2022 ? 001 Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number: N/A Pass-Through Agency: Commonwealth of Massachusetts Executive Office of Administration and Finance Pass-Through Number(s): N/A Award Period: March 3, 2021 through December 31, 2024 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Title 2 of the U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of procurement, suspension, and debarment compliance requirements. The Town should have internal controls designed to ensure compliance with those provisions. Specifically, CFR Title 2, part 200.318 states that the non-Federal entity (the Town) must have and use documented procurement procedures which conform to the procurement standards identified in Title 2 CFR parts 200.317 through 200.327, as well as State and local regulations, for the acquisition of property or services required under a Federal award or subaward. Condition and Context: The Town did not maintain a current procurement policy that met the criteria outlined by Title 2 of the U.S. Code of Federal Regulations part 200.318. Questioned costs: Not applicable. Cause: Procurement policies and procedures are not documented in accordance with Title 2 of the U.S. Code of Federal Regulations. Effect: Noncompliance with federal compliance requirements occurred. Repeat Finding: No. Recommendation: We recommend the Town design and document a procurement policy in accordance with the compliance requirements outlined in Title 2 of the U.S. Code of Federal Regulations part 200.318. Views of responsible officials: Management agrees with the finding. Please refer to the Corrective Action Plan.
Assistance Listing Number, Federal Agency, and Program Name - 84.425F, 84.425M, 84.425N; U.S. Department of Education; HEERF Institutional Portion, HEERF Strengthening Institutions Program (SIP), HEERF Fund for Improvement of Postsecondary Education (FIPSE) Formula Grant. Federal Award Identification Number and Year - P425F204736, P425M201046-20A , P425N200748 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No 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. Condition - The Corporation's procurement procedures does not fully conform to the procurements standards identified in ?? 200.317 through 200.327. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During testing we did not identify any instances of noncompliance related to procurement. However, during the review of the policies we discovered the following provisions of the standards were not in conformity with Uniform Guidance: * ? 200.318 - general procurement standard: the policy excluded a written standard of conduct covering conflicts of interest, including organizational conflicts of interest * ? 200.320 - methods of procurement: the policy does not appear to conform to the standards specific to non-construction purchases in excess of the small acquisition threshold * ?? 200.321 - 300.326 are not addressed in the policies Cause and Effect - Controls in place did not ensure the procurement policies and procedures conformed to the procurement standards identified in ?? 200.317 through 200.327. The lack of controls could result in acquisition of property or services that does not provide full and open competition and could result in disallowed costs. Recommendation - The Corporation should review the procurement standards identified in ?? 200.317 through 200.327 to identify policy deficiencies and work to establish policy that will confirm to the standards. Views of Responsible Officials and Planned Corrective Actions - Management concurs with the finding and will be conducting a thorough review of the current policies to ensure compliance with Uniform Guidance, as well as providing additional training and education to those responsible for procurement.
Assistance Listing Number, Federal Agency, and Program Name - 84.425F, 84.425M, 84.425N; U.S. Department of Education; HEERF Institutional Portion, HEERF Strengthening Institutions Program (SIP), HEERF Fund for Improvement of Postsecondary Education (FIPSE) Formula Grant. Federal Award Identification Number and Year - P425F204736, P425M201046-20A , P425N200748 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No 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. Condition - The Corporation's procurement procedures does not fully conform to the procurements standards identified in ?? 200.317 through 200.327. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During testing we did not identify any instances of noncompliance related to procurement. However, during the review of the policies we discovered the following provisions of the standards were not in conformity with Uniform Guidance: * ? 200.318 - general procurement standard: the policy excluded a written standard of conduct covering conflicts of interest, including organizational conflicts of interest * ? 200.320 - methods of procurement: the policy does not appear to conform to the standards specific to non-construction purchases in excess of the small acquisition threshold * ?? 200.321 - 300.326 are not addressed in the policies Cause and Effect - Controls in place did not ensure the procurement policies and procedures conformed to the procurement standards identified in ?? 200.317 through 200.327. The lack of controls could result in acquisition of property or services that does not provide full and open competition and could result in disallowed costs. Recommendation - The Corporation should review the procurement standards identified in ?? 200.317 through 200.327 to identify policy deficiencies and work to establish policy that will confirm to the standards. Views of Responsible Officials and Planned Corrective Actions - Management concurs with the finding and will be conducting a thorough review of the current policies to ensure compliance with Uniform Guidance, as well as providing additional training and education to those responsible for procurement.
