Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: United States Department of Health and Human Services Federal Program Name: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Federal Award Identification Number and Year: 90EV0467 Award Period for 90EV0467-02 and 90EV0467-03: September 30, 2020 through September 29, 2024 Award Period for 90EV0467-C6: March 15, 2021 through September 30, 2025 Criteria or specific requirement: CFR 200.318 states the non-Federal entity's documented procurement procedures must conform to the procurement standards identified in CFR sections 200.317 through 200.327. Condition: During our procurement testing, it was noted the procurement policy was written to comply with OMB Circular A-110 (2 CFR 215). As the requirements stated in the Circular have been superseded by OMB Uniform Guidance 2 CFR part 200, the policy as it is written is out of compliance. Questioned costs: None. Context: Though the current procurement policy was not updated to comply with 2 CFR Part 200 procurement standards the 3 samples selected during our audit did not identify instances of noncompliance with procurement standards. Cause: Management was not aware of the specific compliance requirement changes and thus, did not update its procurement policy. Effect: By not having an updated policy, the Organization could enter into a material transaction that is not compliant with 2 CFR Part 200. Repeat Finding: No. Recommendation: We recommend the client update its procurement policy so it is compliant with 2 CFR Part 200. Views of responsible officials: Management agrees with the finding and has provided its corrective action plan.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: United States Department of Health and Human Services Federal Program Name: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Federal Award Identification Number and Year: 90EV0467 Award Period for 90EV0467-02 and 90EV0467-03: September 30, 2020 through September 29, 2024 Award Period for 90EV0467-C6: March 15, 2021 through September 30, 2025 Criteria or specific requirement: CFR 200.318 states the non-Federal entity's documented procurement procedures must conform to the procurement standards identified in CFR sections 200.317 through 200.327. Condition: During our procurement testing, it was noted the procurement policy was written to comply with OMB Circular A-110 (2 CFR 215). As the requirements stated in the Circular have been superseded by OMB Uniform Guidance 2 CFR part 200, the policy as it is written is out of compliance. Questioned costs: None. Context: Though the current procurement policy was not updated to comply with 2 CFR Part 200 procurement standards the 3 samples selected during our audit did not identify instances of noncompliance with procurement standards. Cause: Management was not aware of the specific compliance requirement changes and thus, did not update its procurement policy. Effect: By not having an updated policy, the Organization could enter into a material transaction that is not compliant with 2 CFR Part 200. Repeat Finding: No. Recommendation: We recommend the client update its procurement policy so it is compliant with 2 CFR Part 200. Views of responsible officials: Management agrees with the finding and has provided its corrective action plan.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: United States Department of Health and Human Services Federal Program Name: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Federal Award Identification Number and Year: 90EV0467 Award Period for 90EV0467-02 and 90EV0467-03: September 30, 2020 through September 29, 2024 Award Period for 90EV0467-C6: March 15, 2021 through September 30, 2025 Criteria or specific requirement: CFR 200.318 states the non-Federal entity's documented procurement procedures must conform to the procurement standards identified in CFR sections 200.317 through 200.327. Condition: During our procurement testing, it was noted the procurement policy was written to comply with OMB Circular A-110 (2 CFR 215). As the requirements stated in the Circular have been superseded by OMB Uniform Guidance 2 CFR part 200, the policy as it is written is out of compliance. Questioned costs: None. Context: Though the current procurement policy was not updated to comply with 2 CFR Part 200 procurement standards the 3 samples selected during our audit did not identify instances of noncompliance with procurement standards. Cause: Management was not aware of the specific compliance requirement changes and thus, did not update its procurement policy. Effect: By not having an updated policy, the Organization could enter into a material transaction that is not compliant with 2 CFR Part 200. Repeat Finding: No. Recommendation: We recommend the client update its procurement policy so it is compliant with 2 CFR Part 200. Views of responsible officials: Management agrees with the finding and has provided its corrective action plan.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: United States Department of Health and Human Services Federal Program Name: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Federal Award Identification Number and Year: 90EV0467 Award Period for 90EV0467-02 and 90EV0467-03: September 30, 2020 through September 29, 2024 Award Period for 90EV0467-C6: March 15, 2021 through September 30, 2025 Criteria or specific requirement: CFR 200.318 states the non-Federal entity's documented procurement procedures must conform to the procurement standards identified in CFR sections 200.317 through 200.327. Condition: During our procurement testing, it was noted the procurement policy was written to comply with OMB Circular A-110 (2 CFR 215). As the requirements stated in the Circular have been superseded by OMB Uniform Guidance 2 CFR part 200, the policy as it is written is out of compliance. Questioned costs: None. Context: Though the current procurement policy was not updated to comply with 2 CFR Part 200 procurement standards the 3 samples selected during our audit did not identify instances of noncompliance with procurement standards. Cause: Management was not aware of the specific compliance requirement changes and thus, did not update its procurement policy. Effect: By not having an updated policy, the Organization could enter into a material transaction that is not compliant with 2 CFR Part 200. Repeat Finding: No. Recommendation: We recommend the client update its procurement policy so it is compliant with 2 CFR Part 200. Views of responsible officials: Management agrees with the finding and has provided its corrective action plan.
