Audit 404952

U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553, 10.555, AND 10.582 PASS-THROUGH NUMBER 7503 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Activities Allowed or Unallowed / Allowable Costs/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200, subpart E - Cost Principles, establishes principles for determining the allowable costs incurred by the District under federal awards. Such costs are to be necessary and reasonable for the performance of the federal award. Condition: During our tests of payroll and non-payroll expenditures, we identified $1,603 in unallowable costs paid from the Child Nutrition program. These unallowable costs were comprised of $1,353 that should have been paid from District operating and activity funds, $192 due to payroll overpayments, and $58 due to an overpayment of an invoice. In April 2026, the District paid $1,353 from operating and activity funds to the food service fund to reimburse a portion of the unallowable costs. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $1,603 were paid from the Child Nutrition program. Questioned costs: The amount of questioned costs was $1,603. Context: An examination of 2 Child Nutrition employees with payroll totaling $33,673 from a population of 11 employees with payroll totaling $141,447 and an examination of 11 Child Nutrition non-payroll expenditures totaling $25,622 from a population of 109 checks totaling $432,754. Our samples were not statistically valid. Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit for resolution regarding this matter and implement stronger internal controls over program expenditures Views of responsible officials: The District will implement proper control over program expenditures. Expenditures for other programs will be paid directly from those program funds, if possible.

U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553, 10.555, AND 10.582 PASS-THROUGH NUMBER 7503 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-002. Procurement and Suspension and Debarment Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200.320 and Ark. Code Ann. § 6-21-304 establish methods of procurement to be followed by a non-federal entity when purchasing supplies or services with federal awards. Price or rate quotations must be obtained from an adequate number of qualified sources for purchases greater than $10,000 and up to $25,700. For purchases of supplies and services exceeding $25,700, solicitation of bids or proposals must be utilized. Condition: The District did not retain documentation for price quotations obtained from at least two qualified vendors for Child Nutrition program commodities purchased from one vendor totaling $14,766. School board approval of vendors for Child Nutrition program purchases exceeding $25,700 was not obtained. Additionally, during our review of Child Nutrition program invoices, we identified food purchases that did not agree to the vendor's bid sheet description or price. Cause: Lack of internal controls and management oversight over the procurement of supplies and services. Effect or potential effect: Failure to retain documentation of price quotations and bid approvals increases the overall risk of noncompliance with federal regulations. Questioned costs: $0 Context: An examination of non-payroll expenditures for 11 checks totaling $25,622 from a population of 109 checks totaling $432,754. Of the 11 checks examined, 3 checks were to vendors that required solicitation of quotes or bids. Our sample was not statistically valid. Identification as a repeat finding: No Recommendation: The District should implement proper controls and monitor Child Nutrition program purchases for compliance with applicable procurement requirements. Views of responsible officials: The District will gather two qualified vendors for purchases of $10,000 to $25,000. The District will have Board approval for purchases exceeding $25,700. In addition, the Food Service Director will exercise care to order items on the bid list, but will not be limited to only items on the bid list as new items become available.