Assistance Listing Number, Federal Agency, and Program Name - 84.425F, 84.425M, 84.425N; U.S. Department of Education; HEERF Institutional Portion, HEERF Strengthening Institutions Program (SIP), HEERF Fund for Improvement of Postsecondary Education (FIPSE) Formula Grant. Federal Award Identification Number and Year - P425F204736, P425M201046-20A , P425N200748 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No 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. Condition - The Corporation's procurement procedures does not fully conform to the procurements standards identified in ?? 200.317 through 200.327. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During testing we did not identify any instances of noncompliance related to procurement. However, during the review of the policies we discovered the following provisions of the standards were not in conformity with Uniform Guidance: * ? 200.318 - general procurement standard: the policy excluded a written standard of conduct covering conflicts of interest, including organizational conflicts of interest * ? 200.320 - methods of procurement: the policy does not appear to conform to the standards specific to non-construction purchases in excess of the small acquisition threshold * ?? 200.321 - 300.326 are not addressed in the policies Cause and Effect - Controls in place did not ensure the procurement policies and procedures conformed to the procurement standards identified in ?? 200.317 through 200.327. The lack of controls could result in acquisition of property or services that does not provide full and open competition and could result in disallowed costs. Recommendation - The Corporation should review the procurement standards identified in ?? 200.317 through 200.327 to identify policy deficiencies and work to establish policy that will confirm to the standards. Views of Responsible Officials and Planned Corrective Actions - Management concurs with the finding and will be conducting a thorough review of the current policies to ensure compliance with Uniform Guidance, as well as providing additional training and education to those responsible for procurement.
Reference Number: 2022-011 Prior Year Finding: No Federal Agency: U.S. Department of the Treasury State Department Name: Department of Health and Social Services State Division Name: Division of Social Services Federal Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: SLFRP0139 (3/3/2021 ? 12/31/2024) SLFRP2629 (3/3/2021 ? 12/31/2024) Compliance Requirement: Procurement, Suspension & Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.317 Procurements by states, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Per 29 Del C. Chapter 69, section 6981 Large professional service procurement process: (a) Any state contract for which an agency is a party with probable fees, including reimbursable expenses and amendments, greater than the threshold amount or amounts established by the Contracting and Purchasing Advisory Council pursuant to ? 6913 of this title for the completed job will be subject to the provisions of this subchapter. (b) Each agency shall publicly announce, not less than once a week for two consecutive weeks in a newspaper published or circulated in each county of the State, when professional services are required (c) Each agency shall publicly announce each professional services contract subject to subsection (a) of this section by electronic publication accessible to the public in a manner prescribed pursuant to ? 6902(9) of this title for two consecutive weeks. (d) Such announcement shall include: (1) The project identification; (2) General description and scope of the project; (3) Location; (4) Deadline for submission of brief letters of interest; (5) Criteria for selection of professionals including any special criteria required for any particular project; (6) Indication of how interested professionals can apply for consideration; (7) The agency?s intention to award to more than one firm, if applicable; and (8) A description of the selection process to be used, as defined in ? 6982 of this title. (f) Each agency shall establish written administrative procedures for the evaluation of applicants. These administrative procedures shall be adopted and made available to the public by each agency before publicly announcing an occasion when professional services are required. One or more of the following criteria may be utilized in ranking the applicants under consideration: (1) Experience and reputation; (2) Expertise (for the particular project under consideration); (3) Capacity to meet requirements (size, financial condition, etc.); (4) Location (geographical); (5) Demonstrated ability; (6) Familiarity with public work and its requirements; or (7) Distribution of work to individuals and firms or economic considerations. (g) In addition to the above, other criteria necessary for a quality, cost-effective project may be utilized. (h) Each project shall be given individual attention, and a weighted average may be applied to criteria according to its importance to each project. (i) For the selection process described in ? 6982(b) of this title, price may be a criteria used to rank applicants under consideration. Per 29 Del C. Chapter 69, section 6982 Selection: (b) Agencies shall use the selection process described in paragraphs (b)(1) through (3) of this section. (1) Based upon the criteria established pursuant to ? 