FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. 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 micropurchase 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 and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. 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 micropurchase 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 and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. 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 micropurchase 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 and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-005 ? Material Weakness and Noncompliance: Preparation of Schedule of Expenditures of Federal Awards (SEFA) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Agriculture ? Water & Waste Disposal Systems for Rural Communities (AL #10.760) Questioned Costs: No costs have been questioned as a result of this finding. Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The City reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee?s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the City could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with City departments and consultants responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. Recommendation: We recommend that management meet with department heads and third party consultants throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Management Response: The City will work to improve closing processes and communications with various departments and consultants to ensure the SEFA is complete and accurate.
2022-005 ? Material Weakness and Noncompliance: Preparation of Schedule of Expenditures of Federal Awards (SEFA) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Agriculture ? Water & Waste Disposal Systems for Rural Communities (AL #10.760) Questioned Costs: No costs have been questioned as a result of this finding. Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The City reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee?s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the City could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with City departments and consultants responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. Recommendation: We recommend that management meet with department heads and third party consultants throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Management Response: The City will work to improve closing processes and communications with various departments and consultants to ensure the SEFA is complete and accurate.
2022-005 ? Material Weakness and Noncompliance: Preparation of Schedule of Expenditures of Federal Awards (SEFA) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Agriculture ? Water & Waste Disposal Systems for Rural Communities (AL #10.760) Questioned Costs: No costs have been questioned as a result of this finding. Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The City reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee?s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the City could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with City departments and consultants responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. Recommendation: We recommend that management meet with department heads and third party consultants throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Management Response: The City will work to improve closing processes and communications with various departments and consultants to ensure the SEFA is complete and accurate.
2022-005 ? Material Weakness and Noncompliance: Preparation of Schedule of Expenditures of Federal Awards (SEFA) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Agriculture ? Water & Waste Disposal Systems for Rural Communities (AL #10.760) Questioned Costs: No costs have been questioned as a result of this finding. Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The City reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee?s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the City could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with City departments and consultants responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. Recommendation: We recommend that management meet with department heads and third party consultants throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Management Response: The City will work to improve closing processes and communications with various departments and consultants to ensure the SEFA is complete and accurate.
2022-003 Department of Agriculture Federal Financial Assistance Listing/CFDA #10.766 Communities Facilities and Loans Grants Cluster Special Tests & Provisions Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. Condition: Management did not have access to the relevant documents and was unaware of the USDA reserve requirement until further discussion with USDA. The Organization had cash balances on hand exceeding the required reserve amount; however, the funds were not segregated in a separate bookkeeping account or bank account. Cause: Management did not have access to the relevant documents that stated the required reserve amount. Effect: The Organization could be in violation of the reserve amount requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provisions. Views of Responsible Officials: Management agrees with the finding
2022-003 Department of Agriculture Federal Financial Assistance Listing/CFDA #10.766 Communities Facilities and Loans Grants Cluster Special Tests & Provisions Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. Condition: Management did not have access to the relevant documents and was unaware of the USDA reserve requirement until further discussion with USDA. The Organization had cash balances on hand exceeding the required reserve amount; however, the funds were not segregated in a separate bookkeeping account or bank account. Cause: Management did not have access to the relevant documents that stated the required reserve amount. Effect: The Organization could be in violation of the reserve amount requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provisions. Views of Responsible Officials: Management agrees with the finding
Finding: Item 2022-001 ? Procurement and Debarment Federal Program ? Child and Adult Care Food Program ALN (CFDA) Numbers ? 10.558 Agency Award Number ? DC-55-811 Federal Award Year ? June 30, 2022 Federal Agency ? U.S. Department of Agriculture Pass-Through Entity ? Oklahoma Dept. of Education $ - Criteria: 2 CFR ? 200.303, Internal Controls requires that a non-Federal entity establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Food Bank's procurement policy states: The CEO will not enter into any new contracts or purchase agreements or new commitments of any kind valued at or above $500,000 per year without Board review and approval. Condition: The Food Bank did not obtain proper approval by the CEO or the Board for procurement of the food products used for the Child and Adult Care Food Program based on the policy for acquiring goods and services. Cause: The Food Bank did not follow its procurement policy for Board review and approval of the purchase contract under the federal program. Effect: Without appropriate approvals, the Food Bank could obtain food products that are not needed or from vendors who are not approved under the program. Context: Not applicable. Recommendation: The Food Bank should institute a procedure to ensure appropriate approval of all purchases under the program. View of responsible officials: Management's response is reported in "Management's Views and Corrective Action Plan" at the end of this report.
