Audit 390281

#2025-001 Federal Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555 Compliance Requirement: I. Procurement and Suspension and Debarment Type of Finding: Significant Deficiency and Compliance Criteria: An independent estimate must be completed for every procurement action equal to or above 250,000, the federal simplified acquisition threshold in effect during fiscal year 2025. This applies even when purchasing through a cooperative or interlocal contract. The independent estimate must be developed and documented before soliciting or receiving quotes from vendors through the purchasing cooperative. The documentation should include the estimated cost, the date it was prepared, who prepared it, and the basis for the estimate (e.g ., historical data, market research). It ensures compliance with federal regulations (2 CFR § 200.318(e) and 2 CFR § 200.323) to confirm that the prices offered by the cooperative are reasonable. Even though purchasing cooperatives perform competitive procurements, the member district is responsible for the independent estimate to ensure the purchasing cooperative's pricing matches the member district's expected market value for the specific purchase. Condition: During our review of procurement transactions, we noted that the District did not prepare or document an independent cost estimate for a vendor whose expenditures exceeded the simplified acquisition threshold. Cause: The District was unaware of the requirement to prepare and document an independent estimate for procurements exceeding the simplified acquisition threshold. Effect: Failure to perform and document the required independent estimates results in noncompliance with federal requirements for procurements exceeding the simplified acquisition threshold. Additionally, without an independent estimate, the District cannot demonstrate that the amount paid was fair and reasonable, increasing the risk of paying more than market value. Questioned Costs: None reported Repeat Finding: No Recommendation: We recommend that management: 1. Update procurement policies and procedures to clearly require an independent estimate for all procurements exceeding the simplified acquisition threshold. 2. Implement internal control checkpoints, such as required approvals or system prompts, to ensure that documentation is completed and retained prior to contract award. 3. Provide training to procurement and program staff on Federal procurement standards and documentation requirements. 4. Conduct periodic reviews of procurement files to ensure ongoing compliance and strengthen internal controls. Views of Responsible Official: Management concurs with the finding. The District acknowledges that an independent estimate was not documented for the procurement transaction identified. Management is committed to strengthening procurement compliance and improving internal controls to prevent recurrence.