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, 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 20/21, FY 21/22 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 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 obtain an adequate number of price or rate quotations for three of the six vendors tested that were less than 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 documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment The School Corporation did not follow procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. The School Corporation entered a contract with a vendor that exceeded $25,000, but they did not perform procedures to ensure compliance with requirements regarding verification that the vendor was not suspended or debarred from participation in federal programs before entering into the contract. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 EAST NOBLE SCHOOL CORPORATION 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(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." 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 STATE BOARD OF ACCOUNTS 15 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states in part: "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 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 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 2022-001 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, 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 20/21, FY 21/22 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 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 obtain an adequate number of price or rate quotations for three of the six vendors tested that were less than 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 documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment The School Corporation did not follow procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. The School Corporation entered a contract with a vendor that exceeded $25,000, but they did not perform procedures to ensure compliance with requirements regarding verification that the vendor was not suspended or debarred from participation in federal programs before entering into the contract. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 EAST NOBLE SCHOOL CORPORATION 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(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." 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 STATE BOARD OF ACCOUNTS 15 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states in part: "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 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 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 2022-001 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, 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 20/21, FY 21/22 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 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 obtain an adequate number of price or rate quotations for three of the six vendors tested that were less than 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 documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment The School Corporation did not follow procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. The School Corporation entered a contract with a vendor that exceeded $25,000, but they did not perform procedures to ensure compliance with requirements regarding verification that the vendor was not suspended or debarred from participation in federal programs before entering into the contract. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 EAST NOBLE SCHOOL CORPORATION 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(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." 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 STATE BOARD OF ACCOUNTS 15 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states in part: "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 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 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 2022-001 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, 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 20/21, FY 21/22 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 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 obtain an adequate number of price or rate quotations for three of the six vendors tested that were less than 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 documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment The School Corporation did not follow procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. The School Corporation entered a contract with a vendor that exceeded $25,000, but they did not perform procedures to ensure compliance with requirements regarding verification that the vendor was not suspended or debarred from participation in federal programs before entering into the contract. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 EAST NOBLE SCHOOL CORPORATION 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(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." 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 STATE BOARD OF ACCOUNTS 15 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states in part: "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 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 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 2022-001 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, 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 20/21, FY 21/22 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 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 obtain an adequate number of price or rate quotations for three of the six vendors tested that were less than 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 documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment The School Corporation did not follow procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. The School Corporation entered a contract with a vendor that exceeded $25,000, but they did not perform procedures to ensure compliance with requirements regarding verification that the vendor was not suspended or debarred from participation in federal programs before entering into the contract. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 EAST NOBLE SCHOOL CORPORATION 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(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." 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 STATE BOARD OF ACCOUNTS 15 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states in part: "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 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 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 2022-001 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, 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 20/21, FY 21/22 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 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 obtain an adequate number of price or rate quotations for three of the six vendors tested that were less than 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 documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment The School Corporation did not follow procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. The School Corporation entered a contract with a vendor that exceeded $25,000, but they did not perform procedures to ensure compliance with requirements regarding verification that the vendor was not suspended or debarred from participation in federal programs before entering into the contract. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 EAST NOBLE SCHOOL CORPORATION 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(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." 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 STATE BOARD OF ACCOUNTS 15 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states in part: "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 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 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.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D200012 (Year: 2020) Questioned Costs: $129,375 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $16,263,786.14 were expended and reported on the Whitfield County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?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? (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.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must 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?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that a payment was made to the staffing company utilized by the School District to provide ?retention? bonuses to both transportation and school nutrition contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private staffing company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain employed by the private staffing company and in the service of the School District for a stated period of time was not reflected within the associated contract. Therefore, expenditures totaling $129,375 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $129,375 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. Views of Responsible Officials: We do not concur with this finding. The Whitfield County School District followed standard operating procedures for all federal programs? budget approval and disbursement requests with the Georgia Department of Education (GaDOE). The finding was issued after GaDOE approved and paid our requested expenses. Auditor?s Concluding Remarks: School District personnel state that the School District ?followed standard operating procedures for all federal programs? budget approval and disbursement requests with the Georgia Department of Education (GaDOE).? Though GaDOE approved a budget that included the bonuses, the School District was still expected and required to comply with federal regulations associated with the federal program. When each federal program budget is submitted to GaDOE, School District management signs assurances certifying that ?each program will be administered in accordance with all applicable statutes, regulations, program plans, and applications? and that the School District will ?maintain adequate internal controls in the procurement process for goods and services in accordance with Georgia?s Financial Management for Georgia LUAS Manual.? As noted previously, the School District did not follow appropriate procurement policies and procedures and paid amounts beyond those allowed per the contract in place during the fiscal year under review. Additionally, auditors contacted ED?s ESSER program management to discuss the allowability of these bonus payments as ED is the grantor of the funds and the cognizant agency charged with administering the ESSER program. Officials at ED advised auditors that bonuses may be allowable if such bonuses are reflected within the contract; however, as noted previously, no such contract provisions were present. Moreover, ED emphasized that published guidance associated with the issuance of bonuses or premium pay from ESSER funds pertained to school personnel, not contractors. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D200012 (Year: 2020) Questioned Costs: $129,375 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $16,263,786.14 were expended and reported on the Whitfield County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?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? (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.