U.S. Department of Education 2022-001: NSLDS Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A210605- 2022; P033A210605- 2022; P063P211182- 2022; P268K221182- 2022 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: In accordance with 34 CFR 685.309(b) and the National Student Loan Data System (NSLDS) Enrollment Reporting Guide published by the Department of Education, schools must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. In addition, schools must report enrollment status changes within 30 days of becoming aware of the status change or in its next scheduled enrollment submission if the scheduled submission is within 60 days. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: During our testing of 40 students, which is a statistically valid sample, we noted 7 instances of late reporting of student status changes, 4 instances where the effective date of a student status change was improperly reported at the campus-level record, 10 instances where the effective date of a student status change was improperly reported at both the campus-level and program-level record, and 1 instance where student?s was not reported for Fall 2021 at both the campus-level and program-level records. Questioned costs: None. Context: Twenty-eight exceptions were noted out of the 40 students tested, which is a statistically valid sample. Cause: The District?s internal controls were not designed to detect the errors. Effect: Inaccurate information is reflected on the NSLDS database. A student?s enrollment data protects the rights of borrowers by ensuring that loan interest subsidies are based on accurate enrollment data, ensures loan repayment dates are accurately based on the last data of attendance, allows in-school deferments to be automatically granted using NSLDS enrollment data, and provides vast amounts of critical data about the effectiveness of Title IV aid programs, including completion data. Repeat Finding: Yes, see Finding 2021-005 Recommendation: We recommend the District review its report procedures to ensure that the enrollment and program information is accurately reported to NSLDS as required by regulations. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-003: Student Eligibility and Awarding Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063 Federal Award Identification Number and Year: P063P211182- 2022 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 690.62 states the Pell grant for an academic year is based upon the payment and disbursement schedules published by the Secretary for each award year. The payment schedules take into account the cost of attendance, the student?s Estimated Family Contribution (EFC) and the enrollment status of the student. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements Condition: The College awarded an incorrect Pell award amount for this student one out of the 40 students tested, which is a statistically valid sample. Questioned costs: $18,912 Context: The College awarded $6,756,956 in Pell Grant during the year. Cause: The overpayment of Pell Grant was due to the College not using information updating by the student for EFC. Effect: One student was over-awarded Pell Grant funds. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the College implements a process that will ensure all Title IV funds are awarded at proper amounts. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-004: 240 Days Outstanding Check Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A210605- 2022; P033A210605- 2022; P063P211182- 2022; P268K221182- 2022 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 668.164 states that an institution must return to the Department of Education, any Title IV funds that it attempts to disburse directly to a student or parent that are not received by the student or parent. If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Department of Education before the end of this 45-day period. If a check is sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Department of Education no later than 240 days after the date it first issued the check. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: Our audit identified 3 outstanding checks payable to students for Title IV awards that were not returned to the Department of Education within the 240 day prescribed timeframe. Questioned Costs: $2,265 Context and Cause: The District?s existing policies and procedures did not ensure compliance with the applicable criteria. Effect: The checks identified resulted in noncompliance with the Title IV regulation. Repeat Finding: This was not a finding in the prior year. Recommendation: We recommend the College to update its procedures and procedures for processing and monitoring refund checks to ensure compliance with the Title IV requirements. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-001: NSLDS Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A210605- 2022; P033A210605- 2022; P063P211182- 2022; P268K221182- 2022 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: In accordance with 34 CFR 685.309(b) and the National Student Loan Data System (NSLDS) Enrollment Reporting Guide published by the Department of Education, schools must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. In addition, schools must report enrollment status changes within 30 days of becoming aware of the status change or in its next scheduled enrollment submission if the scheduled submission is within 60 days. