FINDING 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "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 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 have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 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 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (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. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "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 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 have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 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 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (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. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "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 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 have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 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 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (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. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "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 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 have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 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 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (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. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021-2022, FY2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-005. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the procurement of goods and the suspension and debarment of vendors. Procurement - Micro-Purchases Upon inquiry of the School Corporation in order to review the procedures in place for verifying micro purchase procedures the School Corporation disclosed its process for micro-purchases, typically those purchases for $10,000 or under, was for the purchase to be reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. The review was documented by initials or a signature on the claim. To verify the internal control was operating effectively four vendors that fell within the micro-purchase threshold were selected for testing. Two of the four vendors selected were not reviewed, as there was no documentation of initials or a signature on the corresponding claim. Procurement - Small Purchases When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Upon inquiry of the School Corporation in order to review the procedures in place for verifying small purchase procedures the School Corporation disclosed it had two processes for ensuring proper procurement procedures were followed. There was one process for small purchases that required a contract and one process for small purchases that did not require a contract. For small purchases requiring a contract, the Food Service Director made the determination, which was then reviewed and approved by the School Board. Small purchases that did not require a contract were reviewed by the Treasurer or Food Service Director to ensure proper procurement procedures were followed. To verify the control was operating effectively five of the six vendors that fell within the small purchase threshold were selected for testing. Of the five tested, one contracted vendor and three noncontracted vendors did not have evidence of a review. Due to the lack of effective internal controls over small purchases, three of five small purchase vendors tested did not obtain the required price or rate quotes. In addition, documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures included the School Board approving bids, which include a certification from the vendor. The one covered transaction identified was not approved by the School Board. As such the internal control was determined to not be properly implemented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 5-22-8-3(d) states: "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 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 have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 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 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (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. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement methods used were not properly documented. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Ref 2023-006: Documentation needs to be maintained to justify the rationale for sole-source arrangements Federal Agency: United States Agency for International Development (USAID) for Nigeria OTL Program: Nigeria OTL Assistance Listing: 98.001 (Nigeria OTL) Award #: 72062021CA00006 NGA100152 (Nigeria OTL) Award year: FY23 Pass-through: Plan USA, Inc. Criteria: Under 2 CFR 200.320(c) vendors above a micro-purchase threshold (currently $165 for Nigeria OTL, which is more restrictive than the threshold in the Uniform Guidance) require a competitive process that includes soliciting multiple bids/quotes to justify best value. The Uniform Guidance requires purchasing decisions to be documented, including sole source justification, as applicable. Condition : We identified five transactions totalling $6,096 with two vendors where long-term arrangements (LTA) were in place for the two vendors but documentation was not retained to demonstrate that a competitive bid process had been performed prior to entering into the LTA. We identified four transactions totalling $5,183 with one vendor where an LTA was in place, but the LTA was extended with the same vendor without management documenting their rationale for sole sourcing this arrangement. The original LTA dates back to 2018 and multiple vendors were initially considered and documentation retained to demonstrate the initial tender at this point. However, documentation was not retained regarding subsequent considerations around maintaining this supplier under a sole source arrangement. Cause: Plan’s accounting policy is silent on a re-tender process should Plan choose to continue to use the same vendor and as such LTAs were extended without retaining documentation that is required in such instances under the Uniform Guidance. Effect: This could lead to missing out on better prospective vendors that management could do business with. There is also a possibility of management bias to continue using the same vendor. Recommendation: Management should put in place policies and procedures that require retaining documentation to justify the rationale for purchasing decisions consistent with the Uniform Guidance. We suggest that management performs a re-tendering process at the end of any LTA prior to extending the contract or otherwise documents the rationale for maintaining these suppliers under a sole source arrangement. Views of Responsible Officials and Management’s Corrective Action Plan: Views of responsible officials and management’s corrective action plan are included at the end of this report after the summary schedule of prior audit findings and status.