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must 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?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that a payment was made to the staffing company utilized by the School District to provide ?retention? bonuses to both transportation and school nutrition contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private staffing company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain employed by the private staffing company and in the service of the School District for a stated period of time was not reflected within the associated contract. Therefore, expenditures totaling $129,375 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $129,375 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. Views of Responsible Officials: We do not concur with this finding. The Whitfield County School District followed standard operating procedures for all federal programs? budget approval and disbursement requests with the Georgia Department of Education (GaDOE). The finding was issued after GaDOE approved and paid our requested expenses. Auditor?s Concluding Remarks: School District personnel state that the School District ?followed standard operating procedures for all federal programs? budget approval and disbursement requests with the Georgia Department of Education (GaDOE).? Though GaDOE approved a budget that included the bonuses, the School District was still expected and required to comply with federal regulations associated with the federal program. When each federal program budget is submitted to GaDOE, School District management signs assurances certifying that ?each program will be administered in accordance with all applicable statutes, regulations, program plans, and applications? and that the School District will ?maintain adequate internal controls in the procurement process for goods and services in accordance with Georgia?s Financial Management for Georgia LUAS Manual.? As noted previously, the School District did not follow appropriate procurement policies and procedures and paid amounts beyond those allowed per the contract in place during the fiscal year under review. Additionally, auditors contacted ED?s ESSER program management to discuss the allowability of these bonus payments as ED is the grantor of the funds and the cognizant agency charged with administering the ESSER program. Officials at ED advised auditors that bonuses may be allowable if such bonuses are reflected within the contract; however, as noted previously, no such contract provisions were present. Moreover, ED emphasized that published guidance associated with the issuance of bonuses or premium pay from ESSER funds pertained to school personnel, not contractors. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D200012 (Year: 2020) Questioned Costs: $129,375 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $16,263,786.14 were expended and reported on the Whitfield County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?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? (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.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must 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?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that a payment was made to the staffing company utilized by the School District to provide ?retention? bonuses to both transportation and school nutrition contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private staffing company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain employed by the private staffing company and in the service of the School District for a stated period of time was not reflected within the associated contract. Therefore, expenditures totaling $129,375 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $129,375 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. Views of Responsible Officials: We do not concur with this finding. The Whitfield County School District followed standard operating procedures for all federal programs? budget approval and disbursement requests with the Georgia Department of Education (GaDOE). The finding was issued after GaDOE approved and paid our requested expenses. Auditor?s Concluding Remarks: School District personnel state that the School District ?followed standard operating procedures for all federal programs? budget approval and disbursement requests with the Georgia Department of Education (GaDOE).? Though GaDOE approved a budget that included the bonuses, the School District was still expected and required to comply with federal regulations associated with the federal program. When each federal program budget is submitted to GaDOE, School District management signs assurances certifying that ?each program will be administered in accordance with all applicable statutes, regulations, program plans, and applications? and that the School District will ?maintain adequate internal controls in the procurement process for goods and services in accordance with Georgia?s Financial Management for Georgia LUAS Manual.? As noted previously, the School District did not follow appropriate procurement policies and procedures and paid amounts beyond those allowed per the contract in place during the fiscal year under review. Additionally, auditors contacted ED?s ESSER program management to discuss the allowability of these bonus payments as ED is the grantor of the funds and the cognizant agency charged with administering the ESSER program. Officials at ED advised auditors that bonuses may be allowable if such bonuses are reflected within the contract; however, as noted previously, no such contract provisions were present. Moreover, ED emphasized that published guidance associated with the issuance of bonuses or premium pay from ESSER funds pertained to school personnel, not contractors. We reaffirm our finding and will review the status of the finding during our next audit.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
FINDING 2022-006 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education_Grants to States, Special Education_Preschool Grants AL Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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) 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(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." 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 the SAM Exclusions; or (b) Collecting a certification from the person; or (c) Adding a clause or condition to the covered transaction with that person.? Condition: 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 equipment requirements of the Procurement and Suspension and Debarment compliance requirement. Cause: The School Corporation's 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 internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was a member of a joint service cooperative (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. During fiscal year 2021, the School Corporation paid membership fees to the Cooperative out of federal Special Education funds. These membership fees made up approximately 48% of the total federal expenditures reimbursed during fiscal year 2021. The Cooperative accounted for state, local, and federal funds in a single fund. The fund did not separately account for each of the funding sources. This made it difficult to identify whether purchases were made by the Cooperative with federal funds, or to identify expenditures by federal program, award number, or years. Therefore, we could not test compliance with the period of performance requirements for approximately 48% of the expenditures. The lack of internal controls and noncompliance were systemic issues, which occurred specifically during fiscal year 2021. No reportable findings were noted for fiscal year 2022. Identification as a repeat finding, if applicable: Yes, see Finding 2020-005. Recommendation: It was recommended that the School Corporation?s management establish effective internal controls to ensure compliance and comply with the Procurement Suspension and Debarment compliance requirement. As recommended, management implemented internal control procedures for the year ended June 30, 2022. Views of Responsible Officials: Management agrees with the finding and has implemented their corrective action plan.
Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct as described in the following sections: Financial management (2 CFR 200.302) Payment (2 CFR 200.305) General procurement standards (2 CFR 200.318) Competition (2 CFR 200.319) Methods of procurement to be followed (2 CFR 200.320) Compensation ? personal services (2 CFR 200.430) Compensation ? fringe benefits (2 CFR 200.431) Transportation costs (2 CFR 200.474) Condition: The Town did not have written policies, procedures, and standards of conduct relative to federal awards as required by the Uniform Guidance. Cause: The Town was not aware of these requirements. Effect: The Town is not in compliance with the Uniform Guidance with respect to these written policies. Recommendation: We recommend that the Town update its policies and procedures to comply with the Uniform Guidance requirements mentioned above. Management?s Response: We agree that our existing policies do not explicitly address federal award compliance requirements. We will be updating the Town?s procedures and policies to incorporate the requirements of Part 200 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
Criteria - 2 CFR 200.318 A component of compliance relating to federal awards is maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - The District used federal ESSER funds to make purchases greater than $10,000 to $21,900 without obtaining at least three quotes and made purchases greater than $21,900 without obtaining three public bids. Cause/Effect Cause of the Finding ? There was a breakdown in the previously established purchasing policy relating to obtaining quotes and bid requirements. In addition, the district was under the false notion that purchases made through the Commonwealth of Pennsylvania?s cooperative purchasing program COSTARS and PEPPM satisfied compliance requirement of quote/bid requirements for federal purchases. Effect of the Finding ? The District was not in compliance with procurement requirements for federal funds. Questioned Costs ? Total questioned costs - $793,135 - Purchases made under the false notion that PEPPM satisfied the three?quote requirement total $16,365 (2% of ESSERS expense), purchases made under the false notion that COSTAR satisfied the three-bid requirement total $401,962 (43% of ESSERS expense), and purchases that were made outside co-purchasing arrangements and did not satisfy three-bid requirement total $374,805 (40% of ESSERS expense). Recommendations - The Uniform Guidance establishes thresholds of when quote and bids are to be obtained from vendors. Documentation is key for all federal purchases. A purchase price from cooperative purchasing programs can be considered one competitive price proposal and cannot replace a procurement process. Advertise when appropriate, obtain adequate quote/bid information from three vendors, and thoroughly document the ?reason? and ?cost analysis? of sole source noncompetitive procurement exceptions. District?s Response - The district will follow the policy for quotation/bid requirements for federal purchases and not use cooperative purchasing programs as the only source of quotations/bids for federal purchases. The district will also improve documentation relating to purchases that meet sole source criteria.
