, and distributing these products based on the number of CSFP recipients served or the number of pounds of TEFAP food distributed.

The following table presents a summary of the number of pounds and the estimated values of USDA commodities received and distributed during the years ended June 30, 2020 and 2019:


Received 19,465,348 29,003,369$ 15,633,050 23,762,236$

Distributed 19,081,723 28,431,767$ 14,336,694 21,791,775$

2020 2019

Note H - Investments

At June 30, 2020 and 2019, investments are as follows:

2020 2019

Vanguard 500 index fund 44,636$ 41,534$

Vanguard total bond market index fund 27,359 25,109

Vanguard mid-cap index fund 18,229 18,266

Vanguard explorer fund 15,538 14,901

Vanguard REIT index fund 15,329 16,470

Bluegrass community foundation investment pool 4,506 4,654

125,597$ 120,934$


-17-

Note I - Property and Equipment, Net

At June 30, 2020 and 2019, net property and equipment consists of the following:

2020 2019

Land and buildings 4,963,894$ 4,950,302$

Warehouse equipment 2,376,273 2,211,636

Vehicles 2,083,126 1,866,644

Office furniture and equipment 544,491 488,527

Construction in progress - 4,405

9,967,784 9,521,514

Accumulated depreciation (6,081,783) (5,639,554)

3,886,001$ 3,881,960$

Depreciation expense totals $442,229 and $409,937 for the years ended June 30, 2020 and 2019, respectively.

Note J - Net Assets With Donor Restrictions

Net assets with donor restrictions subject to expenditure by specified time or purpose restriction at June 30, 2020 and 2019 are as follows:

2020 2019

COVID-19 117,332$ -$

Produce 95,000 -

Endowment net assets (see Note K) 41,091 36,280

Kids Café Program 40,000 10,000

Morehead Distribution Center 34,977 -

Fayette County Pantry Program 30,076 -

Healthcare Pantry 25,000 -

Retail Store Program 16,530 56,500

Agency support/food 14,991 -

Backpack Program 10,500 -

London Distribution Center 8,000 -

Supplemental Nutrition Assistance Program - 31,200

433,497$ 133,980$

Net assets with donor restrictions in perpetuity include contributions or grants, which require the corpus to be invested in perpetuity with the income thereon made available for operations in accordance with donor restrictions. Net assets with donor restrictions in perpetuity as of June 30, 2020 and 2019 consist of an $80,000 grant from the Steele-Reese Foundation, Inc. (see also Note K).


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Note K - Endowment Funds

In accordance with GAAP, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

Interpretation of Relevant Law

In approving endowment, spending, and other related policies, as part of the prudent and diligent discharge of its duties, GPFB's Board of Directors, as authorized by Kentucky law, has relied upon the actions, reports, information, advice, and counsel taken or provided by its duly constituted committees and the duly appointed officers of GPFB and in doing so has interpreted the law to require the preservation of the historic dollar value of donor restricted endowment funds, absent explicit donor direction to the contrary.

The portion of a donor restricted endowment fund that is not classified as restricted in perpetuity is classified as restricted by time until those amounts are appropriated for expenditure by GPFB in a manner consistent with the standard of prudence prescribed by the Uniform Prudent Management of Institutional Fund Act ("UPMIFA"). In accordance with UPMIFA, GPFB considers the following factors in making a determination to appropriate or accumulate donor restricted endowment funds:

The purposes of GPFB and the respective endowment fund The duration and preservation of endowment funds GPFB's investment policies The expected total return from income and the appreciation of investments GPFB's other resources General economic conditions The possible effect of inflation and deflation

Return Objectives and Risk Parameters

There are not separate investment policies relative to endowment funds. GPFB does, however, have investment policies, approved by the Board of Directors, for investments as a whole which address endowment funds. The Board of Directors has appointed a Finance Committee to execute its investment policies. The primary goals of the investment policies are to preserve principal, maximize return through income on investments and appreciation of capital within acceptable levels of investment risk, and to provide a liquid source of funds to support operations. The investment policies work to achieve these objectives.

Strategies Employed for Achieving Return Objectives

GPFB's strategic asset allocation provides for diversification among asset classes and the achievement of its investment objectives within the established risk tolerance parameters.