FINDING 2023-010 Information on the federal program: Federal Agency: Department of the Treasury Pass-Through Entity: The Indianapolis Foundation and The City of Indianapolis Federal Program: Coronavirus State and Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Internal Controls 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) 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 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." Condition: For one selected procurement, EmployIndy was unable to provide support indicating review of procurement documents. Cause: A proper system of internal controls was not implemented by management of the Organization, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Organization’s management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect: Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the organization. Questioned costs: There are no questioned costs. Context: Management was unable to provide adequate support indicating preparation and review of procurement and suspension and debarment documents for the Plaid Agency. Crowe was only able to view the bid request and bid. Documents indicating rationale for awarding the contract were not provided. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: We recommend that management establish a proper system of internal control and develop policies and procedures to ensure all required documentation is retained and provided for purchases and to ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-010 Information on the federal program: Federal Agency: Department of the Treasury Pass-Through Entity: The Indianapolis Foundation and The City of Indianapolis Federal Program: Coronavirus State and Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Internal Controls 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) 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 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." Condition: For one selected procurement, EmployIndy was unable to provide support indicating review of procurement documents. Cause: A proper system of internal controls was not implemented by management of the Organization, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Organization’s management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect: Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the organization. Questioned costs: There are no questioned costs. Context: Management was unable to provide adequate support indicating preparation and review of procurement and suspension and debarment documents for the Plaid Agency. Crowe was only able to view the bid request and bid. Documents indicating rationale for awarding the contract were not provided. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: We recommend that management establish a proper system of internal control and develop policies and procedures to ensure all required documentation is retained and provided for purchases and to ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-010 Information on the federal program: Federal Agency: Department of the Treasury Pass-Through Entity: The Indianapolis Foundation and The City of Indianapolis Federal Program: Coronavirus State and Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Internal Controls 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) 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 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." Condition: For one selected procurement, EmployIndy was unable to provide support indicating review of procurement documents. Cause: A proper system of internal controls was not implemented by management of the Organization, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Organization’s management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect: Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the organization. Questioned costs: There are no questioned costs. Context: Management was unable to provide adequate support indicating preparation and review of procurement and suspension and debarment documents for the Plaid Agency. Crowe was only able to view the bid request and bid. Documents indicating rationale for awarding the contract were not provided. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: We recommend that management establish a proper system of internal control and develop policies and procedures to ensure all required documentation is retained and provided for purchases and to ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
2023-002 Methods of procurement to be followed Federal Agency: Department of Treasury CFDA Cluster Nos.: 21.027 Federal Program Cluster: Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Methods of procurement to be followed Type of Finding: Significant Deficiency Questioned Costs: $0 Criteria: 2 CFR 200.320 Methods of procurement to be followed Condition: In two instances, the City did not follow the procurement method to be followed under Uniform Guidance. In the first instance, the City claimed a higher threshold for Micro-purchases, up to $50,000 as allowed by self-certification, however evidence of the self-certification was not available. In the second instance, the City exceeded the $50,000 threshold required for method of procurement for Micro-purchases. Cause: Inaccurate interpretation of Uniform Guidance. Effect: The City’s method of procurement was not in compliance with the methods prescribed by 2 CFR 200.320 Methods of procurement to be followed. Recommendation: We recommend the City follow the methods of procurement as prescribed by 2 CFR 200.320 Methods of procurement to be followed. In addition, the City should self-certify annually and retain evidence of the self-certification for the increases threshold of Micro-purchases. Management’s Response Regarding Corrective Action Taken or Planned The City concurs with the second instance in which the City exceeds the $50,000 threshold required for the method of procurement for Micro-Purchases. The City corrected the public works contract template using federal funds not to exceed $50,000 and has updated the City internal website to reflect the updated contract templates and provide guidelines for public work projects using federal funds under the micro-purchase thresholds. For the first instance, the City believes some form of self-certification was performed as the procurement policy was updated and reviewed by internal management level and was approved by the council in FY2023. However, moving forward, the city will include an approved annual memo on the review of the purchasing policy to further strengthen the self-certification documentation.
2023-002 Methods of procurement to be followed Federal Agency: Department of Treasury CFDA Cluster Nos.: 21.027 Federal Program Cluster: Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Methods of procurement to be followed Type of Finding: Significant Deficiency Questioned Costs: $0 Criteria: 2 CFR 200.320 Methods of procurement to be followed Condition: In two instances, the City did not follow the procurement method to be followed under Uniform Guidance. In the first instance, the City claimed a higher threshold for Micro-purchases, up to $50,000 as allowed by self-certification, however evidence of the self-certification was not available. In the second instance, the City exceeded the $50,000 threshold required for method of procurement for Micro-purchases. Cause: Inaccurate interpretation of Uniform Guidance. Effect: The City’s method of procurement was not in compliance with the methods prescribed by 2 CFR 200.320 Methods of procurement to be followed. Recommendation: We recommend the City follow the methods of procurement as prescribed by 2 CFR 200.320 Methods of procurement to be followed. In addition, the City should self-certify annually and retain evidence of the self-certification for the increases threshold of Micro-purchases. Management’s Response Regarding Corrective Action Taken or Planned The City concurs with the second instance in which the City exceeds the $50,000 threshold required for the method of procurement for Micro-Purchases. The City corrected the public works contract template using federal funds not to exceed $50,000 and has updated the City internal website to reflect the updated contract templates and provide guidelines for public work projects using federal funds under the micro-purchase thresholds. For the first instance, the City believes some form of self-certification was performed as the procurement policy was updated and reviewed by internal management level and was approved by the council in FY2023. However, moving forward, the city will include an approved annual memo on the review of the purchasing policy to further strengthen the self-certification documentation.