6981(f) of this title, the agency shall determine all applicants that meet the minimum qualifications to perform the required services. (2) The agency shall then interview at least one of the qualified firms. The agency may negotiate with one firm without terminating negotiations with another firm and may negotiate with one or more firms during the same period. At any point in the negotiation process, the agency may, at its discretion, terminate negotiations with any or all firms. (3) The agency may require the firm with whom the agency is negotiating to execute a truth-in-negotiation certificate stating the wage rates and other factual unit costs supporting the compensation are accurate, complete and current at the time of contracting. All professional service contracts shall provide that the original contract price and any additions thereto shall be adjusted to exclude significant sums where the agency determines the contract price was increased due to inaccurate, incomplete or noncurrent wage rates and other factual unit costs. All such contract adjustments shall be made within one year following the end of the contract. Sole source procurement shall be avoided, except when no reasonable alternative sources exist. A written determination by the agency for the sole source procurement shall be included in the agency?s contract file. (29 Del. C. ?6904(i)) 2 CFR 200.214 Suspension and Debarment restricts 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 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Division was unable to provide documentation to support compliance with the required State procurement processes for a professional services contract. In addition, the Division did not provide support that the suspension and debarment status of the vendor was checked before the contract was awarded. Context: For one of eleven contracts selected for testing, no support was provided for the how the contract was procured. Further, the suspension and debarment status of the vendor was not documented for that contract. Questioned costs: Undetermined. Cause: The Division?s internal controls were not sufficient to ensure that Statewide procurement policies and Federal suspension and debarment regulations were followed for purchases made for the program. Effect: The Division is not compliant with federal and state procurement and suspension and debarment requirements. Failure to adhere to procurement and suspension and debarment policies and procedures may result in obtaining goods or services under terms that are not in the best interest of the federal program and/or the State. Recommendation: The Division should review and enhance controls and procedures to ensure that it follows the State?s procurement policy and Federal suspension and debarment regulations for all goods and services charged to the program. Views of responsible officials: We agree with the auditor?s recommendation. Ongoing meeting, training, and monitoring have helped and will continue to help DSS staff to achieve compliance. The following actions have been taken to improve the Procurement process. ? Program unit staff will receive Procurement Bootcamp training on contract rules. ? Program unit & Fiscal unit staff will monitor and track all contracts, MOU/MOA?s and agreement so they are in compliance with State Procurement policy. ? Fiscal unit will ensure they have an approval to pay for any invoices. ? Conduct monthly meetings with OSEC CMP Managers and DSS Fiscal unit.
Condition There is no formal documentation or evidence to support that competitive price analysis for vendors selected by CCI several years ago or that suspension and debarment verifications were performed for vendors, as required by the general procurement standards of the Uniform Guidance. Context We selected two samples which were deemed sole sourced by management and noted no written documentation for this conclusion or evidence of suspension or debarment verification being performed was maintained in the file. Based on our discussions with management, we understand that the arrangements with these vendors were established several years ago. Criteria Under Uniform Guidance Section 200.318, General Procurement Standards, a 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 Sections 200.317 through 200.327. These sections include policies and procedures related to competition, informal and formal procurement methods and noncompetitive procurement also known as sole source. Under Uniform Guidance Section 200.214, Suspension and Debarment and 2 CFR part 180, non-federal entities are required to verify that vendors are not suspended or debarred from participating in federal funds. Cause CCI?s procurement policy was not updated to include the provisions of the general procurement standards required under the Uniform Guidance. Effect Charges relating to vendor services that were charged to the federal award may not be in accordance with the Uniform Guidance. Questioned Costs None. Repeat Finding Yes. Recommendation We recommend that CCI update its existing procurement policy governing contracts with vendors that will be reimbursed by federal grants to incorporate all of the provisions included in the general procurement standards of the Uniform Guidance Section 200.318 and the debarment and suspension regulations of Uniform Guidance Section 200.214. We also recommend that a review of all vendor contract files be performed to ensure that the documentation as required under the Uniform Guidance is maintained in the files. Views of Responsible Officials and Planned Corrective Action See corrective action plan.
Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Procurement Federal Award Identification Number and Year: MD0044 and 2021 Award Period: March 11, 2021 through December 31, 2024, liquidated by December 31, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Per 2CFR ? 200.318(a), non-Federal entities 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. Questioned Costs: None Condition/Context: The Town?s procurement policy for federal expenditures is not in accordance with ?? 200.317 through 200.327. Therefore, for one of three vendors tested, proper procurement processes of obtaining price or rate quotations from an adequate number of qualified sources was not followed. Cause: The Town?s policies and procedures did not require proper federal procurement requirements to be followed prior to paying a vendor with Federal grant funds. Effect: Funds were disbursed to vendors without following proper federal procurement requirements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Town establish and document procurement policies and procedures in conformity with the Federal requirements ?? 200.317 through 200.327. Views of responsible officials: Management agrees with the finding.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Allowability & Earmarking Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.403 (January 1, 2022) states, in relevant part, the following: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. 2 CFR ? 200.404 (January 1, 2022) states the following: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost. 2 CFR ? 200.459 (January 1, 2022) states, in relevant part, the following: (a) Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the non-Federal entity, are allowable, subject to paragraphs (b) and (c) of this section when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal Government. . . . (b) In determining the allowability of costs in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the following factors are relevant: (1) The nature and scope of the service rendered in relation to the service required. * * * * (6) Whether the service can be performed more economically by direct employment rather than contracting. (7) The qualifications of the individual or concern rendering the service and the customary fees charged, especially on non-federally funded activities. (8) Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation, and termination provisions). Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(2)(A) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not less than 90 percent of the funds received by an eligible grantee from a payment made under this section shall be used to provide financial assistance to eligible households . . . . Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(3) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not more than 10 percent of funds received by an eligible grantee from a payment made under this section may be used to provide eligible households with case management and other services related to the novel coronavirus disease (COVID-19) outbreak, as defined by the Secretary, intended to help keep households stably housed. Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(5)(A) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. Per the amended Emergency Rental Assistance terms, dated March 26, 2021, ?The total of all administrative costs, whether direct or indirect costs, may not exceed 10 percent of the total amount of the total award.? The Reallocation Guidance from the U.S. Department of the Treasury (Treasury), dated March 30, 2022, states the following: A Grantee may spend up to 10% of its initial ERA1 allocation for administrative expenses only if the Grantee obligates at least 30% of its initial allocation for the provision of financial assistance and housing stability services on behalf of eligible households by September 30, 2022. If a Grantee has obligated less than 30% of its initial allocation providing financial assistance and housing stability services as of September 30, 2022, Treasury will presume that the Grantee?s administrative expenses were not attributable to such services ? and therefore were not permissible uses of ERA1 funds ? to the extent that the administrative expenses exceed 10% of the Grantee?s allocation after deducting amounts recaptured or reallocated as excess funds, unless the Grantee can demonstrate that those costs are related to the delivery of the program. Condition: The contractual agreement to receive and evaluate applications for Emergency Rental Assistance (ERA) did not have adequate limitations or provisions to ensure costs were reasonable. A similar finding was noted in the prior audit. Repeat Finding: 2021-063 Questioned Costs: $3,580,007 known Statistical Sample: No Context: The State of Nebraska was initially awarded $158,572,581 for ERA to assist eligible households that have difficulty making timely payments of rent and utilities due to the COVID-19 pandemic. At least 90% of funds are to be earmarked for financial aid to eligible households. Not more than 10% of funds may be used for administrative costs. The Agency entered into a contract with Deloitte & Touche LLP (Deloitte) to provide program administration and case management. Eligibility determinations were made by Deloitte and then sent to the State for review and to process the aid payments to eligible recipients. Deloitte was paid $8,672,561 during the fiscal year ended June 30, 2022. We tested one payment for $531,314 and noted the following: ? Adequate support was not on file to allow for a determination as to whether the contracted amount was reasonable. There were no maximums or limitations other than the $14,627,160 cap specified in the contract. The contract was paid on an hourly rate and did not have any stipulations regarding the number of hours paid per application or performance measures to be achieved. ? Per guidance from Treasury, if the State obligates less than 30% of its initial allocation providing financial aid by September 30, 2022, Treasury will presume that the State?s administrative expenses were not attributable to the program, at least to the extent that the administrative expenses exceed 10% of the Grantee?s allocation after deducting amounts recaptured or reallocated as excess funds. The State voluntarily reallocated $84,700,000 to local governments and was required to return an additional $11,716,548 for reallocation. Therefore, State administrative expenses would be limited to $6,215,603 (10% of awarded amount less reallocations). Administrative expenses in fiscal year 2021 and 2022 totaled $9,795,610. As a result, we question costs of $3,580,007 for administrative costs exceeding 10%. As of January 17, 2023, the Agency has spent $26,399,517 on financial aid, and $13,080,572 for administrative expenses, of which $12,563,227 was paid to Deloitte. This is 33.13% of the total amount paid as of January 17, 2023. Without spending 30% of its award on financial aid, the Agency will not meet the earmarking requirements per the guidance released from Treasury. Based on the amount of financial aid spent, the administrative costs appear unreasonable. Cause: The contract was not competitively bid, and contract provisions were not specific enough to ensure that amounts paid were reasonable. The Agency lacked adequate procedures to ensure adherence to earmarking