Finding 2023-001-Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Pass-through entity: The University of Texas of Austin Program: Birth Defects and Development Disabilities – Prevention and Surveillance Assistance listing number: 93.073 Federal award identification number and year: • NU84DD000009 2021 • NU84DD000012 2022 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. 2 CFR 200.214 states non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Order 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. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and Context: The Foundation does not have a formal procurement policy under requirements of 2 CFR 200.317 through 200.327. The Foundation established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. We noted as part of our testing that there was no documentation that these policies and procedures were being followed. Cause: The Foundation procurement policy did not conform to 2 CFR 200.317 through 200.327 and management did not document compliance with the above criteria regarding suspension and debarment. Effect: The Foundation procurement policy did not conform to 2 CFR 200.317 through 200.327. The Foundation’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat Finding: No Recommendation: We recommend management develop a formal procurement policy to conform to 2 CFR 200.317 through 200.327. We recommend that the Foundation add and monitor the formal procedure and policy with designated individual(s) responsible to ensure documentation is retained, satisfying the compliance requirement detailed above. Views of responsible individuals: Management agrees with the finding and recommendation. See corrective action plan for further information.
Finding 2023-001-Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Pass-through entity: The University of Texas of Austin Program: Birth Defects and Development Disabilities – Prevention and Surveillance Assistance listing number: 93.073 Federal award identification number and year: • NU84DD000009 2021 • NU84DD000012 2022 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. 2 CFR 200.214 states non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Order 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. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and Context: The Foundation does not have a formal procurement policy under requirements of 2 CFR 200.317 through 200.327. The Foundation established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. We noted as part of our testing that there was no documentation that these policies and procedures were being followed. Cause: The Foundation procurement policy did not conform to 2 CFR 200.317 through 200.327 and management did not document compliance with the above criteria regarding suspension and debarment. Effect: The Foundation procurement policy did not conform to 2 CFR 200.317 through 200.327. The Foundation’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat Finding: No Recommendation: We recommend management develop a formal procurement policy to conform to 2 CFR 200.317 through 200.327. We recommend that the Foundation add and monitor the formal procedure and policy with designated individual(s) responsible to ensure documentation is retained, satisfying the compliance requirement detailed above. Views of responsible individuals: Management agrees with the finding and recommendation. See corrective action plan for further information.
Finding 2023-001-Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Pass-through entity: The University of Texas of Austin Program: Birth Defects and Development Disabilities – Prevention and Surveillance Assistance listing number: 93.073 Federal award identification number and year: • NU84DD000009 2021 • NU84DD000012 2022 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. 2 CFR 200.214 states non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Order 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. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and Context: The Foundation does not have a formal procurement policy under requirements of 2 CFR 200.317 through 200.327. The Foundation established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. We noted as part of our testing that there was no documentation that these policies and procedures were being followed. Cause: The Foundation procurement policy did not conform to 2 CFR 200.317 through 200.327 and management did not document compliance with the above criteria regarding suspension and debarment. Effect: The Foundation procurement policy did not conform to 2 CFR 200.317 through 200.327. The Foundation’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat Finding: No Recommendation: We recommend management develop a formal procurement policy to conform to 2 CFR 200.317 through 200.327. We recommend that the Foundation add and monitor the formal procedure and policy with designated individual(s) responsible to ensure documentation is retained, satisfying the compliance requirement detailed above. Views of responsible individuals: Management agrees with the finding and recommendation. See corrective action plan for further information.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 through 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR 180.215. During testing of federal compliance, the Center was unable to provide evidence of competitive bidding of a contract nor was a copy of the final contract maintained. Further it was noted that the Center did not check the suspended or debarred list for covered transactions. The Center should implement additional procedures to ensure competitive bidding is undertaken when required and that documentation for such processes is maintained; copies of executed contracts are maintained. Further the Center should ensure that vendors are not on the suspended or debarred list.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 through 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR 180.215. During testing of federal compliance, the Center was unable to provide evidence of competitive bidding of a contract nor was a copy of the final contract maintained. Further it was noted that the Center did not check the suspended or debarred list for covered transactions. The Center should implement additional procedures to ensure competitive bidding is undertaken when required and that documentation for such processes is maintained; copies of executed contracts are maintained. Further the Center should ensure that vendors are not on the suspended or debarred list.