Criteria - 2 CFR 200.318 A component of compliance relating to federal awards is maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - The District used federal ESSER funds to make purchases greater than $10,000 to $21,900 without obtaining at least three quotes and made purchases greater than $21,900 without obtaining three public bids. Cause/Effect Cause of the Finding ? There was a breakdown in the previously established purchasing policy relating to obtaining quotes and bid requirements. In addition, the district was under the false notion that purchases made through the Commonwealth of Pennsylvania?s cooperative purchasing program COSTARS and PEPPM satisfied compliance requirement of quote/bid requirements for federal purchases. Effect of the Finding ? The District was not in compliance with procurement requirements for federal funds. Questioned Costs ? Total questioned costs - $793,135 - Purchases made under the false notion that PEPPM satisfied the three?quote requirement total $16,365 (2% of ESSERS expense), purchases made under the false notion that COSTAR satisfied the three-bid requirement total $401,962 (43% of ESSERS expense), and purchases that were made outside co-purchasing arrangements and did not satisfy three-bid requirement total $374,805 (40% of ESSERS expense). Recommendations - The Uniform Guidance establishes thresholds of when quote and bids are to be obtained from vendors. Documentation is key for all federal purchases. A purchase price from cooperative purchasing programs can be considered one competitive price proposal and cannot replace a procurement process. Advertise when appropriate, obtain adequate quote/bid information from three vendors, and thoroughly document the ?reason? and ?cost analysis? of sole source noncompetitive procurement exceptions. District?s Response - The district will follow the policy for quotation/bid requirements for federal purchases and not use cooperative purchasing programs as the only source of quotations/bids for federal purchases. The district will also improve documentation relating to purchases that meet sole source criteria.
Criteria - 2 CFR 200.318 A component of compliance relating to federal awards is maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - The District used federal ESSER funds to make purchases greater than $10,000 to $21,900 without obtaining at least three quotes and made purchases greater than $21,900 without obtaining three public bids. Cause/Effect Cause of the Finding ? There was a breakdown in the previously established purchasing policy relating to obtaining quotes and bid requirements. In addition, the district was under the false notion that purchases made through the Commonwealth of Pennsylvania?s cooperative purchasing program COSTARS and PEPPM satisfied compliance requirement of quote/bid requirements for federal purchases. Effect of the Finding ? The District was not in compliance with procurement requirements for federal funds. Questioned Costs ? Total questioned costs - $793,135 - Purchases made under the false notion that PEPPM satisfied the three?quote requirement total $16,365 (2% of ESSERS expense), purchases made under the false notion that COSTAR satisfied the three-bid requirement total $401,962 (43% of ESSERS expense), and purchases that were made outside co-purchasing arrangements and did not satisfy three-bid requirement total $374,805 (40% of ESSERS expense). Recommendations - The Uniform Guidance establishes thresholds of when quote and bids are to be obtained from vendors. Documentation is key for all federal purchases. A purchase price from cooperative purchasing programs can be considered one competitive price proposal and cannot replace a procurement process. Advertise when appropriate, obtain adequate quote/bid information from three vendors, and thoroughly document the ?reason? and ?cost analysis? of sole source noncompetitive procurement exceptions. District?s Response - The district will follow the policy for quotation/bid requirements for federal purchases and not use cooperative purchasing programs as the only source of quotations/bids for federal purchases. The district will also improve documentation relating to purchases that meet sole source criteria.
Criteria - 2 CFR 200.318 A component of compliance relating to federal awards is maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - The District used federal ESSER funds to make purchases greater than $10,000 to $21,900 without obtaining at least three quotes and made purchases greater than $21,900 without obtaining three public bids. Cause/Effect Cause of the Finding ? There was a breakdown in the previously established purchasing policy relating to obtaining quotes and bid requirements. In addition, the district was under the false notion that purchases made through the Commonwealth of Pennsylvania?s cooperative purchasing program COSTARS and PEPPM satisfied compliance requirement of quote/bid requirements for federal purchases. Effect of the Finding ? The District was not in compliance with procurement requirements for federal funds. Questioned Costs ? Total questioned costs - $793,135 - Purchases made under the false notion that PEPPM satisfied the three?quote requirement total $16,365 (2% of ESSERS expense), purchases made under the false notion that COSTAR satisfied the three-bid requirement total $401,962 (43% of ESSERS expense), and purchases that were made outside co-purchasing arrangements and did not satisfy three-bid requirement total $374,805 (40% of ESSERS expense). Recommendations - The Uniform Guidance establishes thresholds of when quote and bids are to be obtained from vendors. Documentation is key for all federal purchases. A purchase price from cooperative purchasing programs can be considered one competitive price proposal and cannot replace a procurement process. Advertise when appropriate, obtain adequate quote/bid information from three vendors, and thoroughly document the ?reason? and ?cost analysis? of sole source noncompetitive procurement exceptions. District?s Response - The district will follow the policy for quotation/bid requirements for federal purchases and not use cooperative purchasing programs as the only source of quotations/bids for federal purchases. The district will also improve documentation relating to purchases that meet sole source criteria.