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: During our testing of 40 students, which is a statistically valid sample, we noted 7 instances of late reporting of student status changes, 4 instances where the effective date of a student status change was improperly reported at the campus-level record, 10 instances where the effective date of a student status change was improperly reported at both the campus-level and program-level record, and 1 instance where student?s was not reported for Fall 2021 at both the campus-level and program-level records. Questioned costs: None. Context: Twenty-eight exceptions were noted out of the 40 students tested, which is a statistically valid sample. Cause: The District?s internal controls were not designed to detect the errors. Effect: Inaccurate information is reflected on the NSLDS database. A student?s enrollment data protects the rights of borrowers by ensuring that loan interest subsidies are based on accurate enrollment data, ensures loan repayment dates are accurately based on the last data of attendance, allows in-school deferments to be automatically granted using NSLDS enrollment data, and provides vast amounts of critical data about the effectiveness of Title IV aid programs, including completion data. Repeat Finding: Yes, see Finding 2021-005 Recommendation: We recommend the District review its report procedures to ensure that the enrollment and program information is accurately reported to NSLDS as required by regulations. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-004: 240 Days Outstanding Check Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A210605- 2022; P033A210605- 2022; P063P211182- 2022; P268K221182- 2022 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 668.164 states that an institution must return to the Department of Education, any Title IV funds that it attempts to disburse directly to a student or parent that are not received by the student or parent. If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Department of Education before the end of this 45-day period. If a check is sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Department of Education no later than 240 days after the date it first issued the check. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: Our audit identified 3 outstanding checks payable to students for Title IV awards that were not returned to the Department of Education within the 240 day prescribed timeframe. Questioned Costs: $2,265 Context and Cause: The District?s existing policies and procedures did not ensure compliance with the applicable criteria. Effect: The checks identified resulted in noncompliance with the Title IV regulation. Repeat Finding: This was not a finding in the prior year. Recommendation: We recommend the College to update its procedures and procedures for processing and monitoring refund checks to ensure compliance with the Title IV requirements. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-001: NSLDS Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A210605- 2022; P033A210605- 2022; P063P211182- 2022; P268K221182- 2022 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: In accordance with 34 CFR 685.309(b) and the National Student Loan Data System (NSLDS) Enrollment Reporting Guide published by the Department of Education, schools must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. In addition, schools must report enrollment status changes within 30 days of becoming aware of the status change or in its next scheduled enrollment submission if the scheduled submission is within 60 days. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: During our testing of 40 students, which is a statistically valid sample, we noted 7 instances of late reporting of student status changes, 4 instances where the effective date of a student status change was improperly reported at the campus-level record, 10 instances where the effective date of a student status change was improperly reported at both the campus-level and program-level record, and 1 instance where student?s was not reported for Fall 2021 at both the campus-level and program-level records. Questioned costs: None. Context: Twenty-eight exceptions were noted out of the 40 students tested, which is a statistically valid sample. Cause: The District?s internal controls were not designed to detect the errors. Effect: Inaccurate information is reflected on the NSLDS database. A student?s enrollment data protects the rights of borrowers by ensuring that loan interest subsidies are based on accurate enrollment data, ensures loan repayment dates are accurately based on the last data of attendance, allows in-school deferments to be automatically granted using NSLDS enrollment data, and provides vast amounts of critical data about the effectiveness of Title IV aid programs, including completion data. Repeat Finding: Yes, see Finding 2021-005 Recommendation: We recommend the District review its report procedures to ensure that the enrollment and program information is accurately reported to NSLDS as required by regulations. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-002: Student Eligibility and Awarding Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.268 ? Federal Direct Student Loans Federal Award Identification Number and Year: P268K221182- 2022 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Code of Federal Regulations, 34 CFR 685.203(a) outline the maximum subsidized loan amounts for students based on their dependency status, year of education, and other factors. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: During our testing, we noted 1 instance out of 40 students tested at the College where the Unsubsidized Stafford Loan awarded to the student was less than the maximum amount they were eligible for. Questioned Costs: For the instances identified, each student was under awarded $1,000. Context: The College awarded $751,965 in Direct Loans during the year. Cause: Typographical error based on the department staff member using the values on the student?s loan request form. Effect: For the instance identified, the student was under awarded the unsubsidized portion of the Stafford Loan. Repeat Finding: This was not a finding in the prior year. Recommendation: We recommend the College to evaluate its procedures related to the manual input of information from the student loan request. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-004: 240 Days Outstanding Check Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A210605- 2022; P033A210605- 2022; P063P211182- 2022; P268K221182- 2022 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 668.164 states that an institution must return to the Department of Education, any Title IV funds that it attempts to disburse directly to a student or parent that are not received by the student or parent. If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Department of Education before the end of this 45-day period. If a check is sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Department of Education no later than 240 days after the date it first issued the check. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: Our audit identified 3 outstanding checks payable to students for Title IV awards that were not returned to the Department of Education within the 240 day prescribed timeframe. Questioned Costs: $2,265 Context and Cause: The District?s existing policies and procedures did not ensure compliance with the applicable criteria. Effect: The checks identified resulted in noncompliance with the Title IV regulation. Repeat Finding: This was not a finding in the prior year. Recommendation: We recommend the College to update its procedures and procedures for processing and monitoring refund checks to ensure compliance with the Title IV requirements. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
U.S. Department of Education 2022-005: Unallowable Costs Federal Agency: Department of Education Federal Program: COVID-19 Higher Education Emergency Relief Funds (HEERF)/Coronavirus Aid, Relief and Economic Security (CARES) Act ? Institutional Portion Assistance Listing Number: 84.425F Federal Award Identification Number and Year: P425F204159 - 2022 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: The Uniform Guidance Cost Principles described in 2 CFR Part 200, Subpart E, apply to the HEERF subprogram. Institutions generally have broad uses of funds. Some items of cost in Subpart E of the Uniform Guidance require prior approval under 2 CFR section 200.407 by ED. However, in its HEERF II FAQs published on January 14, 2021, and HEERF III FAQs published on May 11, 2021, ED waived prior approval for certain items of cost (as described in questions 20 and 45, respectively). Specifically, the HEERF grant funds must not be used for construction or purchase of real property. In addition, 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: The District used grants fund for construction costs that were identified as delays, labor rate escalation and supply chain issues related to COVID-19. Questioned Costs: $614,352 Context: The District expended $5,888,620 in HEERF ? Institutional Portion funds for direct costs, lost revenue and bad debt write off during the fiscal year. Cause: Costs were identified on invoices and changes orders as COVID-19 related. The District had interpreted delayed costs related to COVID-19 as allowable. Effect: Noncompliance with allowable cost principles. Repeat Finding: This was not a finding in the prior year. Recommendation: Implement procedures to ensure all grant expenditures are reviewed by fiscal management for additional review. Views of responsible officials: Management concurs with the finding and plans to correct the finding.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Finding No. 2022-001 Federal Agency: U.S. Department of Health and Human Services Program Name: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund Assistance Listing Number: 93.461 Federal Award Year: July 1, 2021 ? June 30, 2022 Compliance Requirements: Other ? Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity?s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and information provided for audit purposes is complete and accurate. Conditions Found Lehigh Valley Health Network and Subsidiaries (the ?Organization?) did not have adequate controls relating to the reporting of expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (the ?Uninsured Program?) in the SEFA. Specifically, the amounts originally provided on the SEFA for the year ended June 30, 2022 for the Uninsured Program were based on when claim payments were received rather than when the services were provided for claim reimbursement. Once the error was identified, management corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program. Cause and Effect In discussing these conditions with management, they stated that sufficient controls were not in place to ensure that the date of the patient service or treatment was used to determine the appropriate amounts and year to include the payment received from HRSA on the SEFA. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with 2 CFR Part 200. Questioned Costs There are no questioned costs related to this finding. Statistical Sample Not applicable. Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Organization establish internal controls to ensure the HRSA COVID-19 Uninsured Program is accurately reported on the SEFA and information provided for audit purposes is complete and accurate. View of Responsible Officials Since the inception of the program, the Organization reported the HRSA COVID-19 for the Uninsured based on payment date rather than on date of service/ incurred date. Once the error was identified, management properly reported and corrected the SEFA for the year ended June 30, 2022 to reflect the total amount of claims for services provided during the year ended June 30, 2022 for the Uninsured Program.