Spending Policy and How the Investment Objectives Relate to the Spending Policy

GPFB does not have a specific spending policy relative to endowment funds. The Finance Committee annually evaluates the cash needs of GPFB to determine whether any endowment fund investment proceeds should be allocated for operations.


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Note K - Endowment Funds (Continued)

At June 30, 2020, endowment net assets consist of the following:

Without donor Purpose

restriction restrictions In perpetuity Total

Board designated 4,506$ -$ -$ 4,506$

Donor restricted - 41,091 80,000 121,091

4,506$ 41,091$ 80,000$ 125,597$


Changes in endowment net assets during the year ended June 30, 2020 are as follows:



Endowment net assets, beginning of year 4,654$ 36,280$ 80,000$ 120,934$

Income from investments 119 2,217 - 2,336

Net unrealized and realized appreciation

(depreciation) (267) 2,594 - 2,327

Endowment net assets, end of year 4,506$ 41,091$ 80,000$ 125,597$


At June 30, 2019, endowment net assets consist of the following:



Board designated 4,654$ -$ -$ 4,654$

Donor restricted - 36,280 80,000 116,280

4,654$ 36,280$ 80,000$ 120,934$


Changes in endowment net assets during the year ended June 30, 2019 are as follows:



Endowment net assets, beginning of year 4,545$ 26,454$ 80,000$ 110,999$

Income from investments 138 2,109 - 2,247

Net unrealized and realized appreciation

(depreciation) (29) 7,717 - 7,688

Endowment net assets, end of year 4,654$ 36,280$ 80,000$ 120,934$



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Note L - Fair Value Measurements

The fair value provisions of the ASC define fair value, provide a framework for measuring fair value, and expand disclosures required for fair value measurements. They also establish a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels. These levels, in order of highest to lowest priority are described below.

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 1 includes the Food Bank's mutual funds. Mutual funds are valued at the net asset value of the shares held by the Food Bank at year-end.

Level 2: Observable inputs other than Level 1 such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 2 includes the Food Bank's investment pool assets. Investment pool assets are valued using the net asset value of the units held by the Food Bank at year-end.

Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Food Bank's own assumptions.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Food Bank believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table presents the balances of the assets measured at fair value on a recurring basis as of June 30, 2020:

Level 1 Level 2 Level 3 Total

Mutual funds 121,091$ -$ -$ 121,091$

Bluegrass Community

Foundation Investment Pool - 4,506 - 4,506

121,091$ 4,506$ -$ 125,597$

The following table presents the balances of the assets measured at fair value on a recurring basis as of June 30, 2019:

Level 1 Level 2 Level 3 Total

Mutual funds 116,280$ -$ -$ 116,280$

Bluegrass Community

Foundation Investment Pool - 4,654 - 4,654

116,280$ 4,654$ -$ 120,934$


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Note M - Bank Line of Credit

The Food Bank has an unsecured bank line of credit of up to an aggregate principal amount of $400,000 which matures December 2020. The line of credit bears interest at a variable interest rate equal to the Prime Rate less 0.50% subject to a floor of 4.25% (equivalent to an interest rate of 4.25% and 5.00% at June 30, 2020 and 2019, respectively). There were no borrowings under the line of credit during the years ended June 30, 2020 and 2019.

Note N - Payroll Protection Program Loan

In April 2020, GPFB received a Paycheck Protection Program ("PPP") loan under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act in the amount of $506,800. The loan bears interest at 1.00%, is uncollateralized/unsecured, and is for a term of two years with a maturity date of April 2022. Under the CARES Act, subject to limitations, as defined, the loan may partially or fully be forgiven depending on actual payroll and other qualified costs for a specified period following receipt of the loan proceeds.

GPFB is accounting for the loan proceeds as a financial liability (debt) in accordance with ASC Topic 470, Debt. As such, GPFB will continue to record the proceeds from the loan as a financial liability until either (1) the loan is partially or fully forgiven and GPFB has been legally released or (2) GPFB pays-off the loan. Management currently anticipates applying for the loan to be fully forgiven. To the extent the loan is not forgiven, the loan requires monthly payments of principal and interest of $28,511 beginning in November 2020. Accordingly, the $506,800 balance outstanding under the loan at June 30, 2020 is presented as a current ($225,244) and a non-current ($281,556) liability per the accompanying statement of financial position as of June 30, 2020.