requirements. Effect: Without such adequate procedures, there is an increased risk for misuse of Federal funds. The Agency did not meet earmarking requirements. Recommendation: We recommend the Agency improve its procedures for ensuring the reasonableness of contractual service payments. Management Response: The Military Department does not agree with this finding. Vendor Contract: The State performed procurement procedures soliciting Requests for Information from vendors in 2020 to support COVID-19 related tasks. A contractual agreement was completed with the vendor once the State determined the program costs, estimated level-of-effort, and key assumptions were reasonable based on the scope of services the State requested. In addition, the state complied with the procurement standards set forth in 2 CFR 200.317-200.327, including expected contract provisions, key program assumptions, and not-to-exceed thresholds. The contractual agreement was completed to enable the State to proactively monitor vendor performance and analyze detailed information on associated cost. Vendor performance was monitored through twice-weekly status meetings, bi-weekly executive status briefings with executives across multiple agencies, bi-weekly Executive Steering Committee meetings, and review of detailed invoices. The State as the Grantee is able to demonstrate that the administrative costs are related to the delivery of the program in a timely fashion and is aligned with US Treasury Guidance. APA Response: As of January 17, 2023, the Agency has spent $1 in administration costs for every $2 spent for aid. This does not appear reasonable and is not in accordance with earmarking requirements. Thus, in addition to the questioned administrative costs identified for 2022, the agency appears to be on track for incurring millions of dollars more in such questioned costs for 2023.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-2021, FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources and a contract must be entered into when the total cost exceeds $50,000. The School Corporation did not enter into contracts with vendors for purchases in excess of $50,000 as required by state statute for three of the six vendors tested. As a result, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition to the three vendors noted above, the School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs for fiscal year 2021-2022. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 16 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must confirm to the procurement standards identified in ?? 200.317 through 200.327." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 17 WARSAW COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-001: Procurement Policy and Procedures Condition: Several purchases were made in excess of the micro purchase threshold ($10,000). The Organization could not provide documentation to show they obtained quotes, or the reason quotes were not obtained, or if they gave preference to minority or women-owned businesses. Cause: The Organization has not established a written procurement policy. Criteria: The Code of Federal Regulations requires that entities receiving federal funding have a written procurement policy. The required elements of the procurement policy are detailed out in the Electronic Code of Federal Regulations (eCFR) under Title 2, Subtitle A, Part 200, Subpart D, 200.317 thru 200.327. Several other areas require written policies: financial management (200.302), federal payment (200.305), compensation-personal services (200.430), compensation-fringe benefits (200.431), relocation costs of employees (200.464), and travel costs (200.475). Effect: Lack of such policies increases the risk of purchasing items at higher prices than may have been necessary, increases the risk of limiting competition, and increases the risk of waste and abuse. Perspective Information: The need for a procurement policy was brought to the CEO's attention in the fall of 2021. The CEO does believe the spirit of the procurement requirements were met. Recommendations: We recommend quotes are obtained whenever possible when purchases are expected to be between $10,000 and $250,000. If purchases are to equal or exceed $250,000, the proper bidding procedures should be followed. Bidding procedures, quotes, and efforts to give preference to minority or women-owned businesses should be documented, including documenting if bids or quotes could not be obtained or the reasons why bids or quotes were not obtained. We also recommend a procurement policy is established as soon as possible and an individual is assigned to monitor the implementation of the policy. Views of Responsible Officials and Planned Corrective Actions: The Club agrees with this finding. Their intent is to create and implement a procurement policy that complies with the Code of Federal Regulations as soon as possible and add the proper documentation for purchases exceeding the micro purchase threshold beginning with fiscal year 2023. See Corrective Action Plan.
2022-001: Procurement Policy and Procedures Condition: Several purchases were made in excess of the micro purchase threshold ($10,000). The Organization could not provide documentation to show they obtained quotes, or the reason quotes were not obtained, or if they gave preference to minority or women-owned businesses. Cause: The Organization has not established a written procurement policy. Criteria: The Code of Federal Regulations requires that entities receiving federal funding have a written procurement policy. The required elements of the procurement policy are detailed out in the Electronic Code of Federal Regulations (eCFR) under Title 2, Subtitle A, Part 200, Subpart D, 200.317 thru 200.327. Several other areas require written policies: financial management (200.302), federal payment (200.305), compensation-personal services (200.430), compensation-fringe benefits (200.431), relocation costs of employees (200.464), and travel costs (200.475). Effect: Lack of such policies increases the risk of purchasing items at higher prices than may have been necessary, increases the risk of limiting competition, and increases the risk of waste and abuse. Perspective Information: The need for a procurement policy was brought to the CEO's attention in the fall of 2021. The CEO does believe the spirit of the procurement requirements were met. Recommendations: We recommend quotes are obtained whenever possible when purchases are expected to be between $10,000 and $250,000. If purchases are to equal or exceed $250,000, the proper bidding procedures should be followed. Bidding procedures, quotes, and efforts to give preference to minority or women-owned businesses should be documented, including documenting if bids or quotes could not be obtained or the reasons why bids or quotes were not obtained. We also recommend a procurement policy is established as soon as possible and an individual is assigned to monitor the implementation of the policy. Views of Responsible Officials and Planned Corrective Actions: The Club agrees with this finding. Their intent is to create and implement a procurement policy that complies with the Code of Federal Regulations as soon as possible and add the proper documentation for purchases exceeding the micro purchase threshold beginning with fiscal year 2023. See Corrective Action Plan.