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Reference Number: 2022-001 Suspension and Debarment Prior Year Finding: No Federal Agency: U.S. Treasury Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559, 10.582 Award Number and Year: None, 2002 Compliance Requirement: Suspension and Debarment Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: ACPS did not maintain consistently documentation of vendor?s suspension and debarment status. ACPS has procedures for verifying a vendor?s suspension and debarment during the procurement process; however, the documentation of the results were not maintained in the vendor?s file. Context: The suspension and debarment verification was not available for review for two of the seven contracts selected for testing. Questioned costs: CLA was unable to determine the vendor?s suspended or debarred status prior to the contract date. The contracts were multi-year, issued before 2022. Cause: ACPS did not maintain the verification of the vendor?s suspension and debarment status in the procurement records. Effect: ACPS is unable to support the vendor?s suspension and debarment status prior to the contract date. Recommendation: We recommend that ACPS consistently follow their procurement procedures and enhance procedures to ensure that all required procurement documentation is maintained in the vendor?s procurement file. Views of responsible officials: ACPS agrees with the finding
Finding 2022-001 - Material Weakness in Internal Control - Activities Allowed or Unallowed and Allowable Costs/Cost Principles; Material Noncompliance Assistance Listing Number.: 93.498 COVID-19: Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: Not applicable Award Number: Not applicable Award Year: 2021 Questioned Costs: $3,073,785 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by the U.S. Department of Health and Human Services. Activities allowed have been defined as expense used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Condition/Context: The Corporation included expenses in their Period 3 submission for Mount Nittany Medical Center, TIN 24-0795682, (the Center) that were previously allocated to the federal program and reported in the Period 1 submission, which resulted in $3,073,785 of questioned costs. Effect: As a result of the error, $3,073,785 of unallowable expenses were allocated to the federal program. Total unused lost revenues for the period of availability which ended June 30, 2022 for the Center were $41,054,091. Cause: An oversight by personnel during the accumulation of expenses for the allocation to the federal program during Period 3 improperly identified the amounts as quarter 1 and quarter 2 of 2022 when the expenses related to quarter 1 and quarter 2 of 2021 and as a result it was not identified that these had previously been reported in Period 1. In addition, the error was not identified during the review process by management. Recommendation: We recommend that management review their procedures for the accumulation of allowable costs to ensure that information is accurate and errors are identified and addressed, prior to reporting. In addition, we recommend that management correct the errors by off-setting against unused lost revenues in their Period 4 submission. Views of Responsible Officials: The Corporation agrees with the finding. As the Center has a significant amount of available lost revenues, management has adjusted the previously reported lost revenues to adjust for the questioned costs in the reporting period 4 filing. In addition, they have added steps to their PRF reporting policy to include preparation of a waterfall file which shows the total amount of COVID eligible expenses and the period in which they were allocated for PRF reporting to ensure they do not have a duplication of costs in the future. Beginning with the reporting period 4, they also utilized the portal worksheets provided by HRSA to assist with preparing the filing. Finally, the preparation of the PRF filing for reporting period 4 (and future periods, if needed) has transitioned to the Assistant Controller to include an additional level of review by the Controller.