Note O - Capital Lease Obligations

At June 30, 2020, the Food Bank is obligated under nine capital leases with respect to a vehicle and certain warehouse equipment. The monthly payments range from $90 to $2,720, with interest rates ranging from 1.00% to 5.99%. The terms of the respective leases end between May 2022 and November 2026. The respective vehicle and warehouse equipment is pledged as collateral for the leases.

At June 30, 2020, the future minimum lease payments under the capital leases and the net present value of the future minimum lease payments are as follows:

Year ending June 30

2021 46,935$ 2022 46,676 2023 44,342 2024 41,421 2025 32,638 Thereafter 23,261

Total future minimum lease payments 235,273

Less amount representing interest (23,413)

Total net present value of the future minimum lease payments 211,860$

Current portion 46,935 Non-current portion 164,925

211,860$


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Note O - Capital Lease Obligations (Continued)

Property and equipment under capital leases includes the following as of June 30, 2020:

Warehouse equipment 51,430$ Vehicles 171,928 Less accumulated depreciation (6,401)

216,957$

The amortization of the property and equipment under capital leases, which totals $6,401 for 2020, is included in depreciation expense in the accompanying financial statements.

Note P - In-kind Contributions

In-kind contributions revenue for the year ended June 30, 2020 and 2019 consists of the following:

2020 2019

Gift cards 15,017$ 5,625$

Vehicle maintenance 10,906 8,525

Professional services 5,985 4,453

Landscape maintenance 3,418 6,777

Facility rental 3,000 -

Building maintenance 2,210 7,860

Warehouse equipment 1,006 -

Supplies 675 -

Vehicles - 18,825

Office equipment - 6,978

Computer equipment - 1,200

42,217$ 60,243$

Note Q - Retirement Plan

The Food Bank has a 401(k) retirement plan (the "Plan") for its employees that meet the Plan's eligibility requirements. All employees are eligible on the first day of the calendar quarter after completing two full months of employment and are fully vested immediately. The Plan provides for both safe harbor and matching contributions by the Food Bank. The plan allows for a discretionary bonus contribution to employees that are employed on June 30th of the applicable plan year. Employees are eligible to make deferral contributions on the first day of the quarter following a two-full month waiting period. The Plan does not allow for participant loans but does allow hardship withdrawals. For the years ended June 30, 2020 and 2019, the Food Bank's contributions to the Plan total approximately $328,000 and $265,000, respectively.


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Note R - Related Party Transactions

GPFB is a member of Feeding Kentucky, a non-profit organization through which the seven member food banks serve all 120 Kentucky counties in partnership with a network of local food pantries and shelters. GPFB's Chief Executive Officer serves as a member of Feeding Kentucky's Board of Directors. During 2020 and 2019, GPFB paid dues to Feeding Kentucky totaling approximately $30,000 and $18,000, respectively.

Note S - Contingencies

Reimbursement claims under federal and/or state programs are subject to audit and adjustment by the respective grantor agencies. Any disallowed claims might become a liability of GPFB. Management is not aware of any communications from grantor agencies regarding the lack of compliance with requirements that could result in such a liability.

Note T - Global Novel Coronavirus Disease 2019

In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 ("COVID-19") outbreak a pandemic. Additionally, the United States Centers for Disease Control and Prevention confirmed the spread of COVID-19 throughout the United States. GPFB's operations have been impacted by the outbreak of COVID-19. Since the situation surrounding the pandemic remains fluid, the long-term duration, nature, and extent of the impact on GPFB's operations, if any, cannot be reasonably estimated at this time. See Note N regarding the April 2020 Payroll Protection Program loan under the CARES Act.

Supplementary Information

See accompanying independent auditor's report and notes to the schedule of expenditures of federal awards.