FINDING 2023-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Fifteen purchases that fell within the small purchases threshold were identified. Three of the purchases were selected for testing. For one of the purchases tested, totaling $55,285, the School Corporation was unable to provide supporting documentation that an adequate number of quotes were obtained from qualified sources. The lack of effective internal controls and noncompliance were isolated to the one purchase noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 22 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In fiscal year 2021-2022, one covered transaction, totaling $55,285, with one vendor was identified. In 2022-2023, four covered transactions, totaling $130,257, with two vendors were identified. All five covered transactions were selected for testing. For the three vendors, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. INDIANA STATE BOARD OF ACCOUNTS 23 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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: (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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Fifteen purchases that fell within the small purchases threshold were identified. Three of the purchases were selected for testing. For one of the purchases tested, totaling $55,285, the School Corporation was unable to provide supporting documentation that an adequate number of quotes were obtained from qualified sources. The lack of effective internal controls and noncompliance were isolated to the one purchase noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 22 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In fiscal year 2021-2022, one covered transaction, totaling $55,285, with one vendor was identified. In 2022-2023, four covered transactions, totaling $130,257, with two vendors were identified. All five covered transactions were selected for testing. For the three vendors, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. INDIANA STATE BOARD OF ACCOUNTS 23 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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: (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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Fifteen purchases that fell within the small purchases threshold were identified. Three of the purchases were selected for testing. For one of the purchases tested, totaling $55,285, the School Corporation was unable to provide supporting documentation that an adequate number of quotes were obtained from qualified sources. The lack of effective internal controls and noncompliance were isolated to the one purchase noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 22 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In fiscal year 2021-2022, one covered transaction, totaling $55,285, with one vendor was identified. In 2022-2023, four covered transactions, totaling $130,257, with two vendors were identified. All five covered transactions were selected for testing. For the three vendors, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. INDIANA STATE BOARD OF ACCOUNTS 23 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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: (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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Fifteen purchases that fell within the small purchases threshold were identified. Three of the purchases were selected for testing. For one of the purchases tested, totaling $55,285, the School Corporation was unable to provide supporting documentation that an adequate number of quotes were obtained from qualified sources. The lack of effective internal controls and noncompliance were isolated to the one purchase noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 22 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In fiscal year 2021-2022, one covered transaction, totaling $55,285, with one vendor was identified. In 2022-2023, four covered transactions, totaling $130,257, with two vendors were identified. All five covered transactions were selected for testing. For the three vendors, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. INDIANA STATE BOARD OF ACCOUNTS 23 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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: (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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Fifteen purchases that fell within the small purchases threshold were identified. Three of the purchases were selected for testing. For one of the purchases tested, totaling $55,285, the School Corporation was unable to provide supporting documentation that an adequate number of quotes were obtained from qualified sources. The lack of effective internal controls and noncompliance were isolated to the one purchase noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 22 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In fiscal year 2021-2022, one covered transaction, totaling $55,285, with one vendor was identified. In 2022-2023, four covered transactions, totaling $130,257, with two vendors were identified. All five covered transactions were selected for testing. For the three vendors, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. INDIANA STATE BOARD OF ACCOUNTS 23 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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: (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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Fifteen purchases that fell within the small purchases threshold were identified. Three of the purchases were selected for testing. For one of the purchases tested, totaling $55,285, the School Corporation was unable to provide supporting documentation that an adequate number of quotes were obtained from qualified sources. The lack of effective internal controls and noncompliance were isolated to the one purchase noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 22 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In fiscal year 2021-2022, one covered transaction, totaling $55,285, with one vendor was identified. In 2022-2023, four covered transactions, totaling $130,257, with two vendors were identified. All five covered transactions were selected for testing. For the three vendors, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. INDIANA STATE BOARD OF ACCOUNTS 23 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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: (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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-008 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027X Federal Award Number and Year (or Other Identifying Number): 22611-054-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 29 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have a procurement policy that complied with the procurement standards. In addition, one purchase, totaling $75,387, was identified that fell within the small purchases threshold. The purchase was selected for testing. The School Corporation did not adequately document the history of the procurement, which would have included an awarded contract. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. One covered transaction, totaling $75,387, was identified and selected for testing. The School Corporation did not verify the vendor's suspension and debarment status prior to payment. 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: INDIANA STATE BOARD OF ACCOUNTS 30 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. . . ." 