2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.
2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.
2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.
2022-002 The District did not have internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 ? Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: COVID-19, 84.425U-0712250 COVID-19, 84.425D-0120461 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Background The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $1,250,418 in federal funding under its ESF awards. This included $1,241,091 in the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), and $9,327 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) subprogram (84.425U). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition The District hired one contractor to replace and upgrade the HVAC system at one of its schools to improve air quality. During the 2021-2022 school year, the District paid $354,454 from its ESSER II award to the contractor for work that laborers performed on the project. Our audit found the District did not have adequate internal controls for ensuring compliance with prevailing wage rate requirements. Specifically, the District did not collect and review all weekly certified payroll reports from the contractor and subcontractor to confirm they paid laborers proper prevailing wages. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition District employees said they reviewed the Department of Labor and Industries website to confirm the contractor and subcontractor submitted weekly certified payroll reports. However, they did not know they needed to collect and review the reports each week to confirm the contractor and subcontractor paid laborers proper prevailing wages. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with the federal wage rate requirements. Further, the District could be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District was required to collect a total of 25 weekly certified payroll reports, but did not collect any of them. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District develop internal controls to ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response State law does not require collection and review of certified payroll records for public works contracts. For most public works projects, the district requires contractors to submit weekly certified payroll to the State Department of Labor & Industries. As an additional control to ensure compliance, the District withholds a portion of the contract value as retainage until all certified payroll and other required documentation is submitted to and confirmed by the State Department Labor and Industries. Given the State procedures in place, the risk that federally funded laborers are not paid similar to local workers for similar projects is extremely low. To meet Federal procurement requirements, having the district also collect certified payroll records seems redundant and may not further reduce the risk that laborers might not be getting paid prevailing wages. However, the district has implemented a process of monitoring weekly payroll reports from contractors and subcontractors on federally-funded public works projects. The district rarely uses federal funds for public works contracts. 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 29 CFR, Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
2022-002 The District did not have internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 ? Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: COVID-19, 84.425U-0712250 COVID-19, 84.425D-0120461 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Background The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $1,250,418 in federal funding under its ESF awards. This included $1,241,091 in the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), and $9,327 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) subprogram (84.425U). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition The District hired one contractor to replace and upgrade the HVAC system at one of its schools to improve air quality. During the 2021-2022 school year, the District paid $354,454 from its ESSER II award to the contractor for work that laborers performed on the project. Our audit found the District did not have adequate internal controls for ensuring compliance with prevailing wage rate requirements. Specifically, the District did not collect and review all weekly certified payroll reports from the contractor and subcontractor to confirm they paid laborers proper prevailing wages. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition District employees said they reviewed the Department of Labor and Industries website to confirm the contractor and subcontractor submitted weekly certified payroll reports. However, they did not know they needed to collect and review the reports each week to confirm the contractor and subcontractor paid laborers proper prevailing wages. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with the federal wage rate requirements. Further, the District could be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District was required to collect a total of 25 weekly certified payroll reports, but did not collect any of them. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District develop internal controls to ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response State law does not require collection and review of certified payroll records for public works contracts. For most public works projects, the district requires contractors to submit weekly certified payroll to the State Department of Labor & Industries. As an additional control to ensure compliance, the District withholds a portion of the contract value as retainage until all certified payroll and other required documentation is submitted to and confirmed by the State Department Labor and Industries. Given the State procedures in place, the risk that federally funded laborers are not paid similar to local workers for similar projects is extremely low. To meet Federal procurement requirements, having the district also collect certified payroll records seems redundant and may not further reduce the risk that laborers might not be getting paid prevailing wages. However, the district has implemented a process of monitoring weekly payroll reports from contractors and subcontractors on federally-funded public works projects. The district rarely uses federal funds for public works contracts. 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 29 CFR, Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.
2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.
2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.
2022-002 The District did not have internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 ? Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: COVID-19, 84.425U-0712250 COVID-19, 84.425D-0120461 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Background The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $1,250,418 in federal funding under its ESF awards. This included $1,241,091 in the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), and $9,327 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) subprogram (84.425U). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition The District hired one contractor to replace and upgrade the HVAC system at one of its schools to improve air quality. During the 2021-2022 school year, the District paid $354,454 from its ESSER II award to the contractor for work that laborers performed on the project. Our audit found the District did not have adequate internal controls for ensuring compliance with prevailing wage rate requirements. Specifically, the District did not collect and review all weekly certified payroll reports from the contractor and subcontractor to confirm they paid laborers proper prevailing wages. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition District employees said they reviewed the Department of Labor and Industries website to confirm the contractor and subcontractor submitted weekly certified payroll reports. However, they did not know they needed to collect and review the reports each week to confirm the contractor and subcontractor paid laborers proper prevailing wages. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with the federal wage rate requirements. Further, the District could be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District was required to collect a total of 25 weekly certified payroll reports, but did not collect any of them. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District develop internal controls to ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response State law does not require collection and review of certified payroll records for public works contracts. For most public works projects, the district requires contractors to submit weekly certified payroll to the State Department of Labor & Industries. As an additional control to ensure compliance, the District withholds a portion of the contract value as retainage until all certified payroll and other required documentation is submitted to and confirmed by the State Department Labor and Industries. Given the State procedures in place, the risk that federally funded laborers are not paid similar to local workers for similar projects is extremely low. To meet Federal procurement requirements, having the district also collect certified payroll records seems redundant and may not further reduce the risk that laborers might not be getting paid prevailing wages. However, the district has implemented a process of monitoring weekly payroll reports from contractors and subcontractors on federally-funded public works projects. The district rarely uses federal funds for public works contracts. 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 29 CFR, Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
2022-002 The District did not have internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 ? Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: COVID-19, 84.425U-0712250 COVID-19, 84.425D-0120461 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Background The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $1,250,418 in federal funding under its ESF awards. This included $1,241,091 in the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), and $9,327 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) subprogram (84.425U). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition The District hired one contractor to replace and upgrade the HVAC system at one of its schools to improve air quality. During the 2021-2022 school year, the District paid $354,454 from its ESSER II award to the contractor for work that laborers performed on the project. Our audit found the District did not have adequate internal controls for ensuring compliance with prevailing wage rate requirements. Specifically, the District did not collect and review all weekly certified payroll reports from the contractor and subcontractor to confirm they paid laborers proper prevailing wages. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition District employees said they reviewed the Department of Labor and Industries website to confirm the contractor and subcontractor submitted weekly certified payroll reports. However, they did not know they needed to collect and review the reports each week to confirm the contractor and subcontractor paid laborers proper prevailing wages. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with the federal wage rate requirements. Further, the District could be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District was required to collect a total of 25 weekly certified payroll reports, but did not collect any of them. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District develop internal controls to ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response State law does not require collection and review of certified payroll records for public works contracts. For most public works projects, the district requires contractors to submit weekly certified payroll to the State Department of Labor & Industries. As an additional control to ensure compliance, the District withholds a portion of the contract value as retainage until all certified payroll and other required documentation is submitted to and confirmed by the State Department Labor and Industries. Given the State procedures in place, the risk that federally funded laborers are not paid similar to local workers for similar projects is extremely low. To meet Federal procurement requirements, having the district also collect certified payroll records seems redundant and may not further reduce the risk that laborers might not be getting paid prevailing wages. However, the district has implemented a process of monitoring weekly payroll reports from contractors and subcontractors on federally-funded public works projects. The district rarely uses federal funds for public works contracts. 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 29 CFR, Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).