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God's Pantry Food Bank, Inc.Schedule of Expenditures of Federal AwardsYear Ended June 30, 2020

Federal Pass-through Non-cash Passed

Federal grantor/pass-through grantor/ CFDA entity Federal financial through to

cluster and/or program title number number expenditures assistance sub-recipients

U.S . Department of Agriculture

Passed through the Kentucky Department of Education

Child and Adult Care Food Program 10.558 11740 35,912$ 35,912$ 35,912$

Child Nutrition Cluster

Summer Food Service Program for Children 10.559 12021 36,093 36,093 36,093

Passed through the Kentucky Department of Agriculture

Food Distribution Cluster

Commodity Supplemental Food Program - Administrative Costs 10.565 N/A 904,388 - 17,362

Commodity Supplemental Food Program - Food Commodities 10.565 14000019782 7,569,038 7,569,038 7,569,038

The Emergency Food Assistance Program - Administrative Costs 10.568 N/A 1,577,828 - 31,125

The Emergency Food Assistance Program - Food Commodities 10.569 14000019711 20,862,730 20,862,730 20,862,730

Total Food Distribution Cluster 30,913,984 28,431,768 28,480,255

Supplemental Nutrition Assistance Program (SNAP) Cluster

State Administrative Matching Grants for SNAP 10.561 185KY40452519 16,806 - -

Trade Mitigation and Food Purchase Distribution Program 10.178 1900003666 454,600 - -

Total U.S. Department of Agriculture 31,457,395 28,503,773 28,552,260

U.S. Department of Homeland Security

Direct

Emergency Food and Shelter National Board Program 97.024 N/A 3,605 - -

Total expenditures of federal awards 31,461,000$

Total non-cash financial assistance 28,503,773$

Total amount distributed to sub-recipients 28,552,260$

God's Pantry Food Bank, Inc.Notes to the Schedule of Expenditures of Federal AwardsYear Ended June 30, 2020

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Note A - Basis of Presentation

The accompanying schedule of expenditures of federal awards (schedule) includes the federal awards activity of God's Pantry Food Bank, Inc. (the "Food Bank" or "GPFB") under programs of the federal government for the year ended June 30, 2020 in accordance with the requirements of Title 2 U. S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Because this schedule only presents a selected portion of the operations of the Food Bank, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Food Bank.

Note B - Summary of Significant Accounting Policies

Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U. S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowed or are limited as to reimbursement.

Food commodities are considered distributed when they are shipped to the agencies.

Note C - Food Distribution Cluster

Per the U.S. Office of Management and Budget, the Food Distribution Cluster consists of CFDA numbers 10.565, the Commodity Supplemental Food Program, 10.568, the Emergency Food Assistance Program-Administrative Costs, and 10.569, the Emergency Food Assistance Program-Food Commodities. Accordingly, this cluster has been treated as a single program in determining GPFB's major programs for the year ended June 30, 2020.

Note D - Non-cash Financial Assistance

The values of U.S. Department of Agriculture ("USDA") commodities received and distributed during the year, and the inventory value of undistributed USDA commodities as of year-end, are estimated by valuing the respective number of pounds of such food products at an approximate average wholesale value of one pound of donated product based on an annual study performed by Feeding America.

The amount of federal expenditures under the Commodity Supplemental Food Program (CFDA number 10.565) reported on the schedule of expenditures of federal awards for the year ended June 30, 2020 includes an estimate of non-monetary expenditures (distribution of USDA commodities) totaling $7,569,038.

The amount of federal expenditures under the Emergency Food Assistance Program (CFDA number 10.569) reported on the schedule of expenditures of federal awards for the year ended June 30, 2020 includes an estimate of non-monetary expenditures (distribution of USDA commodities) totaling $20,862,730.

Inventory per the accompanying statement of financial position as of June 30, 2020 includes an estimated inventory value of USDA food commodities in the amount of $3,938,222.

God's Pantry Food Bank, Inc.Notes to the Schedule of Expenditures of Federal Awards (Continued)Year Ended June 30, 2020

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Note E - Sub-recipients

During the year ended June 30, 2020, GPFB distributed a total of $28,431,768 (an estimate of non-monetary expenditures) of Commodity Supplemental Food Program (CFDA number 10.565) and Emergency Food Assistance Program (CFDA number 10.569) food commodities to sub-recipients (100% of the non-monetary USDA commodities distributed under both programs).

During the year ended June 30, 2020, GPFB provided $17,362 of its Commodity Supplemental Food Program (CFDA number 10.565) federal funding to Facing Hunger Foodbank to cover its costs associated with storing, transporting, and distributing food commodities provided to it by GPFB for distribution in four Kentucky counties.

