FA 2024-001 Strengthen Controls over Transfers
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: $803,845.92
Description:
The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of
Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”
In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.”
Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.”
Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.”
Condition:
Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable.
Questioned Costs:
Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia
(O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer.
Recommendation:
The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures.
Views of Responsible Officials:
We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: $803,845.92
Description:
The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of
Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”
In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.”
Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.”
Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.”
Condition:
Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable.
Questioned Costs:
Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia
(O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer.
Recommendation:
The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures.
Views of Responsible Officials:
We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: $803,845.92
Description:
The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of
Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”
In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.”
Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.”
Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.”
Condition:
Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable.
Questioned Costs:
Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia
(O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer.
Recommendation:
The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures.
Views of Responsible Officials:
We concur with this finding.
FA 2024-002 Improve Controls over Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: None Identified
Description:
A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s suspension and debarment procedures were followed.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, Title 2 CFR Section 180.300 states in part that the non-Federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Condition:
A sample of 4 covered transactions was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and suspension and debarment compliance requirements were met. While auditors were able to determine that the vendor associated with three of these transactions were not suspended, debarred, or otherwise excluded, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction as required by the School District’s internal policies and procedures.
Cause:
The School District did not follow its policies and procedures that govern the suspension and debarment process for federal programs.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate implement procedures to address suspension and debarment compliance requirements exposes the School District to unnecessary risk of error or misuse of federal funds and could result in the expenditures of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that vendors are not suspended, debarred, or otherwise excluded prior to entering into covered transactions and required suspension and debarment documentation is properly retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
FA 2024-002 Improve Controls over Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: None Identified
Description:
A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s suspension and debarment procedures were followed.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, Title 2 CFR Section 180.300 states in part that the non-Federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Condition:
A sample of 4 covered transactions was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and suspension and debarment compliance requirements were met. While auditors were able to determine that the vendor associated with three of these transactions were not suspended, debarred, or otherwise excluded, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction as required by the School District’s internal policies and procedures.
Cause:
The School District did not follow its policies and procedures that govern the suspension and debarment process for federal programs.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate implement procedures to address suspension and debarment compliance requirements exposes the School District to unnecessary risk of error or misuse of federal funds and could result in the expenditures of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that vendors are not suspended, debarred, or otherwise excluded prior to entering into covered transactions and required suspension and debarment documentation is properly retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
FA 2024-002 Improve Controls over Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: None Identified
Description:
A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s suspension and debarment procedures were followed.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, Title 2 CFR Section 180.300 states in part that the non-Federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Condition:
A sample of 4 covered transactions was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and suspension and debarment compliance requirements were met. While auditors were able to determine that the vendor associated with three of these transactions were not suspended, debarred, or otherwise excluded, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction as required by the School District’s internal policies and procedures.
Cause:
The School District did not follow its policies and procedures that govern the suspension and debarment process for federal programs.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate implement procedures to address suspension and debarment compliance requirements exposes the School District to unnecessary risk of error or misuse of federal funds and could result in the expenditures of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that vendors are not suspended, debarred, or otherwise excluded prior to entering into covered transactions and required suspension and debarment documentation is properly retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: $803,845.92
Description:
The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of
Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”
In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.”
Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.”
Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.”
Condition:
Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable.
Questioned Costs:
Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia
(O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer.
Recommendation:
The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures.
Views of Responsible Officials:
We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: $803,845.92
Description:
The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of
Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”
In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.”
Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.”
Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.”
Condition:
Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable.
Questioned Costs:
Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia
(O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer.
Recommendation:
The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures.
Views of Responsible Officials:
We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: $803,845.92
Description:
The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of
Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”
In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.”
Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.”
Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.”
Condition:
Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable.
Questioned Costs:
Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia
(O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer.
Recommendation:
The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures.
Views of Responsible Officials:
We concur with this finding.
FA 2024-002 Improve Controls over Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: None Identified
Description:
A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s suspension and debarment procedures were followed.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, Title 2 CFR Section 180.300 states in part that the non-Federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Condition:
A sample of 4 covered transactions was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and suspension and debarment compliance requirements were met. While auditors were able to determine that the vendor associated with three of these transactions were not suspended, debarred, or otherwise excluded, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction as required by the School District’s internal policies and procedures.
Cause:
The School District did not follow its policies and procedures that govern the suspension and debarment process for federal programs.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate implement procedures to address suspension and debarment compliance requirements exposes the School District to unnecessary risk of error or misuse of federal funds and could result in the expenditures of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that vendors are not suspended, debarred, or otherwise excluded prior to entering into covered transactions and required suspension and debarment documentation is properly retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
FA 2024-002 Improve Controls over Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: None Identified
Description:
A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s suspension and debarment procedures were followed.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, Title 2 CFR Section 180.300 states in part that the non-Federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Condition:
A sample of 4 covered transactions was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and suspension and debarment compliance requirements were met. While auditors were able to determine that the vendor associated with three of these transactions were not suspended, debarred, or otherwise excluded, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction as required by the School District’s internal policies and procedures.
Cause:
The School District did not follow its policies and procedures that govern the suspension and debarment process for federal programs.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate implement procedures to address suspension and debarment compliance requirements exposes the School District to unnecessary risk of error or misuse of federal funds and could result in the expenditures of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that vendors are not suspended, debarred, or otherwise excluded prior to entering into covered transactions and required suspension and debarment documentation is properly retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
FA 2024-002 Improve Controls over Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 National School Lunch Program
COVID-19 – 10.555 – National School Lunch Program
Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024)
Questioned Costs: None Identified
Description:
A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s suspension and debarment procedures were followed.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, Title 2 CFR Section 180.300 states in part that the non-Federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Condition:
A sample of 4 covered transactions was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and suspension and debarment compliance requirements were met. While auditors were able to determine that the vendor associated with three of these transactions were not suspended, debarred, or otherwise excluded, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction as required by the School District’s internal policies and procedures.
Cause:
The School District did not follow its policies and procedures that govern the suspension and debarment process for federal programs.
Effect:
The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate implement procedures to address suspension and debarment compliance requirements exposes the School District to unnecessary risk of error or misuse of federal funds and could result in the expenditures of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that vendors are not suspended, debarred, or otherwise excluded prior to entering into covered transactions and required suspension and debarment documentation is properly retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.