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 31 WABASH CITY 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 A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a system of internal controls and develop policies and procedures to ensure the history of the procurement is maintained for goods within the small purchase threshold and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-008 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027X Federal Award Number and Year (or Other Identifying Number): 22611-054-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 29 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have a procurement policy that complied with the procurement standards. In addition, one purchase, totaling $75,387, was identified that fell within the small purchases threshold. The purchase was selected for testing. The School Corporation did not adequately document the history of the procurement, which would have included an awarded contract. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed there were no policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. One covered transaction, totaling $75,387, was identified and selected for testing. The School Corporation did not verify the vendor's suspension and debarment status prior to payment. 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: INDIANA STATE BOARD OF ACCOUNTS 30 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented 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. . . ." 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 31 WABASH CITY 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 A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, goods that fell within the small purchase threshold were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a system of internal controls and develop policies and procedures to ensure the history of the procurement is maintained for goods within the small purchase threshold and ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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): SY 2021-22, SY 2022-23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, 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. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of four vendors were identified for procurement that fell within the small purchases range. All four vendors were selected for testing. For three of the four vendors tested, the School Corporation could not provide evidence that price or rate quotes were obtained. In addition, the School Corporation did not obtain a contract for two of three vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for these vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included an appendix in the contract that a vendor will sign, stating they are not suspended or debarred or the School Corporation will check the SAMs website to ensure that the vendor is not suspended or debarred. Five covered transactions that equaled or exceeded $25,000 were identified. All five transactions, totaling $3,936,236 were selected for testing. For three of the five vendors, the School Corporation had not performed procedures to ensure the vendors, paid a total of $192,750, were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 WASHINGTON COMMUNITY SCHOOLS, INC. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 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 STATE BOARD OF ACCOUNTS 20 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services, and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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): SY 2021-22, SY 2022-23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, 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. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of four vendors were identified for procurement that fell within the small purchases range. All four vendors were selected for testing. For three of the four vendors tested, the School Corporation could not provide evidence that price or rate quotes were obtained. In addition, the School Corporation did not obtain a contract for two of three vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for these vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included an appendix in the contract that a vendor will sign, stating they are not suspended or debarred or the School Corporation will check the SAMs website to ensure that the vendor is not suspended or debarred. Five covered transactions that equaled or exceeded $25,000 were identified. All five transactions, totaling $3,936,236 were selected for testing. For three of the five vendors, the School Corporation had not performed procedures to ensure the vendors, paid a total of $192,750, were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 WASHINGTON COMMUNITY SCHOOLS, INC. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 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 STATE BOARD OF ACCOUNTS 20 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services, and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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): SY 2021-22, SY 2022-23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, 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. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of four vendors were identified for procurement that fell within the small purchases range. All four vendors were selected for testing. For three of the four vendors tested, the School Corporation could not provide evidence that price or rate quotes were obtained. In addition, the School Corporation did not obtain a contract for two of three vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for these vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included an appendix in the contract that a vendor will sign, stating they are not suspended or debarred or the School Corporation will check the SAMs website to ensure that the vendor is not suspended or debarred. Five covered transactions that equaled or exceeded $25,000 were identified. All five transactions, totaling $3,936,236 were selected for testing. For three of the five vendors, the School Corporation had not performed procedures to ensure the vendors, paid a total of $192,750, were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 WASHINGTON COMMUNITY SCHOOLS, INC. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 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 STATE BOARD OF ACCOUNTS 20 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services, and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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): SY 2021-22, SY 2022-23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, 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. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of four vendors were identified for procurement that fell within the small purchases range. All four vendors were selected for testing. For three of the four vendors tested, the School Corporation could not provide evidence that price or rate quotes were obtained. In addition, the School Corporation did not obtain a contract for two of three vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for these vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included an appendix in the contract that a vendor will sign, stating they are not suspended or debarred or the School Corporation will check the SAMs website to ensure that the vendor is not suspended or debarred. Five covered transactions that equaled or exceeded $25,000 were identified. All five transactions, totaling $3,936,236 were selected for testing. For three of the five vendors, the School Corporation had not performed procedures to ensure the vendors, paid a total of $192,750, were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 WASHINGTON COMMUNITY SCHOOLS, INC. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 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 STATE BOARD OF ACCOUNTS 20 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services, and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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): SY 2021-22, SY 2022-23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, 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. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of four vendors were identified for procurement that fell within the small purchases range. All four vendors were selected for testing. For three of the four vendors tested, the School Corporation could not provide evidence that price or rate quotes were obtained. In addition, the School Corporation did not obtain a contract for two of three vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for these vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included an appendix in the contract that a vendor will sign, stating they are not suspended or debarred or the School Corporation will check the SAMs website to ensure that the vendor is not suspended or debarred. Five covered transactions that equaled or exceeded $25,000 were identified. All five transactions, totaling $3,936,236 were selected for testing. For three of the five vendors, the School Corporation had not performed procedures to ensure the vendors, paid a total of $192,750, were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 WASHINGTON COMMUNITY SCHOOLS, INC. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 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 STATE BOARD OF ACCOUNTS 20 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services, and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, 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): SY 2021-22, SY 2022-23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, 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. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of four vendors were identified for procurement that fell within the small purchases range. All four vendors were selected for testing. For three of the four vendors tested, the School Corporation could not provide evidence that price or rate quotes were obtained. In addition, the School Corporation did not obtain a contract for two of three vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for these vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included an appendix in the contract that a vendor will sign, stating they are not suspended or debarred or the School Corporation will check the SAMs website to ensure that the vendor is not suspended or debarred. Five covered transactions that equaled or exceeded $25,000 were identified. All five transactions, totaling $3,936,236 were selected for testing. For three of the five vendors, the School Corporation had not performed procedures to ensure the vendors, paid a total of $192,750, were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 WASHINGTON COMMUNITY SCHOOLS, INC. 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 states in part: "(a) 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 conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 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 STATE BOARD OF ACCOUNTS 20 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services, and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), 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 conform to the procurement standards identified in §§ 200.317 through 200.327.” Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases. POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327. The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023. Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013. Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely. Questioned costs: No costs are questioned. Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects. Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327. Repeat Finding: This is not a repeat finding. Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures. It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1). Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), 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 conform to the procurement standards identified in §§ 200.317 through 200.327.” Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases. POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327. The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023. Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013. Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely. Questioned costs: No costs are questioned. Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects. Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327. Repeat Finding: This is not a repeat finding. Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures. It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1). Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Finding Reference: 2023-001 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Treasury Awards: Assistance Listing Number 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Periods: July 1, 2021 – June 30, 2023 Description: Incomplete Federal Requirements within Procurement Policies Type of Finding: Compliance and Deficiency in Internal Control Over Compliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “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).” Part 200.320 Methods of procurement to be followed states the following: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319" regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion for Coronavirus State and Local Fiscal Recovery Funds, we noted that the Corporation did not have a procurement policy that conforms to all applicable Federal law, State and Local Fiscal Recovery Funds Regulations, and the standards contained in the Uniform Guidance, as applicable, when purchasing services with the Coronavirus State and Local Fiscal Recovery Funds. Cause The Corporation did not comply and maintain a procurement policy that conforms to the provisions required by the Uniform Guidance upon receiving such federal funds related to the Coronavirus State and Local Fiscal Recovery Funds program. Effect or potential effect Purchasing of goods and/or servicing with the State and Local Fiscal Recovery Funds may not be in compliance with the Uniform Guidance. Questioned costs Not applicable. Identification of a repeat finding This is a repeat finding of Finding 2022-001 in the prior year. Context The Corporation utilized the funds awarded to their facility to bolster staff and entered into various labor contracts with agency vendors. As a result of the pandemic and related public emergency, there was an unprecedented stress on the labor force and therefore, a high demand and dependency on agency labor. As part of management’s assessment, a competitive solicitation would have resulted in a delay and lack of required and necessary staff. As such, this specific circumstance would allow for noncompetitive procurement. Recommendation The Corporation should update its procurement policy to include the provisions required by the Uniform Guidance for purchasing goods and/or services with federal funds. View of responsible officials The Corporation agrees with the finding and has developed a plan to correct the finding.