Finding 2022-002 - Significant Deficiency in Internal Control - Reporting Assistance Listing Number.: 93.498 COVID-19: Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number: Not applicable Award Year: 2021 Questioned Costs: None reported Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Fund and American Rescue Plan Rural Distribution (PRF) payments must also comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. Condition/Context: The Corporation included expenses in their Period 3 submission for Mount Nittany Medical Center, TIN 24-0795682, (the Center) that were previously allocated to the federal program and reported in the Period 1 submission, which resulted in expenses in the Period 3 submission being inaccurately reported and overstated by $3,073,785. Effect: As a result of the error, $3,073,785 of expenses were inaccurately reported in the Period 3 submission for the Center. Cause: An oversight by management during the review process that failed to identify the error in the reporting of expenses. Recommendation: We recommend that management implement procedures to ensure that information used in preparation of the reports is reviewed, with errors addressed, prior to reporting. In addition, we recommend that management correct the errors by off-setting against unused lost revenues in their Period 4 submission. Views of Responsible Officials: The Corporation agrees with the finding. As the Center has a significant amount of available lost revenues, management has adjusted the previously reported lost revenues to adjust for the questioned costs in the reporting period 4 filing. In addition, they have added steps to their PRF reporting policy to include preparation of a waterfall file which shows the total amount of COVID eligible expenses and the period in which they were allocated for PRF reporting to ensure they do not have a duplication of costs in the future. Beginning with the reporting period 4, they also utilized the portal worksheets provided by HRSA to assist with preparing the filing. Finally, the preparation of the PRF filing for reporting period 4 (and future periods, if needed) has transitioned to the Assistant Controller to include an additional level of review by the Controller.
MW 2022-004 Review of Reimbursement Requests and Expenses Federal Award: 14.231 Emergency Solutions Grant Program 2022 Funding Department of Housing and Urban Development Passed through the Florida Department of Children and Families Contract No. GPZ48 Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Reimbursement requests and monthly expense reports should be subject to independent review to verify the completeness and accuracy of the request and attached support. Condition: Detail attached to the reimbursement requests and monthly expense reports did not consistently support the amount requested for reimbursement. Detail attached to the reimbursement requests and monthly expense reports did not consistently support the amount requested for reimbursement. Individual payroll and non-payroll expenses were not consistently subject to review for allowability. Cause: Staff mistakenly omitted required support or input incorrect amounts. Staff mistakenly submitted a disallowed expense within a reimbursement request discovered by the pass through entity. Effect: A reimbursement request included errors and unsupported expenses. The grantor identified the errors and omissions and required the reimbursement request be resubmitted with the corrections and required support. The Organization did not have procedures to document the review of individual payroll and non-payroll expenses for allowability. Questioned Costs: None Perspective: The Executive Director has implemented procedures to organize reimbursement request and monthly expense documentation to make it easier to ensure the completeness and accuracy of the submissions to the grantor. However, these documents are often very long, and human error may not be completely avoidable through the current method of documentation. Recommendation: Review of reimbursement requests and monthly expense submissions should be documented and ensure the completeness and accuracy of the submission. Review of individual payroll and non-payroll expense allowability should be documented. Management Response: Since the prior audit, we implemented several changes which affect the repeated findings. We have already implemented the recommended process for the review of reimbursement requests and monthly expense submissions. These are documented to ensure the completeness and accuracy of the submission. We also implemented the documentation of the review of individual payroll and non-payroll expense allowability. The fiscal year 20-21 audit report was issued on June 30, 2022. The change in the fiscal year resulted in a 12-hour turnaround making it difficult to clear the findings and implement the recommended changes from last year's audit.