Criteria - 2 CFR 200.318 A component of compliance relating to federal awards is maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - The District used federal ESSER funds to make purchases greater than $10,000 to $21,900 without obtaining at least three quotes and made purchases greater than $21,900 without obtaining three public bids. Cause/Effect Cause of the Finding ? There was a breakdown in the previously established purchasing policy relating to obtaining quotes and bid requirements. In addition, the district was under the false notion that purchases made through the Commonwealth of Pennsylvania?s cooperative purchasing program COSTARS and PEPPM satisfied compliance requirement of quote/bid requirements for federal purchases. Effect of the Finding ? The District was not in compliance with procurement requirements for federal funds. Questioned Costs ? Total questioned costs - $793,135 - Purchases made under the false notion that PEPPM satisfied the three?quote requirement total $16,365 (2% of ESSERS expense), purchases made under the false notion that COSTAR satisfied the three-bid requirement total $401,962 (43% of ESSERS expense), and purchases that were made outside co-purchasing arrangements and did not satisfy three-bid requirement total $374,805 (40% of ESSERS expense). Recommendations - The Uniform Guidance establishes thresholds of when quote and bids are to be obtained from vendors. Documentation is key for all federal purchases. A purchase price from cooperative purchasing programs can be considered one competitive price proposal and cannot replace a procurement process. Advertise when appropriate, obtain adequate quote/bid information from three vendors, and thoroughly document the ?reason? and ?cost analysis? of sole source noncompetitive procurement exceptions. District?s Response - The district will follow the policy for quotation/bid requirements for federal purchases and not use cooperative purchasing programs as the only source of quotations/bids for federal purchases. The district will also improve documentation relating to purchases that meet sole source criteria.
Criteria - 2 CFR 200.318 A component of compliance relating to federal awards is maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - The District used federal ESSER funds to make purchases greater than $10,000 to $21,900 without obtaining at least three quotes and made purchases greater than $21,900 without obtaining three public bids. Cause/Effect Cause of the Finding ? There was a breakdown in the previously established purchasing policy relating to obtaining quotes and bid requirements. In addition, the district was under the false notion that purchases made through the Commonwealth of Pennsylvania?s cooperative purchasing program COSTARS and PEPPM satisfied compliance requirement of quote/bid requirements for federal purchases. Effect of the Finding ? The District was not in compliance with procurement requirements for federal funds. Questioned Costs ? Total questioned costs - $793,135 - Purchases made under the false notion that PEPPM satisfied the three?quote requirement total $16,365 (2% of ESSERS expense), purchases made under the false notion that COSTAR satisfied the three-bid requirement total $401,962 (43% of ESSERS expense), and purchases that were made outside co-purchasing arrangements and did not satisfy three-bid requirement total $374,805 (40% of ESSERS expense). Recommendations - The Uniform Guidance establishes thresholds of when quote and bids are to be obtained from vendors. Documentation is key for all federal purchases. A purchase price from cooperative purchasing programs can be considered one competitive price proposal and cannot replace a procurement process. Advertise when appropriate, obtain adequate quote/bid information from three vendors, and thoroughly document the ?reason? and ?cost analysis? of sole source noncompetitive procurement exceptions. District?s Response - The district will follow the policy for quotation/bid requirements for federal purchases and not use cooperative purchasing programs as the only source of quotations/bids for federal purchases. The district will also improve documentation relating to purchases that meet sole source criteria.
Finding 2022-001 Procurement Policy Criteria: Non-Federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. A non-federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Under the micro-purchase method, the aggregate dollar amount does not exceed $3,500 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(f). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR part 200, ?Contract Provisions for Non- Federal Entity Contracts Under Federal Awards.? Non-federal entities had a grace period of two full fiscal years after the effective date of the Uniform Guidance before they had to comply with the procurement requirements of 2 CFR section 200. For a non-federal entity with a fiscal year-end of June 30, its effective date for the procurement requirements was July 1, 2017. However, during this grace period, non-federal entities were required to clearly document whether they decided to comply with the previous version of the applicable procurement standards or the new standards contained in the Uniform Guidance. Condition: The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. Context: See condition above for context of the finding. Cause: The City has not evaluated its existing procurement policies for compliance with the requirements of the Uniform Guidance. Effect: The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. Identification as a Repeat Finding: Yes. 2021-001. Recommendation: The City should evaluate and update existing purchasing policies and procedures in order to bring the City into compliance with the procurement policy requirements of 2 CFR part 200 and the Uniform Guidance. The updated policy should include, among other things: 1. Thresholds and appropriate approval procedures for allowable federal procurement methods. 2. Written standards for how conflicts of interest involving employees engaged to select, award, and administer contracts will be governed. 3. How to ensure that contracts and awards are made only to responsible and eligible contractors and how oversight of contractor performance will be monitored. 4. How records will be maintained in order to document the history of federal procurements. Views of Responsible Officials: The City is still in the process of working with an outside firm on a review of procurement and purchasing policies. The consultation includes compliance review of this standard. Expected completion ? FYE 2023.
