Audit 330391

CONDITION: The District used local exemptions in procuring some of the costs related to its ESSER program. CRITERIA: The South Carolina Department of Education (“SDE”) had issued a memorandum (“Memorandum”) in August 2023 notifying school districts that local exemptions could not be used in procurement activities related to federal programs. If a school district wanted to use noncompetitive procurements, they would need to (a) meet the exceptions noted in this Memorandum and as more fully detailed in Office of Management and Budget (“OMB”) 2 CFR 200.320 or (b) request and receive an approved waiver from the SDE on the “Request for Noncompetitive Procurement Approval” form. CONTEXT AND EFFECT: The OMB’s 2024 compliance supplement did not list in the compliance matrix a requirement to test the “Procurement and Suspension and Debarment” compliance requirement for this program. However, the SDE required that this compliance requirement be tested. The District followed its approved procurement code which allowed the use of local exemptions for certain federal procurement activities. The District had received other communications from SDE staff that made them believe that following their procurement code was sufficient in procuring activities for this federal program. The District’s auditors tested approximately $14,150,000 in key items related to the ESSER program and noted one procurement of approximately $522,000 where the District used a local exemption. The District’s auditors tested a random sample of other ESSER expenditures and noted sixteen procurements totaling approximately $810,000 where the District used local exemptions. The amount of known procurements extrapolated to the remaining random population resulted in potential noncompetitive procurements of approximately $1,830,000. The actual known or likely questioned costs is not determinable – as it would be less than the total potential noncompetitive procurements. CAUSE: The District was not fully aware that using its local exemptions as provided for in its procurement code was not allowable for federal purchases in this program. RECOMMENDATION: We recommend that the District ensure that procurements related to federal programs do not use local exemptions and that these procurements provide for full and open competition. RESPONSE: The District agrees with this finding and will adhere to the corrective action plan on page 136 in this audit report.

CONDITION: The District used local exemptions in procuring some of the costs related to its ESSER program. CRITERIA: The South Carolina Department of Education (“SDE”) had issued a memorandum (“Memorandum”) in August 2023 notifying school districts that local exemptions could not be used in procurement activities related to federal programs. If a school district wanted to use noncompetitive procurements, they would need to (a) meet the exceptions noted in this Memorandum and as more fully detailed in Office of Management and Budget (“OMB”) 2 CFR 200.320 or (b) request and receive an approved waiver from the SDE on the “Request for Noncompetitive Procurement Approval” form. CONTEXT AND EFFECT: The OMB’s 2024 compliance supplement did not list in the compliance matrix a requirement to test the “Procurement and Suspension and Debarment” compliance requirement for this program. However, the SDE required that this compliance requirement be tested. The District followed its approved procurement code which allowed the use of local exemptions for certain federal procurement activities. The District had received other communications from SDE staff that made them believe that following their procurement code was sufficient in procuring activities for this federal program. The District’s auditors tested approximately $14,150,000 in key items related to the ESSER program and noted one procurement of approximately $522,000 where the District used a local exemption. The District’s auditors tested a random sample of other ESSER expenditures and noted sixteen procurements totaling approximately $810,000 where the District used local exemptions. The amount of known procurements extrapolated to the remaining random population resulted in potential noncompetitive procurements of approximately $1,830,000. The actual known or likely questioned costs is not determinable – as it would be less than the total potential noncompetitive procurements. CAUSE: The District was not fully aware that using its local exemptions as provided for in its procurement code was not allowable for federal purchases in this program. RECOMMENDATION: We recommend that the District ensure that procurements related to federal programs do not use local exemptions and that these procurements provide for full and open competition. RESPONSE: The District agrees with this finding and will adhere to the corrective action plan on page 136 in this audit report.