CORRECTIVE ACTION PLAN OF CURRENT AUDIT FINDINGS
June 30, 2024
FINDING 2024-001
Information on the federal program:
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School...
CORRECTIVE ACTION PLAN OF CURRENT AUDIT FINDINGS
June 30, 2024
FINDING 2024-001
Information on the federal program:
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Program, School Summer Food Service Program
Assistance Listing Number: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness
Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements.
Context:
Procurement
Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. 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 $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. The School Corporation's policy states that the small purchase threshold is between $10,000 and $150,000. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources.
For fiscal year 2023, two vendors, totaling $109,657 and $53,441, were selected for testing at the small purchase threshold. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used.
The lack of internal controls and noncompliance was isolated to fiscal year 2023.
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.
During the audit period, there were ten vendors identified which exceeded $25,000 in disbursements on an annual basis. Six vendors were selected for testing. In one instance, the School Corporation's contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor's suspension and debarment status prior to payment.
The lack of internal controls and noncompliance was isolated to fiscal year 2023. Views of Responsible Official: We concur with the finding.
Description of Corrective Action Plan: Management will ensure that the School Corporation's procurement policy is being followed for all procurement thresholds. Management will perform a periodic check of federal fund disbursements to see if any vendors exceed procurement or suspension and debarment thresholds on an annual basis to ensure compliance with federal and state procurement guidelines.
The School Corporation will ensure that all contracts exceeding $25,000 include a suspension and debarment clause and will verify that the vendor is not suspended or debarred prior to entering into the contract.
Responsible Party and Timeline for Completion: The Food Service Department has already implemented these changes as the issue was not present in fiscal year 2024.