Finding 2022-001 Procurement Policy Criteria: Non-Federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. A non-federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Under the micro-purchase method, the aggregate dollar amount does not exceed $3,500 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(f). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR part 200, ?Contract Provisions for Non- Federal Entity Contracts Under Federal Awards.? Non-federal entities had a grace period of two full fiscal years after the effective date of the Uniform Guidance before they had to comply with the procurement requirements of 2 CFR section 200. For a non-federal entity with a fiscal year-end of June 30, its effective date for the procurement requirements was July 1, 2017. However, during this grace period, non-federal entities were required to clearly document whether they decided to comply with the previous version of the applicable procurement standards or the new standards contained in the Uniform Guidance. Condition: The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. Context: See condition above for context of the finding. Cause: The City has not evaluated its existing procurement policies for compliance with the requirements of the Uniform Guidance. Effect: The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. Identification as a Repeat Finding: Yes. 2021-001. Recommendation: The City should evaluate and update existing purchasing policies and procedures in order to bring the City into compliance with the procurement policy requirements of 2 CFR part 200 and the Uniform Guidance. The updated policy should include, among other things: 1. Thresholds and appropriate approval procedures for allowable federal procurement methods. 2. Written standards for how conflicts of interest involving employees engaged to select, award, and administer contracts will be governed. 3. How to ensure that contracts and awards are made only to responsible and eligible contractors and how oversight of contractor performance will be monitored. 4. How records will be maintained in order to document the history of federal procurements. Views of Responsible Officials: The City is still in the process of working with an outside firm on a review of procurement and purchasing policies. The consultation includes compliance review of this standard. Expected completion ? FYE 2023.
Finding 2022-001 Procurement Policy Criteria: Non-Federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. A non-federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Under the micro-purchase method, the aggregate dollar amount does not exceed $3,500 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(f). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR part 200, ?Contract Provisions for Non- Federal Entity Contracts Under Federal Awards.? Non-federal entities had a grace period of two full fiscal years after the effective date of the Uniform Guidance before they had to comply with the procurement requirements of 2 CFR section 200. For a non-federal entity with a fiscal year-end of June 30, its effective date for the procurement requirements was July 1, 2017. However, during this grace period, non-federal entities were required to clearly document whether they decided to comply with the previous version of the applicable procurement standards or the new standards contained in the Uniform Guidance. Condition: The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. Context: See condition above for context of the finding. Cause: The City has not evaluated its existing procurement policies for compliance with the requirements of the Uniform Guidance. Effect: The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. Identification as a Repeat Finding: Yes. 2021-001. Recommendation: The City should evaluate and update existing purchasing policies and procedures in order to bring the City into compliance with the procurement policy requirements of 2 CFR part 200 and the Uniform Guidance. The updated policy should include, among other things: 1. Thresholds and appropriate approval procedures for allowable federal procurement methods. 2. Written standards for how conflicts of interest involving employees engaged to select, award, and administer contracts will be governed. 3. How to ensure that contracts and awards are made only to responsible and eligible contractors and how oversight of contractor performance will be monitored. 4. How records will be maintained in order to document the history of federal procurements. Views of Responsible Officials: The City is still in the process of working with an outside firm on a review of procurement and purchasing policies. The consultation includes compliance review of this standard. Expected completion ? FYE 2023.
Finding 2022-001 Procurement Policy Criteria: Non-Federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. A non-federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Under the micro-purchase method, the aggregate dollar amount does not exceed $3,500 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(f). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR part 200, ?Contract Provisions for Non- Federal Entity Contracts Under Federal Awards.? Non-federal entities had a grace period of two full fiscal years after the effective date of the Uniform Guidance before they had to comply with the procurement requirements of 2 CFR section 200. For a non-federal entity with a fiscal year-end of June 30, its effective date for the procurement requirements was July 1, 2017. However, during this grace period, non-federal entities were required to clearly document whether they decided to comply with the previous version of the applicable procurement standards or the new standards contained in the Uniform Guidance. Condition: The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018. Context: See condition above for context of the finding. Cause: The City has not evaluated its existing procurement policies for compliance with the requirements of the Uniform Guidance. Effect: The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City?s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program. Identification as a Repeat Finding: Yes. 2021-001. Recommendation: The City should evaluate and update existing purchasing policies and procedures in order to bring the City into compliance with the procurement policy requirements of 2 CFR part 200 and the Uniform Guidance. The updated policy should include, among other things: 1. Thresholds and appropriate approval procedures for allowable federal procurement methods. 2. Written standards for how conflicts of interest involving employees engaged to select, award, and administer contracts will be governed. 3. How to ensure that contracts and awards are made only to responsible and eligible contractors and how oversight of contractor performance will be monitored. 4. How records will be maintained in order to document the history of federal procurements. Views of Responsible Officials: The City is still in the process of working with an outside firm on a review of procurement and purchasing policies. The consultation includes compliance review of this standard. Expected completion ? FYE 2023.
Finding 2022-002?Procurement Program: Protecting and Improving Health Globally: Building and Strengthening Public Health Impact, Systems, Capacity and Security Assistance Listing No.: 93.318 Federal Award Number: NU50CK000584 Federal Award Year: 2021, 2022 Type of Finding: Material weakness and material instance of noncompliance Criteria: Per 2 CFR 200.303, the Council must establish and maintain effective internal controls over federal awards that provide reasonable assurance that it is managing federal awards in compliance with federal statutes, regulations and provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Non-federal entities other than states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Entities must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. A non-federal entity must use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 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 good and services awarded under non-procurement transaction that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. Condition: The Council did not retain documentation or other evidence that the procurement process was performed for certain program expenditures during the year. Cause: Control procedures did not function as designed and thus compliance with procurement requirements was not followed. Effect: Not performing the procurement process increases the risk of noncompliance with rules and regulations. Questioned costs: None known Context: We selected three transactions to test controls and compliance over small purchases and noted there was no support for procurement compliance or controls over compliance for these three transactions. Repeat finding: No Recommendation: We recommend management review, revise, and test current control procedures and make any necessary changes to ensure compliance with criteria above. View of responsible officials: Management concurs with the finding. See corrective action plan.
