Audit 373998

Finding Type. Immaterial Noncompliance; Significant Deficiency in Internal Controls over Compliance (Procurement). Federal program(s) U.S. Department of Agriculture - Child Nutrition Cluster (ALN 10.553, 10.555, 10.559, and 10.582); Passed through the Michigan Department of Education; All project numbers. Criteria. The District's purchasing policy states that some form of competitive bidding based upon adequate and complete specifications will be implemented for all purchases projected to exceed $10,000. Condition. During the fiscal year 2024-2025, the District utilized the Michigan Department of Education (MDE) competitive bidding threshold of $30,512 when procuring supplies and equipment using the Child Nutrition Cluster funds. However, the federal small purchase threshold was $10,000, and the simplified acquisition threshold was $250,000 during the same period. The District did not obtain the required number of quotes or bids for purchases exceeding the federal small purchase threshold, but below the MDE threshold. Cause. The District relied solely on state guidance for procurement thresholds and did not adequately consider federal requirements applicable to purchases made with federal funds. Effect. The District was not in compliance with federal procurement regulations. This could result in questioned costs and potential repayment of federal funds if deemed unallowable. Questioned Costs. No costs have been questioned as a result of this finding inasmuch as no unallowable costs were identified. Recommendation. We recommend the District revise its procurement policies to clearly distinguish between state and federal requirements and ensure that federal thresholds are applied when expending federal funds. View of Responsible Officials. The District will be communicating and reviewing all Federal purchases to ensure that any purchases between $10,000 and $250,000 follow Board Policy 3301A. The District mistakenly applied the State bidding threshold for Federal purchases that fell between the micro purchase threshold ($10,000) and the State of MI bidding threshold ($30,512). Responsible Official. Daniel Peña, Chief Financial Officer Estimated Completion Date. June 30, 2026