SD 2022-005 Support for Matching Federal Award: 14.231 Emergency Solutions Grant Program 2022 Funding Department of Housing and Urban Development Passed through the Florida Department of Children and Families Contract No. GPZ48 Criteria: 24 CFR 576.201 specifies the recipient must make matching contributions to supplement the recipient's ESG program in an amount that equals the recipient's fiscal year grant for ESG. 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. The sources of matching funds, required by awards, should be documented and retained. Condition: Subrecipient requests for reimbursement did not include detail support for matching funds. Cause: At the outset of the award, subrecipients specify the types of match (cash, in-kind, service, use of facilities, etc.) they will provide for the award and they provide the amount of the match for each month on the monthly invoice/request for reimbursement. However, no support is provided for the type, quantity, or value of match during the month. Effect: The required matching funds may not be obtained for the award. Questioned Costs: None Perspective: Support for matching was not obtained for any subrecipients. Recommendation: Sources of and detail support for matching funds should be obtained prior to payment of subrecipient requests for reimbursement. Management Response: Since the prior audit, we implemented several changes which affect the repeated findings. The FY 20-21 Audit report was issued on June 30, 2022. The change in the fiscal year resulted in a 12-hour turnaround making it difficult to clear the findings and implement the recommended changes from last year's audit. We require match documentation to be provided upfront during the competitive RFP. We detailed in each sub-recipient contract the Match requirements that ensure compliance with 24 CFR 576.201 and 2 CFR 200.303. We have added a match reporting requirement to the invoicing process that requires proof of Match monthly. These sub-recipient contracts went into effect July 1, 2022 making the implementation of the recommended change effective outside of the fiscal year in review. This finding will be cleared in our next audit.
SD 2022-006 Subrecipient Procurement Policy Federal Award: 14.231 Emergency Solutions Grant Program 2022 Funding Department of Housing and Urban Development Passed through the Florida Department of Children and Families Contract No. GPZ48 Criteria: 2 CFR Part 180 prohibits award recipients from entering into covered transactions with vendors who are suspended or debarred. Further, 2 CFR 200.320 sets forth the requirements for acquisition contracts awarded to vendors including the requirement to obtain price or rate quotations from an adequate number of qualified sources and the circumstances in which noncompetitive procurement methods can be used. 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Policies and procedures at subrecipient organizations should ensure competitive procurement and the use of vendors who are not suspended or debarred for grant-funded expenditures. Condition: Subrecipients are required to have procurement policies which ensure competitive procurement and use vendors who are not suspended or debarred for grant-funded expenditures. Cause: The Organization has not developed a process to monitor this requirement for subrecipients. Effect: The Organization may reimburse subrecipients for transactions which did not comply with competitive procurement requirements or were made with suspended or debarred vendors. Questioned Costs: None Perspective: The Organization has competitive procurement procedures and verifies vendors are in good-standing for their grant-funded expenses. Procurement policies at subrecipients have not been required to be provided or evaluated. Recommendation: Prior to approving funding to a subrecipient, and annually thereafter, the Organization should require subrecipients to submit procurement policies which ensure competitive procurement and the use of vendors who are not suspended or debarred for grant-funded expenditures. Management Response: Since the prior audit, we implemented several changes which affect the repeated findings. The fiscal year 20-21 audit report was issued on June 30, 2022. The change in the fiscal year resulted in a 12-hour turnaround making it difficult to clear the findings and implement the recommended changes from last year's audit. We addressed the procurement policies with our existing subcontractors during their fiscal year 21-22 Monitoring visits in May, 2022. We added to any new and/or existing contracts the requirement for the Agency to supply their Procurement policies that ensure competitive procurement and the use of vendors who are not suspended or debarred for grant-funded expenditures. All new sub-recipient contracts that went into effect July 1, 2022 made the implementation of the recommended change effective outside of the fiscal year in review. This finding will be cleared in our next audit.
Reference Number: 2022-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CDBG Entitlement Grant Cluster Assistance Listing Number: 14.218 Award Number: B-18-UC-24-0012, B-19-UC-24-0012, B20-UW-24-0012, B20-UC-24-0012, B-21-UC-24-0012 Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The County did not timely report required subaward information to FSRS for first-tier subawards of $30,000 or more. Questioned Costs: None Context: Five of five subawards selected for testing were reported to FSRS. "See Schedule of Findings and Questioned Costs for chart/table" Cause: The County?s policies and procedures were not sufficient to ensure that required subaward information was timely reported to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not properly reported in FSRS in accordance with FFATA requirements. Recommendation: We further recommend the County to develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS. Views of Responsible Officials and Planned Corrective Action: The County agrees with the finding. See separate Corrective Action Plan related to this finding.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $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. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.