FA 2022-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 ? Special Education Grants to States COVID-19 ? 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants COVID-19 ? 84.173 ? Special Education Preschool Grants Federal Award Numbers: H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: $72,747 Description: A review of expenditures charged to the Special Education Cluster (Assistance Listing Numbers 84.027 and 84.173) revealed that the School District?s internal control procedures were not operating appropriately to ensure that the School District?s procurement procedures were followed. Background: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. Special Education Cluster funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Special Education Cluster funds totaling $1,381,680 were expended and reported on the Madison County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In addition, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state in part that ?(a) the non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and? (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.? Furthermore, provisions included in the Uniform Guidance, Section 200.320 ? Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state ?If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources?? Condition: A sample of 30 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though no problems were noted with the micro-purchase transactions tested, auditors encountered the significant issues in testing small purchase transactions; therefore, the entire population of small purchase transactions was ultimately tested. Upon review of these transactions, it was noted that the School District could not provide evidence that an adequate number of rate or price quotations was obtained from qualified sources for eight vendors associated with small purchase expenditures. Questioned Costs: Questioned costs of $72,747 were identified for all small purchase expenditures that did not follow the School District?s procurement procedures. Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement procedures are followed, and appropriate documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating effectively and as designed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 ? Special Education Grants to States COVID-19 ? 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants COVID-19 ? 84.173 ? Special Education Preschool Grants Federal Award Numbers: H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: $72,747 Description: A review of expenditures charged to the Special Education Cluster (Assistance Listing Numbers 84.027 and 84.173) revealed that the School District?s internal control procedures were not operating appropriately to ensure that the School District?s procurement procedures were followed. Background: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. Special Education Cluster funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Special Education Cluster funds totaling $1,381,680 were expended and reported on the Madison County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In addition, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state in part that ?(a) the non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and? (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.? Furthermore, provisions included in the Uniform Guidance, Section 200.320 ? Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state ?If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources?? Condition: A sample of 30 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though no problems were noted with the micro-purchase transactions tested, auditors encountered the significant issues in testing small purchase transactions; therefore, the entire population of small purchase transactions was ultimately tested. Upon review of these transactions, it was noted that the School District could not provide evidence that an adequate number of rate or price quotations was obtained from qualified sources for eight vendors associated with small purchase expenditures. Questioned Costs: Questioned costs of $72,747 were identified for all small purchase expenditures that did not follow the School District?s procurement procedures. Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement procedures are followed, and appropriate documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating effectively and as designed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 ? Special Education Grants to States COVID-19 ? 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants COVID-19 ? 84.173 ? Special Education Preschool Grants Federal Award Numbers: H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: $72,747 Description: A review of expenditures charged to the Special Education Cluster (Assistance Listing Numbers 84.027 and 84.173) revealed that the School District?s internal control procedures were not operating appropriately to ensure that the School District?s procurement procedures were followed. Background: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. Special Education Cluster funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Special Education Cluster funds totaling $1,381,680 were expended and reported on the Madison County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In addition, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state in part that ?(a) the non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and? (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.? Furthermore, provisions included in the Uniform Guidance, Section 200.320 ? Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state ?If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources?? Condition: A sample of 30 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though no problems were noted with the micro-purchase transactions tested, auditors encountered the significant issues in testing small purchase transactions; therefore, the entire population of small purchase transactions was ultimately tested. Upon review of these transactions, it was noted that the School District could not provide evidence that an adequate number of rate or price quotations was obtained from qualified sources for eight vendors associated with small purchase expenditures. Questioned Costs: Questioned costs of $72,747 were identified for all small purchase expenditures that did not follow the School District?s procurement procedures. Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement procedures are followed, and appropriate documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating effectively and as designed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 ? Special Education Grants to States COVID-19 ? 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants COVID-19 ? 84.173 ? Special Education Preschool Grants Federal Award Numbers: H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: $72,747 Description: A review of expenditures charged to the Special Education Cluster (Assistance Listing Numbers 84.027 and 84.173) revealed that the School District?s internal control procedures were not operating appropriately to ensure that the School District?s procurement procedures were followed. Background: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. Special Education Cluster funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Special Education Cluster funds totaling $1,381,680 were expended and reported on the Madison County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In addition, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state in part that ?(a) the non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and? (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.? Furthermore, provisions included in the Uniform Guidance, Section 200.320 ? Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state ?If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources?? Condition: A sample of 30 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though no problems were noted with the micro-purchase transactions tested, auditors encountered the significant issues in testing small purchase transactions; therefore, the entire population of small purchase transactions was ultimately tested. Upon review of these transactions, it was noted that the School District could not provide evidence that an adequate number of rate or price quotations was obtained from qualified sources for eight vendors associated with small purchase expenditures. Questioned Costs: Questioned costs of $72,747 were identified for all small purchase expenditures that did not follow the School District?s procurement procedures. Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement procedures are followed, and appropriate documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating effectively and as designed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 ? Special Education Grants to States COVID-19 ? 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants COVID-19 ? 84.173 ? Special Education Preschool Grants Federal Award Numbers: H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: $72,747 Description: A review of expenditures charged to the Special Education Cluster (Assistance Listing Numbers 84.027 and 84.173) revealed that the School District?s internal control procedures were not operating appropriately to ensure that the School District?s procurement procedures were followed. Background: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. Special Education Cluster funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Special Education Cluster funds totaling $1,381,680 were expended and reported on the Madison County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In addition, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state in part that ?(a) the non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and? (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.? Furthermore, provisions included in the Uniform Guidance, Section 200.320 ? Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state ?If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources?? Condition: A sample of 30 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though no problems were noted with the micro-purchase transactions tested, auditors encountered the significant issues in testing small purchase transactions; therefore, the entire population of small purchase transactions was ultimately tested. Upon review of these transactions, it was noted that the School District could not provide evidence that an adequate number of rate or price quotations was obtained from qualified sources for eight vendors associated with small purchase expenditures. Questioned Costs: Questioned costs of $72,747 were identified for all small purchase expenditures that did not follow the School District?s procurement procedures. Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement procedures are followed, and appropriate documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating effectively and as designed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 ? Special Education Grants to States COVID-19 ? 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants COVID-19 ? 84.173 ? Special Education Preschool Grants Federal Award Numbers: H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: $72,747 Description: A review of expenditures charged to the Special Education Cluster (Assistance Listing Numbers 84.027 and 84.173) revealed that the School District?s internal control procedures were not operating appropriately to ensure that the School District?s procurement procedures were followed. Background: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. Special Education Cluster funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Special Education Cluster funds totaling $1,381,680 were expended and reported on the Madison County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In addition, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state in part that ?(a) the non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and? (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.? Furthermore, provisions included in the Uniform Guidance, Section 200.320 ? Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state ?If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources?? Condition: A sample of 30 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though no problems were noted with the micro-purchase transactions tested, auditors encountered the significant issues in testing small purchase transactions; therefore, the entire population of small purchase transactions was ultimately tested. Upon review of these transactions, it was noted that the School District could not provide evidence that an adequate number of rate or price quotations was obtained from qualified sources for eight vendors associated with small purchase expenditures. Questioned Costs: Questioned costs of $72,747 were identified for all small purchase expenditures that did not follow the School District?s procurement procedures. Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement procedures are followed, and appropriate documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating effectively and as designed. Views of Responsible Officials: We concur with this finding.
