The District?s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster program, which includes the School Breakfast and National School Lunch programs. These programs provide free or reduced-price meals to students from low-income families. The District received $419,405 to administer the programs during the 2021?22 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition Procurement When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. State and federal requirements also allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services and goods from another entity?s contract. If the District uses such an agreement, federal regulations require it to confirm and retain documentation showing the awarding entity followed all procurement laws and regulations applicable to the District when selecting the contractor. Our audit found the District did not have an effective process in place to ensure staff followed the most restrictive procurement requirements when purchasing food products and equipment. We tested three contractors that were subject to procurement requirements, and we found the District did not retain sufficient documentation showing it obtained quotes or solicited formal bids from two of them. The District also piggybacked onto another school district?s food service contract, but did not obtain and review the procurement documentation to confirm the other district procured the contract in accordance with the applicable requirements before purchasing. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, inserting a clause or condition into the contract in which the contractor states it is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation to demonstrate compliance. We found the District did not have effective controls to verify that two of the three contractors we tested were not suspended or debarred before entering into food service contracts more than $25,000. The District paid these contractors $183,206 and $100,237 during the period. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance with federal requirements. Cause of Condition Procurement The District experienced turnover in the Food Services Director position, and the current Director did not know that the purchases required quotes or formal sealed bidding. The current Director was also unaware of the requirement to obtain documentation when piggybacking to verify the other agency complied with procurement requirements. Suspension and Debarment District staff were not aware that they were required to verify the contractors were not suspended or debarred before contracting or purchasing. Effect of Condition Procurement The District paid a total of $350,256 to three contractors for food service products, and could not demonstrate it complied with federal requirements for procuring them. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Suspension and Debarment Without adequate internal controls, the District cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal procurement, suspension and debarment requirements. Specifically, the District should: ? Follow the most restrictive procurement requirements of federal, state or local laws ? Train staff responsible for the procurement process on all applicable requirements ? Retain documentation to demonstrate compliance with federal requirements ? Verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from receiving federal funds before contracting or purchasing District?s Response The District takes compliance seriously and has expended significant effort to ensure that all resources are spent effectively and appropriately. However, we can and will improve internal controls and documented evidence of compliance with federal requirements. The District will improve its documentation practices to demonstrate compliance with federal procurement and suspension and debarment requirements. The District will also ensure employees have the proper training on federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District?s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster program, which includes the School Breakfast and National School Lunch programs. These programs provide free or reduced-price meals to students from low-income families. The District received $419,405 to administer the programs during the 2021?22 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition Procurement When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. State and federal requirements also allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services and goods from another entity?s contract. If the District uses such an agreement, federal regulations require it to confirm and retain documentation showing the awarding entity followed all procurement laws and regulations applicable to the District when selecting the contractor. Our audit found the District did not have an effective process in place to ensure staff followed the most restrictive procurement requirements when purchasing food products and equipment. We tested three contractors that were subject to procurement requirements, and we found the District did not retain sufficient documentation showing it obtained quotes or solicited formal bids from two of them. The District also piggybacked onto another school district?s food service contract, but did not obtain and review the procurement documentation to confirm the other district procured the contract in accordance with the applicable requirements before purchasing. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, inserting a clause or condition into the contract in which the contractor states it is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation to demonstrate compliance. We found the District did not have effective controls to verify that two of the three contractors we tested were not suspended or debarred before entering into food service contracts more than $25,000. The District paid these contractors $183,206 and $100,237 during the period. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance with federal requirements. Cause of Condition Procurement The District experienced turnover in the Food Services Director position, and the current Director did not know that the purchases required quotes or formal sealed bidding. The current Director was also unaware of the requirement to obtain documentation when piggybacking to verify the other agency complied with procurement requirements. Suspension and Debarment District staff were not aware that they were required to verify the contractors were not suspended or debarred before contracting or purchasing. Effect of Condition Procurement The District paid a total of $350,256 to three contractors for food service products, and could not demonstrate it complied with federal requirements for procuring them. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Suspension and Debarment Without adequate internal controls, the District cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal procurement, suspension and debarment requirements. Specifically, the District should: ? Follow the most restrictive procurement requirements of federal, state or local laws ? Train staff responsible for the procurement process on all applicable requirements ? Retain documentation to demonstrate compliance with federal requirements ? Verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from receiving federal funds before contracting or purchasing District?s Response The District takes compliance seriously and has expended significant effort to ensure that all resources are spent effectively and appropriately. However, we can and will improve internal controls and documented evidence of compliance with federal requirements. The District will improve its documentation practices to demonstrate compliance with federal procurement and suspension and debarment requirements. The District will also ensure employees have the proper training on federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District?s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster program, which includes the School Breakfast and National School Lunch programs. These programs provide free or reduced-price meals to students from low-income families. The District received $419,405 to administer the programs during the 2021?22 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition Procurement When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. State and federal requirements also allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services and goods from another entity?s contract. If the District uses such an agreement, federal regulations require it to confirm and retain documentation showing the awarding entity followed all procurement laws and regulations applicable to the District when selecting the contractor. Our audit found the District did not have an effective process in place to ensure staff followed the most restrictive procurement requirements when purchasing food products and equipment. We tested three contractors that were subject to procurement requirements, and we found the District did not retain sufficient documentation showing it obtained quotes or solicited formal bids from two of them. The District also piggybacked onto another school district?s food service contract, but did not obtain and review the procurement documentation to confirm the other district procured the contract in accordance with the applicable requirements before purchasing. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, inserting a clause or condition into the contract in which the contractor states it is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation to demonstrate compliance. We found the District did not have effective controls to verify that two of the three contractors we tested were not suspended or debarred before entering into food service contracts more than $25,000. The District paid these contractors $183,206 and $100,237 during the period. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance with federal requirements. Cause of Condition Procurement The District experienced turnover in the Food Services Director position, and the current Director did not know that the purchases required quotes or formal sealed bidding. The current Director was also unaware of the requirement to obtain documentation when piggybacking to verify the other agency complied with procurement requirements. Suspension and Debarment District staff were not aware that they were required to verify the contractors were not suspended or debarred before contracting or purchasing. Effect of Condition Procurement The District paid a total of $350,256 to three contractors for food service products, and could not demonstrate it complied with federal requirements for procuring them. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Suspension and Debarment Without adequate internal controls, the District cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal procurement, suspension and debarment requirements. Specifically, the District should: ? Follow the most restrictive procurement requirements of federal, state or local laws ? Train staff responsible for the procurement process on all applicable requirements ? Retain documentation to demonstrate compliance with federal requirements ? Verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from receiving federal funds before contracting or purchasing District?s Response The District takes compliance seriously and has expended significant effort to ensure that all resources are spent effectively and appropriately. However, we can and will improve internal controls and documented evidence of compliance with federal requirements. The District will improve its documentation practices to demonstrate compliance with federal procurement and suspension and debarment requirements. The District will also ensure employees have the proper training on federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District?s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster program, which includes the School Breakfast and National School Lunch programs. These programs provide free or reduced-price meals to students from low-income families. The District received $419,405 to administer the programs during the 2021?22 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition Procurement When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. State and federal requirements also allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services and goods from another entity?s contract. If the District uses such an agreement, federal regulations require it to confirm and retain documentation showing the awarding entity followed all procurement laws and regulations applicable to the District when selecting the contractor. Our audit found the District did not have an effective process in place to ensure staff followed the most restrictive procurement requirements when purchasing food products and equipment. We tested three contractors that were subject to procurement requirements, and we found the District did not retain sufficient documentation showing it obtained quotes or solicited formal bids from two of them. The District also piggybacked onto another school district?s food service contract, but did not obtain and review the procurement documentation to confirm the other district procured the contract in accordance with the applicable requirements before purchasing. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, inserting a clause or condition into the contract in which the contractor states it is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation to demonstrate compliance. We found the District did not have effective controls to verify that two of the three contractors we tested were not suspended or debarred before entering into food service contracts more than $25,000. The District paid these contractors $183,206 and $100,237 during the period. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance with federal requirements. Cause of Condition Procurement The District experienced turnover in the Food Services Director position, and the current Director did not know that the purchases required quotes or formal sealed bidding. The current Director was also unaware of the requirement to obtain documentation when piggybacking to verify the other agency complied with procurement requirements. Suspension and Debarment District staff were not aware that they were required to verify the contractors were not suspended or debarred before contracting or purchasing. Effect of Condition Procurement The District paid a total of $350,256 to three contractors for food service products, and could not demonstrate it complied with federal requirements for procuring them. