FINDING 2023-004
Finding Subject: Child Nutrition Cluster – Procurement, Suspension, and Debarment
Summary of Finding: Material Weakness, Other Matters
The School Corporation had not properly designed or implemented an effective system of internal controls to
prevent, or detect and correct, noncompl...
FINDING 2023-004
Finding Subject: Child Nutrition Cluster – Procurement, Suspension, and Debarment
Summary of Finding: Material Weakness, Other Matters
The School Corporation had not properly designed or implemented an effective system of internal controls to
prevent, or detect and correct, noncompliance.
Procurement: A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing
Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must
complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a
questionnaire is received IDOE will review the answers to determine a Cooperative’s classification. Only
Cooperatives that submit the questionnaire and receive a SFA-only Cooperative classification from IDOE
in writing will be considered a SFA only Cooperative for the purposes of the procurement process and
procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold,
the proper purchasing method would be the bidding process, unless the purchase meets certain other
qualifications. Federal regulations allow for informal procurement methods when the value of the
procurement for goods or services does not exceed the simplified acquisition threshold, which is
customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000
or less for when small purchase procedures may be used. This informal process allows for methods other
than the formal bid process. The informal process is divided between two methods based on thresholds.
Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for
those purchases above the micro-purchase threshold, but below the simplified acquisition threshold.
Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase
procedures are used, then price or rate quotations must be obtained from an adequate number of
qualified sources. If it is determined a single source provider can be used for a small purchase,
documentation must be retained supporting the determination. The School Corporation purchased milk
through Region 8 Education Service Center (Region 8). However, Region 8 had not received the SFAonly
Cooperative classification from IDOE for fiscal years 2021–2022 and 2022-2023. As such, the
School Corporation could not rely on the procurement done by Region 8. Region 8 could be considered
one quote for procurement; however, the School Corporation did not obtain any other quotes related to
the purchase of milk, therefore, an adequate number of quotes from qualified sources was not obtained.
Suspension and Debarment: Prior to entering into subawards and covered transactions with federal
award funds, recipients are required to verify that such contractors and subrecipients are not suspended,
debarred, or otherwise excluded. “Covered transactions” include, but are not limited to contracts for
goods and services awarded under a non-procurement transaction (i.e. grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions,
collecting a certification from that vendor, or adding a clause or condition to the covered transaction with
that vendor.
INDIANA STATE BOARD OF ACCOUNTS
47
MADISON-GRANT UNITED SCHOOL CORPORATION
Steve Vore., Superintendent Ben Mann, Chief Financial Officer
Kristy Drewitz, Transportation Allison McGuire, Payroll/Benefits Anna Richards, Corp Secretary/Deputy
Treasurer
Inspire, Cultivate, and Promote excellence in every Argyll.
Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a
vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise
excluded, the School Corporation noted that vendor’s were checked against Sam. Gove and verified to
not be suspended or debarred. Four covered transactions that equaled or exceeded $25,000 were
identified. All for transactions, totaling $213,795, were selected for testing. For three of the four vendors,
the School Corporation did not verify the vendor’s suspension and debarment status prior to payment.
The total amount spent with the three vendors was $162,733.
Contact Person Responsible for Corrective Action: Kathy Bernaix
Contact Phone Number and Email Address: 765-536-0008 kbernaix@mgusc.k12.in.us
Views of Responsible Officials: We concur with the finding.
Description of Corrective Action Plan: Procurement: Three quotes will be requested for “small purchases” and the
process will be reviewed to ensure it is performed. Suspension and Debarment: Before purchasing goods that total
$25,000 or more from a vendor, the Food Service Director will look up the vendor on SAM.gov for debarment activity.
Anticipated Completion Date: February 2024