Audit 393929

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF AGRICULTURE, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CHILD NUTRITION CLUSTER – FEDERAL ALN 10.553, 10.555, AND 10.559 2025-003 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria – 2 CFR § 180 and 2 CFR § 200.318-327 requires 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 the child nutrition cluster federal programs. Condition – During our audit, we noted the District did not have sufficient controls in place within its child nutrition cluster federal programs to ensure compliance with federal requirements related to assuring that the District 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 – Not applicable. Our testing did not indicate any instances of noncompliance with this requirement. Context – The District’s internal controls required the District to review for compliance with suspension and debarment requirements on an annual basis. The District should also be reviewing for compliance with suspension and debarment requirements any time the District adds a new vendor. For one of two vendors tested, the District did not retain documentation to support they had performed procedures to verify vendor eligibility with suspension and debarment requirements. This was not a statistically valid sample. Repeat Finding – This is a current year finding. Cause – This was an oversight by district personnel. Effect – Noncompliance with suspension and debarment requirements could result in the District expending federal funds inappropriately or utilized vendors that are not eligible to be parties 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 for the child nutrition cluster federal program. Internal controls over compliance for this area should include documentation of compliance with Uniform Guidance requirements related to suspension and debarment. These controls should also include steps to ensure 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. 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 the child nutrition 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.