FINDING 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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 2022-003 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 20-21, FY 21/22 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 19 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. There was no oversight, review, or approval process in place and documented at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained. 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 $150,000 per Indiana Code. 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 obtain price or rate quotes for three vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micropurchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. In addition, contracts were not awarded for the two vendors tested in fiscal year 2020-2021 with purchases exceeding $50,000. Suspension and Debarment The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds were not suspended or debarred from participating in federal awards programs. Nonfederal 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. There were three vendors subject to suspension and debarment requirements during the audit period. The School Corporation did not perform procedures to ensure the vendors were 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. INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY 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(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." 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 STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF WARREN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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 an effective system of internal controls to ensure 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 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.
2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR ?200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR ? 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. Ohio Rev. Code ? 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code ? 167.081. Purchases under a contract entered into under Ohio Rev. Code ? 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. The School District participated in The Ohio Purchasing Council?s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and lighting project, pursuant to Ohio Rev. Code ? 167.081. The School District utilized ESSER grant funds for part of this project. The School District did not maintain documentation that the Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to Ohio Rev. Code ?. 167.081 when awarding the unit price contract to Prodigy Building Solutions, LLC. and therefore failed to meet the documentation requirements of 2 CFR ? 200.320(b) and 2 CFR ? 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance requirements and the Ohio Revised Code could result in further citations for the School District and potential loss of grant funding. The School District should review the applicable Uniform Guidance requirements and the Ohio Revised Code before entering into any contracts.
2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR ?200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR ? 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. Ohio Rev. Code ? 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code ? 167.081. Purchases under a contract entered into under Ohio Rev. Code ? 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. The School District participated in The Ohio Purchasing Council?s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and lighting project, pursuant to Ohio Rev. Code ? 167.081. The School District utilized ESSER grant funds for part of this project. The School District did not maintain documentation that the Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to Ohio Rev. Code ?. 167.081 when awarding the unit price contract to Prodigy Building Solutions, LLC. and therefore failed to meet the documentation requirements of 2 CFR ? 200.320(b) and 2 CFR ? 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance requirements and the Ohio Revised Code could result in further citations for the School District and potential loss of grant funding. The School District should review the applicable Uniform Guidance requirements and the Ohio Revised Code before entering into any contracts.
2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR ?200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR ? 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. Ohio Rev. Code ? 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code ? 167.081. Purchases under a contract entered into under Ohio Rev. Code ? 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. The School District participated in The Ohio Purchasing Council?s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and lighting project, pursuant to Ohio Rev. Code ? 167.081. The School District utilized ESSER grant funds for part of this project. The School District did not maintain documentation that the Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to Ohio Rev. Code ?. 167.081 when awarding the unit price contract to Prodigy Building Solutions, LLC. and therefore failed to meet the documentation requirements of 2 CFR ? 200.320(b) and 2 CFR ? 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance requirements and the Ohio Revised Code could result in further citations for the School District and potential loss of grant funding. The School District should review the applicable Uniform Guidance requirements and the Ohio Revised Code before entering into any contracts.
FINDING 2022-002 ? Questioned Costs Related to Procurement Federal Agency: Department of Education Federal Communications Commission Program: COVID-19 Education Stabilization Fund (ESF): 84.425 COVID-19 Telehealth Program: 32.006 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, the School District is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Recipients of federal awards should have internal controls in place to ensure procurement practices are consistent and appropriate. Policies should dictate the method of procurement that should be used, who is authorized to approve purchases, and what procurement documentation and information should be maintained. The policy should also explain which items are eligible for non-competitive procurement (i.e., available only from a single source, public emergency, expressly authorized by awarding or pass-through agency, or if competitive procurement results are deemed inadequate). Condition: The School District did not adequately document its analysis that its technology purchases for the ESF and the Telehealth Program qualified for non-competitive procurement for being available through a single source. As a result, the School District did not have documentation to provide evidence of compliance which resulted in questioned costs. Cause: The School District did not have a formal procedure in place to adequately document the procurement procedures that were used. Effect: The School District was not in compliance with the procurement requirements of the Uniform Guidance. Questioned Costs: $1,001,167 based on the technology equipment invoice applied to the ESF and $499,768 based on the technology equipment invoice applied to the Telehealth Program. Recommendation: We recommend that the School District ensures that their purchasing policy formally reflects the procurement requirements in the Uniform Guidance. We recommend that the School District establish procedures to ensure that their purchasing policy is followed, including the use of competitive bids or proposals, when appropriate. Views of Responsible Officials and Planned Corrective Action: The School District agrees with the recommendation. See separate Corrective Action Plan.