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Suspension and Debarment Without adequate internal controls, the District cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal procurement, suspension and debarment requirements. Specifically, the District should: ? Follow the most restrictive procurement requirements of federal, state or local laws ? Train staff responsible for the procurement process on all applicable requirements ? Retain documentation to demonstrate compliance with federal requirements ? Verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from receiving federal funds before contracting or purchasing District?s Response The District takes compliance seriously and has expended significant effort to ensure that all resources are spent effectively and appropriately. However, we can and will improve internal controls and documented evidence of compliance with federal requirements. The District will improve its documentation practices to demonstrate compliance with federal procurement and suspension and debarment requirements. The District will also ensure employees have the proper training on federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District?s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster program, which includes the School Breakfast and National School Lunch programs. These programs provide free or reduced-price meals to students from low-income families. The District received $419,405 to administer the programs during the 2021?22 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition Procurement When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. State and federal requirements also allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services and goods from another entity?s contract. If the District uses such an agreement, federal regulations require it to confirm and retain documentation showing the awarding entity followed all procurement laws and regulations applicable to the District when selecting the contractor. Our audit found the District did not have an effective process in place to ensure staff followed the most restrictive procurement requirements when purchasing food products and equipment. We tested three contractors that were subject to procurement requirements, and we found the District did not retain sufficient documentation showing it obtained quotes or solicited formal bids from two of them. The District also piggybacked onto another school district?s food service contract, but did not obtain and review the procurement documentation to confirm the other district procured the contract in accordance with the applicable requirements before purchasing. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, inserting a clause or condition into the contract in which the contractor states it is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation to demonstrate compliance. We found the District did not have effective controls to verify that two of the three contractors we tested were not suspended or debarred before entering into food service contracts more than $25,000. The District paid these contractors $183,206 and $100,237 during the period. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance with federal requirements. Cause of Condition Procurement The District experienced turnover in the Food Services Director position, and the current Director did not know that the purchases required quotes or formal sealed bidding. The current Director was also unaware of the requirement to obtain documentation when piggybacking to verify the other agency complied with procurement requirements. Suspension and Debarment District staff were not aware that they were required to verify the contractors were not suspended or debarred before contracting or purchasing. Effect of Condition Procurement The District paid a total of $350,256 to three contractors for food service products, and could not demonstrate it complied with federal requirements for procuring them. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Suspension and Debarment Without adequate internal controls, the District cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal procurement, suspension and debarment requirements. Specifically, the District should: ? Follow the most restrictive procurement requirements of federal, state or local laws ? Train staff responsible for the procurement process on all applicable requirements ? Retain documentation to demonstrate compliance with federal requirements ? Verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from receiving federal funds before contracting or purchasing District?s Response The District takes compliance seriously and has expended significant effort to ensure that all resources are spent effectively and appropriately. However, we can and will improve internal controls and documented evidence of compliance with federal requirements. The District will improve its documentation practices to demonstrate compliance with federal procurement and suspension and debarment requirements. The District will also ensure employees have the proper training on federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District?s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster program, which includes the School Breakfast and National School Lunch programs. These programs provide free or reduced-price meals to students from low-income families. The District received $419,405 to administer the programs during the 2021?22 school year. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition Procurement When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. State and federal requirements also allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services and goods from another entity?s contract. If the District uses such an agreement, federal regulations require it to confirm and retain documentation showing the awarding entity followed all procurement laws and regulations applicable to the District when selecting the contractor. Our audit found the District did not have an effective process in place to ensure staff followed the most restrictive procurement requirements when purchasing food products and equipment. We tested three contractors that were subject to procurement requirements, and we found the District did not retain sufficient documentation showing it obtained quotes or solicited formal bids from two of them. The District also piggybacked onto another school district?s food service contract, but did not obtain and review the procurement documentation to confirm the other district procured the contract in accordance with the applicable requirements before purchasing. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, inserting a clause or condition into the contract in which the contractor states it is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation to demonstrate compliance. We found the District did not have effective controls to verify that two of the three contractors we tested were not suspended or debarred before entering into food service contracts more than $25,000. The District paid these contractors $183,206 and $100,237 during the period. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance with federal requirements. Cause of Condition Procurement The District experienced turnover in the Food Services Director position, and the current Director did not know that the purchases required quotes or formal sealed bidding. The current Director was also unaware of the requirement to obtain documentation when piggybacking to verify the other agency complied with procurement requirements. Suspension and Debarment District staff were not aware that they were required to verify the contractors were not suspended or debarred before contracting or purchasing. Effect of Condition Procurement The District paid a total of $350,256 to three contractors for food service products, and could not demonstrate it complied with federal requirements for procuring them. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Suspension and Debarment Without adequate internal controls, the District cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal procurement, suspension and debarment requirements. Specifically, the District should: ? Follow the most restrictive procurement requirements of federal, state or local laws ? Train staff responsible for the procurement process on all applicable requirements ? Retain documentation to demonstrate compliance with federal requirements ? Verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from receiving federal funds before contracting or purchasing District?s Response The District takes compliance seriously and has expended significant effort to ensure that all resources are spent effectively and appropriately. However, we can and will improve internal controls and documented evidence of compliance with federal requirements. The District will improve its documentation practices to demonstrate compliance with federal procurement and suspension and debarment requirements. The District will also ensure employees have the proper training on federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.