Audit 51659

Sunnyside School District No. 201 September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 32.009 ? COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: ECF202113007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $189,226 in ECF Program funds to purchase bus Wi-Fi hotspots for students and school staff. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. When using ECF Program funds to purchase eligible services and equipment, the FCC requires recipients to comply with all applicable state, local, or tribal laws by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. State law and District policy allow for the purchase of goods and services from contracts awarded by another government or group of governments via an interlocal agreement or contract, a process often referred to as ?piggybacking.? To comply with piggybacking law, the entity must enter into this interlocal agreement before it purchases services or goods from the other entity?s bid contract. Description of Condition Our audit found the District?s internal controls were ineffective for ensuring it followed state law and its own policy when procuring equipment that it charged to the ECF Program. The District paid one service provider $189,226 for bus Wi-Fi hotspots, and did not ensure it entered into an interlocal agreement with the cooperative that bid the purchase. We consider this internal control deficiency to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition Staff responsible for the purchase did not know the District must have an interlocal agreement in place before piggybacking onto the cooperative?s bid. Effect of Condition The District spent $189,226 in program funds on a contract that another purchasing cooperative procured, but it did not have an interlocal agreement that allowed for piggybacking with the lead agency. Since the District did not enter into an interlocal agreement with the lead agency that allowed for piggybacking, state law would have required it to competitively procure the purchase. Without an effective internal control to ensure it follows procurement or piggybacking procedures, the District cannot demonstrate it complied with applicable state and local procurement requirements and received the best price for the bus Wi-Fi hotpots. Recommendation We recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should comply with state law and its own policy when procuring goods and services paid with ECF Program funds, and keep documentation supporting the procurement methods it used. District?s Response The Sunnyside District contracts with WSIPC to use their financial system. We thought we were part of the WSIPC purchasing program since we were part of the WSIPC program. From this audit we now know that we need to have an interlocal agreement with WSIPC to use the WSIPC Purchasing Program. We?ve emailed the person in charge of the program to complete an Interlocal Agreement. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next 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 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.

Sunnyside School District No. 201 September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 32.009 ? COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: ECF202113007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $189,226 in ECF Program funds to purchase bus Wi-Fi hotspots for students and school staff. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. When using ECF Program funds to purchase eligible services and equipment, the FCC requires recipients to comply with all applicable state, local, or tribal laws by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. State law and District policy allow for the purchase of goods and services from contracts awarded by another government or group of governments via an interlocal agreement or contract, a process often referred to as ?piggybacking.? To comply with piggybacking law, the entity must enter into this interlocal agreement before it purchases services or goods from the other entity?s bid contract. Description of Condition Our audit found the District?s internal controls were ineffective for ensuring it followed state law and its own policy when procuring equipment that it charged to the ECF Program. The District paid one service provider $189,226 for bus Wi-Fi hotspots, and did not ensure it entered into an interlocal agreement with the cooperative that bid the purchase. We consider this internal control deficiency to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition Staff responsible for the purchase did not know the District must have an interlocal agreement in place before piggybacking onto the cooperative?s bid. Effect of Condition The District spent $189,226 in program funds on a contract that another purchasing cooperative procured, but it did not have an interlocal agreement that allowed for piggybacking with the lead agency. Since the District did not enter into an interlocal agreement with the lead agency that allowed for piggybacking, state law would have required it to competitively procure the purchase. Without an effective internal control to ensure it follows procurement or piggybacking procedures, the District cannot demonstrate it complied with applicable state and local procurement requirements and received the best price for the bus Wi-Fi hotpots. Recommendation We recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should comply with state law and its own policy when procuring goods and services paid with ECF Program funds, and keep documentation supporting the procurement methods it used. District?s Response The Sunnyside District contracts with WSIPC to use their financial system. We thought we were part of the WSIPC purchasing program since we were part of the WSIPC program. From this audit we now know that we need to have an interlocal agreement with WSIPC to use the WSIPC Purchasing Program. We?ve emailed the person in charge of the program to complete an Interlocal Agreement. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next 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 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.