During the year ended June 30, 2020, GPFB provided $31,125 of its Emergency Food Assistance Program Administrative Costs (CFDA number 10.568) federal funding to Facing Hunger Foodbank to cover its costs associated with storing, transporting, and distributing food commodities provided to it by GPFB for distribution in four Kentucky counties.

During the year ended June 30, 2020, GPFB provided $35,912 of its Child and Adult Care Food Program (CFDA number 10.558) food commodities to sub-recipients (100% of the non-monetary food commodities distributed under this program).

During the year ended June 30, 2020, GPFB provided $36,093 of its Summer Food Service Program for Children (CFDA number 10.559) food commodities to sub-recipients (100% of the non-monetary food commodities distributed under this program).

Note F - Indirect Cost Rate

GPFB has not elected to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.

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Independent Auditor's Report on Internal Control over Financial Reporting andon Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards


We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of God's Pantry Food Bank, Inc., which comprise the statement of financial position as of June 30, 2020, and the related statements of activities, functional expenses,and cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise God's Pantry Food Bank, Inc.'s basic financial statements, and have issued our report thereon dated November 17, 2020.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered God's Pantry Food Bank, Inc.'s internal control over financial reporting (internal control) to determine the audit pr ocedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of God's Pantry Food Bank, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness of God's Pantry Food Bank, Inc.'s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correctmisstatements on a timely basis. A material weakness is a deficiency, or a combination o f deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity 's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards (Continued)

Compliance and Other Matters

As part of obtaining reasonable assurance about whether God's Pantry Food Bank, Inc.'s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of God's Pantry Food Bank, Inc.'s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering God's Pantry Food Bank, Inc.'s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


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Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance in Accordance with the

Uniform Guidance


Report on Compliance for Each Major Federal Program

We have audited God's Pantry Food Bank, Inc.'s compliance with the types of compliance requirements described in the U.S. Office of Management and Budget Compliance Supplement that could have a direct and material effect on each of God's Pantry Food Bank, Inc.'s major federal programs for the year ended June 30, 2020. God's Pantry Food Bank, Inc.'s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of God's Pantry Food Bank, Inc.'s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about God's Pantry Food Bank, Inc.'s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of God's Pantry Food Bank, Inc.'s compliance.

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Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance in Accordance with the

Uniform Guidance (Continued)

Opinion on Each Major Federal Program

In our opinion, God's Pantry Food Bank, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020.

Report on Internal Control over Compliance

Management of God's Pantry Food Bank, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered God's Pantry Food Bank, Inc.'s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of God's Pantry Food Bank, Inc.'s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, non-compliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material non-compliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.


God's Pantry Food Bank, Inc.Schedule of Findings and Questioned CostsYear Ended June 30, 2020

-31-

Section I - Summary of Auditor's Results


Type of auditor's report issued: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? yes X no

Significant deficiency(ies) identified that arenot considered to be material weakness(es)? yes X none reported

Non-compliance material to the financial statements noted? yes X no

Federal Awards

Internal control over major programs:

Material weakness(es) identified? yes X no

Significant deficiency(ies) identified that arenot considered to be material weakness(es)? yes X none reported

Type of auditor's report issued on compliance for major federal programs: Unmodified

Any audit findings disclosed that are required to be reportedin accordance with section 516(a) of Uniform Guidance? yes X no

Identification of major federal programs:

Federal CFDA number Cluster and/or program title

Food Distribution Cluster

10.565 Commodity Supplemental Food Program10.568 The Emergency Food Assistance Program -

Administrative Costs10.569 The Emergency Food Assistance Program -

Food Commodities

God's Pantry Food Bank, Inc.Schedule of Findings and Questioned Costs (Continued)Year Ended June 30, 2020

-32-

Section I - Summary of Auditor's Results (Continued)

Federal Awards (Continued)

Dollar threshold used to distinguish between type A and type B programs: $750,000

Auditee qualified as a low-risk auditee? X yes no

Section II - Findings-financial Statement Audit

None

Section III - Findings and Questioned Costs-major Federal Award Program Audit

None

God's Pantry Food Bank, Inc.Schedule of Prior Audit Findings and Their ResolutionYear Ended June 30, 2020

-33-

Section I - Findings-Financial Statement Audit

None

Section II - Findings and Questioned Costs-major Federal Award Program Audit

None

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