2022-001: Procurement Policy and Procedures Condition: Several purchases were made in excess of the micro purchase threshold ($10,000). The Organization could not provide documentation to show they obtained quotes, or the reason quotes were not obtained, or if they gave preference to minority or women-owned businesses. Cause: The Organization has not established a written procurement policy. Criteria: The Code of Federal Regulations requires that entities receiving federal funding have a written procurement policy. The required elements of the procurement policy are detailed out in the Electronic Code of Federal Regulations (eCFR) under Title 2, Subtitle A, Part 200, Subpart D, 200.317 thru 200.327. Several other areas require written policies: financial management (200.302), federal payment (200.305), compensation-personal services (200.430), compensation-fringe benefits (200.431), relocation costs of employees (200.464), and travel costs (200.475). Effect: Lack of such policies increases the risk of purchasing items at higher prices than may have been necessary, increases the risk of limiting competition, and increases the risk of waste and abuse. Perspective Information: The need for a procurement policy was brought to the CEO's attention in the fall of 2021. The CEO does believe the spirit of the procurement requirements were met. Recommendations: We recommend quotes are obtained whenever possible when purchases are expected to be between $10,000 and $250,000. If purchases are to equal or exceed $250,000, the proper bidding procedures should be followed. Bidding procedures, quotes, and efforts to give preference to minority or women-owned businesses should be documented, including documenting if bids or quotes could not be obtained or the reasons why bids or quotes were not obtained. We also recommend a procurement policy is established as soon as possible and an individual is assigned to monitor the implementation of the policy. Views of Responsible Officials and Planned Corrective Actions: The Club agrees with this finding. Their intent is to create and implement a procurement policy that complies with the Code of Federal Regulations as soon as possible and add the proper documentation for purchases exceeding the micro purchase threshold beginning with fiscal year 2023. See Corrective Action Plan.
2022-001: Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program Title: Higher Education Emergency Relief Funds Assistance Listing Number: 84.425F Award Period: July 01, 2021 - June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: The CRF subsections 200.317 through 200.326 address procurement standards within the Uniform Guidance. These standards include elements that should be included in a written procurement policy. Additionally, 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 nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet other criteria as specified in 2 CFR section 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 section 180.215?. Condition: During testing, it was noted there was no documentation to ensure the vendors were not suspended or debarred. In addition, there was no documentation of a second review to ensure the vendors were not suspended or debarred. Questioned Costs: None Context: During testing, it was noted there was no documentation to ensure certain vendors were not suspended or debarred. Cause: The University?s control system to document the prevention of contracting with a suspended and barred vendor was not in place. Effect: The University could have paid a vendor who was suspended or barred at the time of payment. Repeat Finding: Yes, see 2021-001 Recommendation: We recommend documenting the vendor was checked on the SAM.gov website prior to payment. In addition, We also recommend a supervisor review the documentation prior to payment as a second review. Views of Responsible Officials: Management agrees with finding.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program, COVID-19 - Summer Food Service Program Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY20-21, FY21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Indiana Code also requires any small purchase above $50,000 must be awarded a contract. INDIANA STATE BOARD OF ACCOUNTS 20 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases During fiscal year 2020-2021, the School Corporation purchased food and supply items from four vendors with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. Two of the four vendors were above $50,000 and a contract was not awarded. During 2021-2022, the School Corporation purchased food and supply items from one vendor with total purchases that fell within the small purchase threshold without obtaining quotes or providing full and open competition. A contract was not awarded to this vendor. There was no documentation available to support the rationale to limit competition. Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During 2020-2021 and 2021-2022, the School Corporation entered into a covered transaction with the Commercial Food Systems. They did not follow its procedures to ensure that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in Federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 21 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000) . . . . (d) if the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 EAST WASHINGTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - 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 2021, FY 2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-012. Condition and Context An effective system of internal controls was not in place at the School Corporation 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. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. The School Corporation did not obtain price or rate quotes for two vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micropurchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. The School Corporation did not obtain a contract for these two vendors as required by Indiana Code for purchases between $50,000 and $150,000. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit for both purchases made using the small purchases and micro-purchases procurement methods. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform any procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. 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 28 SCOTT COUNTY SCHOOL DISTRICT 2 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 (Uniform Guidance) states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 29 SCOTT COUNTY SCHOOL DISTRICT 2 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 Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: U.S. Department of Education Federal Program Title: COVID-19 Education Stabilization Fund ? Higher Education Emergency Relief Fund - Institutional Portion (Assistance Listing No. 84.425F)Grant Award Period: July 1, 2021 through June 30, 2022 Grant Identification Numbers: P425F203954 ? 20A Compliance Requirement: Procurement, Suspension and Debarment Criteria: 2 CFR 200.318(a) requires the non-Federal entity to have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations, 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. 2 CFR 200.214 states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implemented at 2 CFR 180.300. 2 CFR 180.300 specifies that before entering into a covered transaction with another person at the next lower tier, the entity must verify that the counterparty with whom they intend to do business is not excluded or disqualified. 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure compliance with procurement, suspension and debarment standards. Conditions Found: During the audit, it was identified that the College did not have a procurement policy in order to comply with 2 CFR 200.318(a). As a result of the lack of a policy, expenditures were made that were not in compliance with the procurement requirements of 2 CFR 200.317 through 2 CFR 200.327. Additionally, it was identified that the College did not obtain evidence that the expenditures made during the period were in compliance with the suspension and debarment requirements of 2 CFR 200.214 and 2 CFR 180.300. Further, it was identified that the College did not have effective internal controls over procurement, suspension and debarment in accordance with 2 CFR 200.303. Total expenditures for 84.425F that were subject to procurement, suspension and debarment compliance requirements were $847,652. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: Not determinable Repeat Finding: This finding is a repeat finding in the immediately prior audit. In the prior year, this was reported as finding 2021-001. Cause and Effect: The College did not perform procedures to evidence that the transactions entered into were with counterparties which met the requirements of 2 CFR 200.214 and 2 CFR 180.300. The College did not have an effective system of internal control in place to ensure the procurement, suspension and debarment compliance requirements in 2 CFR 200.317 through 200.327 and 2 CFR 200.214 and 2 CFR 180.300. The College does not typically expend federal awards that are subject to the Uniform Guidance procurement requirements, and as such, management did not have policies in place prior to receiving these federal awards to comply with procurement, suspension and debarment compliance requirements. In response to the prior year finding, management is in process of implementing procurement policies to meet the requirements of 2 CFR sections 200.317 through 200.327. Recommendation: We recommend the College enhance its internal control to ensure that the College has a policy and effective internal controls in place to ensure that the College conforms to required federal procurement, suspension and debarment procedures. View of Responsible Officials: We concur with the finding and are in the process of finalizing policies and procedures to comply with procurement, suspension and debarment standards. Beginning in April 2022, in response to the prior year finding, the College began to ensure vendors were not suspended and debarred for all HEERF funds, including reviewing prior vendors with which HEERF funds were expended. Further, management began obtaining quotes for certain purchases that are being reimbursed by HEERF funds. Consistent with our corrective action plan, we implemented formal written policies and procedures during fiscal year 2023.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Rural eConnectivity Pilot Program Assistance Listing Number: 10.752 Federal Award Identification Number and Year: MD 1701-A64, 2020 Award Period: July 1, 2020 ? July 1, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2CFR ? 200.318(a), non-Federal entities 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. Questioned Costs: None Condition/Context: The Commission?s procurement policy for federal expenditures is not in accordance with ?? 200.317 through 200.327. Cause/Effect: The Commission does not have sufficient documented policies and procedures over procurement to ensure federal procurement requirements are met. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission establish and document procurement policies and procedures in conformity with the Federal requirements ?? 200.317 through 200.327. Views of responsible officials: Management agrees with the finding.
Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is also a compliance finding, not just controls - UPDATED This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings of the auditors. We have developed a plan to address the findings, and are actively working to implement that plan. The corrective action plan is attached to this report.
Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is also a compliance finding, not just controls - UPDATED This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings of the auditors. We have developed a plan to address the findings, and are actively working to implement that plan. The corrective action plan is attached to this report.