Federal Program Information: COVID – Coronavirus State and Local Fiscal Recovery Funds (ALN #21.027) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): Procurement: The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of 2 CFR 200.318, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. Condition: The College did not have a formal procurement policy in place documenting procedures that conform to the procurement standards in the Uniform Guidance. Cause: Lack of administrative oversight with respect to procurement process. Effect or Potential Effect: The College is not in compliance with procurement standards. Questioned Costs: None. Context: The College did not have a formal procurement policy in place documenting procedures that conform to the procurement standards in the Uniform Guidance. Identification as a Repeat Finding: There was no similar finding identified during the prior year. Recommendation: We recommend the College develop and implement a procurement policy conforming to procurement standards. Views of Responsible Officials:
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that 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 conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that 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 conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Criteria: Recipients are responsible for ensuring that any procurement using State and Local Fiscal Recovery Funds, or payments under procurement contracts using such funds, are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327. All contracts made by the non-Federal entity under the Federal award must contain the applicable provisions covering Davis Bacon Act. Condition: The City utilized a vendor from a state contract for public work in excess of $2,000 and did not execute a contract enumerating all required provisions. Cause: The City did not acquire the necessary certified payrolls. Effect: The City is not in compliance with the requirements of the awarding agency. Questioned Costs: None Context/Sampling: All contracts for public works were tested to ensure the necessary required provisions were included and that contractors and subcontractors submitted certified payrolls. The City did not acquire a contract for one project. Prior Year: None Recommendation: We recommend the City enhance internal controls to ensure that all purchases for goods and services under the federal award requiring a formal contract executes one. Client Response: The City recognizes the importance of internal controls and plans to enhance procedures to ensure that all purchases for goods and services under a federal award requiring a formal contract executes one. The City believes it is prudent such awards have a contract to support purchase orders. Covid interruptions with related illnesses, early retirements and hiring difficulties all contributed to the negative impact.
FINDING 2023-001 PROCUREMENT SIGNIFICANT DEFICIENCY Federal Program: Charter School Programs Assistance Listing Numbers: 84.282A Criteria Per 2 CFR 200.318, “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 conform to the procurement standards identified in §200.317 through 200.327.” Per 2 CFR 200.320(a)(2)(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.” Condition The School was unable to provide documentation to support that price comparisons were obtained from vendors for costs falling in the category of small purchases (between $10,000 and $249,999). Additionally, the School’s procedures manual did not include procedures for the handling of these transactions. Cause Documentation was not maintained to support that this step in the procurement process was completed. Effect Not documenting these procedures could result in the School completing procurement transactions not in compliance with Federal regulations. Recommendation We recommend the School develop procedures to ensure price comparisons are obtained and documented. Views of Responsible Officials and Planned Corrective Actions The School’s Corrective Action Plan is included on page 23.
FINDING 2023-001 PROCUREMENT SIGNIFICANT DEFICIENCY Federal Program: Charter School Programs Assistance Listing Numbers: 84.282A Criteria Per 2 CFR 200.318, “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 conform to the procurement standards identified in §200.317 through 200.327.” Per 2 CFR 200.320(a)(2)(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.” Condition The School was unable to provide documentation to support that price comparisons were obtained from vendors for costs falling in the category of small purchases (between $10,000 and $249,999). Additionally, the School’s procedures manual did not include procedures for the handling of these transactions. Cause Documentation was not maintained to support that this step in the procurement process was completed. Effect Not documenting these procedures could result in the School completing procurement transactions not in compliance with Federal regulations. Recommendation We recommend the School develop procedures to ensure price comparisons are obtained and documented. Views of Responsible Officials and Planned Corrective Actions The School’s Corrective Action Plan is included on page 23.