FINDING 2022-002 ? Questioned Costs Related to Procurement Federal Agency: Department of Education Federal Communications Commission Program: COVID-19 Education Stabilization Fund (ESF): 84.425 COVID-19 Telehealth Program: 32.006 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, the School District is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Recipients of federal awards should have internal controls in place to ensure procurement practices are consistent and appropriate. Policies should dictate the method of procurement that should be used, who is authorized to approve purchases, and what procurement documentation and information should be maintained. The policy should also explain which items are eligible for non-competitive procurement (i.e., available only from a single source, public emergency, expressly authorized by awarding or pass-through agency, or if competitive procurement results are deemed inadequate). Condition: The School District did not adequately document its analysis that its technology purchases for the ESF and the Telehealth Program qualified for non-competitive procurement for being available through a single source. As a result, the School District did not have documentation to provide evidence of compliance which resulted in questioned costs. Cause: The School District did not have a formal procedure in place to adequately document the procurement procedures that were used. Effect: The School District was not in compliance with the procurement requirements of the Uniform Guidance. Questioned Costs: $1,001,167 based on the technology equipment invoice applied to the ESF and $499,768 based on the technology equipment invoice applied to the Telehealth Program. Recommendation: We recommend that the School District ensures that their purchasing policy formally reflects the procurement requirements in the Uniform Guidance. We recommend that the School District establish procedures to ensure that their purchasing policy is followed, including the use of competitive bids or proposals, when appropriate. Views of Responsible Officials and Planned Corrective Action: The School District agrees with the recommendation. See separate Corrective Action Plan.
FINDING 2022-002 ? Questioned Costs Related to Procurement Federal Agency: Department of Education Federal Communications Commission Program: COVID-19 Education Stabilization Fund (ESF): 84.425 COVID-19 Telehealth Program: 32.006 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, the School District is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Recipients of federal awards should have internal controls in place to ensure procurement practices are consistent and appropriate. Policies should dictate the method of procurement that should be used, who is authorized to approve purchases, and what procurement documentation and information should be maintained. The policy should also explain which items are eligible for non-competitive procurement (i.e., available only from a single source, public emergency, expressly authorized by awarding or pass-through agency, or if competitive procurement results are deemed inadequate). Condition: The School District did not adequately document its analysis that its technology purchases for the ESF and the Telehealth Program qualified for non-competitive procurement for being available through a single source. As a result, the School District did not have documentation to provide evidence of compliance which resulted in questioned costs. Cause: The School District did not have a formal procedure in place to adequately document the procurement procedures that were used. Effect: The School District was not in compliance with the procurement requirements of the Uniform Guidance. Questioned Costs: $1,001,167 based on the technology equipment invoice applied to the ESF and $499,768 based on the technology equipment invoice applied to the Telehealth Program. Recommendation: We recommend that the School District ensures that their purchasing policy formally reflects the procurement requirements in the Uniform Guidance. We recommend that the School District establish procedures to ensure that their purchasing policy is followed, including the use of competitive bids or proposals, when appropriate. Views of Responsible Officials and Planned Corrective Action: The School District agrees with the recommendation. See separate Corrective Action Plan.
FINDING 2022-002 ? Questioned Costs Related to Procurement Federal Agency: Department of Education Federal Communications Commission Program: COVID-19 Education Stabilization Fund (ESF): 84.425 COVID-19 Telehealth Program: 32.006 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, the School District is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Recipients of federal awards should have internal controls in place to ensure procurement practices are consistent and appropriate. Policies should dictate the method of procurement that should be used, who is authorized to approve purchases, and what procurement documentation and information should be maintained. The policy should also explain which items are eligible for non-competitive procurement (i.e., available only from a single source, public emergency, expressly authorized by awarding or pass-through agency, or if competitive procurement results are deemed inadequate). Condition: The School District did not adequately document its analysis that its technology purchases for the ESF and the Telehealth Program qualified for non-competitive procurement for being available through a single source. As a result, the School District did not have documentation to provide evidence of compliance which resulted in questioned costs. Cause: The School District did not have a formal procedure in place to adequately document the procurement procedures that were used. Effect: The School District was not in compliance with the procurement requirements of the Uniform Guidance. Questioned Costs: $1,001,167 based on the technology equipment invoice applied to the ESF and $499,768 based on the technology equipment invoice applied to the Telehealth Program. Recommendation: We recommend that the School District ensures that their purchasing policy formally reflects the procurement requirements in the Uniform Guidance. We recommend that the School District establish procedures to ensure that their purchasing policy is followed, including the use of competitive bids or proposals, when appropriate. Views of Responsible Officials and Planned Corrective Action: The School District agrees with the recommendation. See separate Corrective Action Plan.
FINDING 2022-002 ? Questioned Costs Related to Procurement Federal Agency: Department of Education Federal Communications Commission Program: COVID-19 Education Stabilization Fund (ESF): 84.425 COVID-19 Telehealth Program: 32.006 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, the School District is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Recipients of federal awards should have internal controls in place to ensure procurement practices are consistent and appropriate. Policies should dictate the method of procurement that should be used, who is authorized to approve purchases, and what procurement documentation and information should be maintained. The policy should also explain which items are eligible for non-competitive procurement (i.e., available only from a single source, public emergency, expressly authorized by awarding or pass-through agency, or if competitive procurement results are deemed inadequate). Condition: The School District did not adequately document its analysis that its technology purchases for the ESF and the Telehealth Program qualified for non-competitive procurement for being available through a single source. As a result, the School District did not have documentation to provide evidence of compliance which resulted in questioned costs. Cause: The School District did not have a formal procedure in place to adequately document the procurement procedures that were used. Effect: The School District was not in compliance with the procurement requirements of the Uniform Guidance. Questioned Costs: $1,001,167 based on the technology equipment invoice applied to the ESF and $499,768 based on the technology equipment invoice applied to the Telehealth Program. Recommendation: We recommend that the School District ensures that their purchasing policy formally reflects the procurement requirements in the Uniform Guidance. We recommend that the School District establish procedures to ensure that their purchasing policy is followed, including the use of competitive bids or proposals, when appropriate. Views of Responsible Officials and Planned Corrective Action: The School District agrees with the recommendation. See separate Corrective Action Plan.