Audit 389098

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF EDUCATION, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, SPECIAL EDUCATION CLUSTER – FEDERAL ALN 84.027 AND 84.173 2025-002 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria – 2 CFR § 180 requires Independent School District No. 728 (the District) to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including suspension and debarment requirements applicable to special education cluster federal programs. Condition – Our testing indicated that the District did not have sufficient controls in place within its special education cluster federal programs to assure it was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Questioned Costs – None. Our testing did not indicate any instances of noncompliance with this requirement. Context – The District has properly designed internal controls in place over suspension and debarment requirements applicable to special education cluster federal programs. However, for one of nine vendors tested, the District did not perform procedures to verify vendor eligibility until after the District had already paid the vendor in excess of $25,000 within the fiscal year. This was not a statistically valid sample. Repeat Finding – This is a current year and prior year finding. Cause – The District did not verify that one of nine vendors tested was not suspended or debarred prior to purchasing goods or services exceeding $25,000 during the year within its special education cluster federal programs. Effect – The District’s control procedures over suspension and debarment were not performed in a timely manner for one vendor. Therefore, the controls would not have been effective in preventing the expenditure of federal funds with a vendor that was not eligible to be party to such transactions, which could be viewed as a violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures relating to suspension and debarment applicable to special education cluster federal programs. Internal controls over compliance for this area should include adequate documentation of verification that any vendor with which the District contracts for goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website, prior to expending federal funds with such vendors. View of Responsible Official and Planned Corrective Actions – The District agrees with the finding. The District will review and update its policies and procedures relating to suspension and debarment applicable to special education cluster federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.