2023-015 Oregon Housing and Community Services Fully implement controls to ensure subrecipients are in compliance with program requirements Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Procurement, Suspension, and Debarment, Special Tests and Provisions Type of Finding: Material Weakness Prior Year Findings: 2022-018, 2022-019, 2022-020, 2022-021, 2022-024 Questioned Costs: N/A Criteria: 2 CFR 200.303(a); 2 CFR 200.311; 2 CFR 200.313; 2 CFR 200.317 - .327; 24 CFR 576.100; 24 CFR 576.101(c); 24 CFR 576.102(c) The Emergency Solutions Grants (ESG/ESG-CV) program is operated by the department via pass-through funds to subrecipients. With the significant influx of pandemic relief funds, the department expanded the number of subrecipients partnered with from 17 longstanding community action agencies (CAAs) to a total of 45 CAA and non-CAA subrecipients. During fiscal year 2023, 98% of program expenditures were passed through to 40 of these subrecipients. Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance program expenditures are in compliance with the terms and conditions of the federal award. However, the significant increases to federal funding the creation and implementation of a new award system for non-CAA recipients, and the increase in the number of subrecipients, along with a period of high employee turnover led to delays in the department’s development and implementation of sufficient subrecipient monitoring processes that would meet this objective. Department management subsequently contracted with a private auditing firm to assist in the monitoring of the program activities and expenditures of funds passed through to the subrecipients to remedy the noted control weaknesses. Department staff and the private auditing firm are currently working through the monitoring backlog. However, at the time of the audit, monitoring of only 16 of the 40 subrecipients had been completed which represents 58% of the fiscal year 2023 pass-through expenditures. Additionally, the completed monitoring was only performed over fiscal year 2022 expenditures as the department works to catch up on monitoring of prior year expenditures. Incomplete monitoring could lead to program noncompliance. We recommend department management complete the review and monitoring of program funds passed through to subrecipients for compliance with all applicable program requirements.
2023-016 Oregon Housing and Community Services Verification that subrecipients have not been suspended or debarred needs to be retained Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirements: Procurement and Suspension and Debarment Type of Finding: Material Weakness Prior Year Finding: 2022-022 Questioned Costs: N/A Criteria: 2 CFR 200.317 - .327 The prior-year audit noted that procurement processes were not followed. Specifically, evidence the department verified non-community action agencies receiving Emergency Solutions Grant Program and ESG-CV money were not suspended or debarred was not retained. During the audit, we attempted to review the suspension and debarment status of those entities that had received ESG and ESG-CV funds in 2023. We found the department did not retain evidence the suspension and debarment status of subrecipients was verified. Management stated this was due to the contracts being executed prior to fiscal year 2023. Due to employee turnover, it was unclear whether the verifications had not been performed or documentation had not been retained. Current procurement staff have since developed procedures to ensure future compliance with suspension and debarment requirements. We recommend department management perform and retain evidence of checks of suspension and debarment for all new and existing contracts.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the OMB guidance in 2 CFR § 200. 2 CFR § 200.317 - 200.327 requires entities to use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR 200.324(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.324(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” The School District paid more than $250,000 to Valley Wholesale during fiscal year 2023 for food products for the Child Nutrition Cluster. This amount exceeded the simplified acquisition threshold thus the District should follow a formal competitive procurement method described in 2 CFR 200.320(b). However, the School District did not follow a formal procurement method because they chose to use this local vendor (Valley Wholesale) to allow them to get their fresh produce in a timely manner to avoid food waste. The School District did not have the proper internal controls in place to ensure proper bidding procedures were followed. Failure to have the appropriate controls in place may result in vendors being used that are not providing the best possible prices. The School District should follow their established procurement policies and federal guidelines when choosing all vendors for the Child Nutrition Cluster.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the OMB guidance in 2 CFR § 200. 2 CFR § 200.317 - 200.327 requires entities to use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR 200.324(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.324(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” The School District paid more than $250,000 to Valley Wholesale during fiscal year 2023 for food products for the Child Nutrition Cluster. This amount exceeded the simplified acquisition threshold thus the District should follow a formal competitive procurement method described in 2 CFR 200.320(b). However, the School District did not follow a formal procurement method because they chose to use this local vendor (Valley Wholesale) to allow them to get their fresh produce in a timely manner to avoid food waste. The School District did not have the proper internal controls in place to ensure proper bidding procedures were followed. Failure to have the appropriate controls in place may result in vendors being used that are not providing the best possible prices. The School District should follow their established procurement policies and federal guidelines when choosing all vendors for the Child Nutrition Cluster.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the OMB guidance in 2 CFR § 200. 2 CFR § 200.317 - 200.327 requires entities to use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR 200.324(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.324(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” The School District paid more than $250,000 to Valley Wholesale during fiscal year 2023 for food products for the Child Nutrition Cluster. This amount exceeded the simplified acquisition threshold thus the District should follow a formal competitive procurement method described in 2 CFR 200.320(b). However, the School District did not follow a formal procurement method because they chose to use this local vendor (Valley Wholesale) to allow them to get their fresh produce in a timely manner to avoid food waste. The School District did not have the proper internal controls in place to ensure proper bidding procedures were followed. Failure to have the appropriate controls in place may result in vendors being used that are not providing the best possible prices. The School District should follow their established procurement policies and federal guidelines when choosing all vendors for the Child Nutrition Cluster.
Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Federal Award Number: 227AKAK7W1003, 227AKAK7W1006, 237AKAK7W1003, 237AKAK7W1006 Applicable Compliance Requirement: Procurement and Suspension and Debarment Condition: For one of five procurement contracts selected for testing, the State could not provide documentation of the procurement method chosen and the procurement exceeded the threshold required for competitive bidding procedures. Context: The State is required to follow its own procurement policies and procedures as outlined in the Alaska Administrative Manual (AAM) Section AAM 81 “Procurement”. The Alaska Administrative Manual Section AAM 81.020 requires procurements more than $10,000 and less than $50,000 to involve obtaining at least three quotes or informal proposals. Cause: The vendor provided services that were previously under the micro-purchase threshold for procurement, which did not require competitive bidding procedures. The level of activity with the vendor increased and exceeded the threshold for competitive bidding procedures to be completed by the State. Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Subpart C, §200.317 requires states to follow their procurement policies and procedures. Effect: It is important for the Department to obtain and maintain appropriate documentation to support procurement decisions. Otherwise, a procurement decision would be unsupported and could lead to questioned costs. Questioned Costs: None Recommendation: The State should provide training to employees to ensure that goods and services procured are done so in accordance with the State’s procurement policy. View of Responsible Officials: Management agrees with this finding.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a nonfederal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327. While there is a conflict-of-interest policy, it does not specifically include standards of conduct covering conflicts of interest for procurement. There are no designed and implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. For three significant transactions tested there were no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. Total procurements were $482,904. Cause: The organization began charging procurement transactions in the current year to federal awards. The organization’s staff did not understand how to document the procurement history. Effect or Potential Effect: Questioned costs may be disallowed and required to be repaid. Questioned Costs: $365,501; total of the three significant transactions tested. Repeat Finding: No. Recommendation: The organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. The conflict-of-interest policy should be updated to include standards of conduct for those involved in procuring and to include organizational conflicts of interest. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing procurement and conflict-of-interest policies.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a nonfederal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327. While there is a conflict-of-interest policy, it does not specifically include standards of conduct covering conflicts of interest for procurement. There are no designed and implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. For three significant transactions tested there were no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. Total procurements were $482,904. Cause: The organization began charging procurement transactions in the current year to federal awards. The organization’s staff did not understand how to document the procurement history. Effect or Potential Effect: Questioned costs may be disallowed and required to be repaid. Questioned Costs: $365,501; total of the three significant transactions tested. Repeat Finding: No. Recommendation: The organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. The conflict-of-interest policy should be updated to include standards of conduct for those involved in procuring and to include organizational conflicts of interest. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing procurement and conflict-of-interest policies.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a nonfederal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327. While there is a conflict-of-interest policy, it does not specifically include standards of conduct covering conflicts of interest for procurement. There are no designed and implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. For three significant transactions tested there were no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. Total procurements were $482,904. Cause: The organization began charging procurement transactions in the current year to federal awards. The organization’s staff did not understand how to document the procurement history. Effect or Potential Effect: Questioned costs may be disallowed and required to be repaid. Questioned Costs: $365,501; total of the three significant transactions tested. Repeat Finding: No. Recommendation: The organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. The conflict-of-interest policy should be updated to include standards of conduct for those involved in procuring and to include organizational conflicts of interest. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing procurement and conflict-of-interest policies.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Assistance Number – Research and Development Cluster, Multiple Federal Grantors, Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Institute's micro-purchase threshold of $25,000 included in the policy is in excess of 2 CFR Section 200.320, and the Institute is not eligible for the increase to the micro-purchase threshold. Formal procurement and non competitive procurement policies have been documented; however, formalized documentation supporting the Institute is in compliance with policies did not exist. Additionally, there was no suspension and debarment check completed prior to purchases made with federal funds. Questioned Costs – Total questioned costs of $45,000 were identified and represents value of equipment purchased for which the procurement process could not be supported in line with the Institute's policy and Uniform Guidance. Context – One purchase of $45,000 out of a total of three purchases totaling $152,986 subject to procurement requirements in 2023 was selected for testing. The Institute could not provide documentation supporting their purchase adhered to policies for formal procurement or non competitive procurement. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. The sample was not intended to be, and was not, a statistically valid sample. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Cause – The Institute's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Identification as a Repeat Finding, if applicable – Not a repeat finding. Recommendation – Policies and procedures should be modified to ensure that procurement policies and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.