FINDING 2022-002 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-034-PN01, 22611-034-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases and simplified acquisitions were followed. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained. 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 micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not obtain price or rate quotes for the five vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The School Corporation also did not follow procurement requirements for contracted services which exceeded the simplified acquisition threshold of $150,000. The School Corporation did not correctly procure a contract for the one vendor that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not adequately maintain documentation detailing the history of the procurement or the rationale to limit competition. Finally, the School Corporation did not verify that this vendor was not excluded or disqualified from participation in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 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 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP 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. (ii) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and. . . ." 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, 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, procurement procedures for goods and services were not adhered to 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 grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP 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.
2022-004 - Procurement, Suspension & Debarment Federal Program Information: ALN - 10.760 - Water and Waste Disposal Systems for Rural Communities Criteria: The following CFR(s) apply to this finding: 2 CFR 200.317-200.326. Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population. Repeat Finding: This is a repeat finding of 2021-004. Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and DebarmentFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, COVID-19 - National School Lunch Program, Summer FoodService Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Other MattersRepeat FindingThis is a repeat finding for suspension and debarment from the immediately prior report. The prioraudit finding number was 2020-004.INDIANA STATE BOARD OF ACCOUNTS23BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Condition and ContextAn effective internal control system was not in place at the School Corporation to ensurecompliance with requirements related to the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Federal regulations allow for informal procurement methods when the value of the procurement forproperty or services does not exceed the simplified acquisition threshold, which is set at $250,000.However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchaseprocedures may be used. This informal process allows for methods other than the formal bid process. Theinformal process is divided between two methods based on thresholds. Micro-purchases, typically for thosepurchases $10,000 or under, and small purchase procedures for those purchases above the micropurchasethreshold, but below the simplified acquisition threshold. Micro-purchases may be awardedwithout soliciting competitive price rate quotations. If small purchase procedures are used, then price orrate quotations must be obtained from an adequate number of qualified sources.The School Corporation did not obtain price or rate quotes for six vendors tested that were lessthan the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold.The micro-purchase threshold may be increased, but the School Corporation did not provide documentationthat the threshold had been increased.The School Corporation engaged with an Education Service Center that was not an approvedSchool Food Authority (SFA) cooperative. Since the Education Service Center failed to meet therequirements to be an approved SFA cooperative, the obligation reverted to the School Corporation. TheSchool Corporation did not obtain price or rate quotes for purchases of milk, exceeding $10,000 from anadequate number of sources, which fell under the small purchase procedures. In addition, the SchoolCorporation did not verify the milk vendor with a contract over $25,000 was not excluded or disqualifiedfrom participation in federal award programs.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318(i) states:"The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationale for themethod of procurement, selection of contract type, contractor selection or rejection, and thebasis for the contract price."INDIANA STATE BOARD OF ACCOUNTS24BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.320(b) (Uniform Guidance) states:"Procurement by small purchase procedures. Small purchase procedures are those relativelysimple and informal procurement methods for securing services, supplies, or other propertythat do not cost more than the Simplified Acquisition Threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number of qualifiedsources."2 CFR 200.320 (Revised Uniform Guidance) states in part:"The non-Federal entity must have and use document procurement procedures, consistent withthe standards of this section and ?? 200.317, 200.318, and 200.319 for any of the followingmethods of procurement used for the acquisition of property or services required under aFederal award or sub-award.(a) Informal procurement methods. When the value of the procurement for property orservices 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 informalprocurement methods to expedite the completion of its transactions and minimize theassociated administrative burden and cost. The informal methods used for procurementof property or services at or below the SAT include: . . .(2) Small purchases ?(i) Small purchase procedures. The acquisition of property or services, theaggregate dollar amount of which is higher than the micro-purchase threshold butdoes not exceed the simplified acquisition threshold. If small purchase proceduresare used, price or rate quotations must be obtained from an adequate number ofqualified sources as determined appropriate by the non-Federal entity. . . ."Indiana Code 5-22-8-3 states:"(a) This section applies only if the purchasing agent expects the purchase to be:(1) at least fifty thousand dollars ($50,000); and(2) not more than one hundred fifty thousand dollars ($150,000). . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Procurement and Suspension and Debarment compliance requirement.EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Procurement and Suspension and Debarmentcompliance requirement could result in the loss of future federal funds to the School Corporation.INDIANA STATE BOARD OF ACCOUNTS25BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance and comply with the grant agreement and the Procurement and Suspension andDebarment compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.