2023-002 Methods of procurement to be followed Federal Agency: Department of Treasury CFDA Cluster Nos.: 21.027 Federal Program Cluster: Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Methods of procurement to be followed Type of Finding: Significant Deficiency Questioned Costs: $0 Criteria: 2 CFR 200.320 Methods of procurement to be followed Condition: In two instances, the City did not follow the procurement method to be followed under Uniform Guidance. In the first instance, the City claimed a higher threshold for Micro-purchases, up to $50,000 as allowed by self-certification, however evidence of the self-certification was not available. In the second instance, the City exceeded the $50,000 threshold required for method of procurement for Micro-purchases. Cause: Inaccurate interpretation of Uniform Guidance. Effect: The City’s method of procurement was not in compliance with the methods prescribed by 2 CFR 200.320 Methods of procurement to be followed. Recommendation: We recommend the City follow the methods of procurement as prescribed by 2 CFR 200.320 Methods of procurement to be followed. In addition, the City should self-certify annually and retain evidence of the self-certification for the increases threshold of Micro-purchases. Management’s Response Regarding Corrective Action Taken or Planned The City concurs with the second instance in which the City exceeds the $50,000 threshold required for the method of procurement for Micro-Purchases. The City corrected the public works contract template using federal funds not to exceed $50,000 and has updated the City internal website to reflect the updated contract templates and provide guidelines for public work projects using federal funds under the micro-purchase thresholds. For the first instance, the City believes some form of self-certification was performed as the procurement policy was updated and reviewed by internal management level and was approved by the council in FY2023. However, moving forward, the city will include an approved annual memo on the review of the purchasing policy to further strengthen the self-certification documentation.
Reference Number: 2023-008 Federal Program Title: Public Health Emergency Preparedness Federal Assistance Listing Number: 93.069 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU90TP922022-04-01; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria Procurement In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.318: (j) 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 § 200.319 states: (b) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR § 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Suspension and Debarment In addition, in accordance with 2 CFR § 180.200 a covered transaction is a nonprocurement or procurement transaction that is subject to the prohibitions of this part. Per 2 CFR § 180.970(a), nonprocurement transaction means any transaction, regardless of type (except procurement contracts), including, but not limited to grants. According to 2 CFR § 180.300, when the County enters into a covered transaction with another person at the next lower tier, the County must verify that the person is not excluded or disqualified. The County can do this by: 1. Checking System for Award Management (SAM) exclusions 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. Per 2 CFR § 180.985, person means any individual, corporation, partnership, association, unit of government, or legal entity, however organized. Condition During our audit of the Department of Public Health (DPH) compliance with the procurement and suspension and debarment requirements for the Public Health Emergency Preparedness Program, we noted the following: • For twenty-one (21) contracts, DPH did not provide documentation related to the history of the procurement. Therefore, we were unable to determine whether DPH complied with the procurement requirements related to the method of procurement, competition, and the basis for the contract price. • For two (2) contracts, DPH did not provide documentation of the justification and approval of sole source. Therefore, we were unable to determine whether the procurement method used was appropriate and whether limiting competition was justified. • For three (3) contracts, DPH did not provide documentation to demonstrate DPH verified that the vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendors are not suspended or debarred. Cause DPH did not provide procurement and suspension and debarment documentation due to staff shortages and increased workload. For suspension and debarment, for two of the three contracts, DPH provided copies of the verification from Sam.gov, however, the documents did not have dates indicating the verification occurred prior to contract execution. Effect Failure to document the history of procurements results in noncompliance with the procurement requirements with 2 CFR §§ 200.317, 200.318, 200.319 and 200.320. Failure to document verification of suspension and debarment results in noncompliance with 2 CFR § 180.300, and there is a risk that federal funds may be used to pay subrecipients and vendors that are suspended or debarred. Questioned Costs Questioned costs were not identified. Context For the twenty-seven (27) contracts selected for testing, which totaled $1,942,586 from a population of 178 contracts with expenditures totaling $2,132,936, DPH did not provide the necessary documentation for twenty-three (23) contracts with expenditures totaling $1,273,569 and suspension and debarment documentation for three (3) contracts with expenditures totaling $124,809. The sample was not a statistically valid sample. Recommendation We recommend that DPH maintain sufficient records to support vendor selection in accordance with procurement requirements. In additional, we recommend that DPH either: 1) include a contract clause or condition to the covered transaction with that person, 2) check the SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from that person.
Reference Number: 2023-006 Federal Program Title: Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Federal Assistance Listing Number: 93.354 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU90TP922183-01-03; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria Procurement In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.318: (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR § 200.319 states: (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR § 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Suspension and Debarment In addition, in accordance with 2 CFR § 180.200 a covered transaction is a nonprocurement or procurement transaction that is subject to the prohibitions of this part. Per 2 CFR § 180.970(a), nonprocurement transaction means any transaction, regardless of type (except procurement contracts), including, but not limited to grants. According to 2 CFR § 180.300, when the County enters into a covered transaction with another person at the next lower tier, the County must verify that the person is not excluded or disqualified. The County can do this by: 1. Checking System for Award Management (SAM) exclusions 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. Per 2 CFR § 180.985, person means any individual, corporation, partnership, association, unit of government, or legal entity, however organized. Condition During our audit of the Department of Public Health (DPH) compliance with the procurement and suspension and debarment requirements for the Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Program, we noted that for one (1) contract, DPH did not provide documentation related to the history of the procurement. Therefore, we were unable to determine whether DPH complied with the procurement requirements related to the method of procurement, competition, and the basis for the contract price. In addition, for the same one (1) contract, DPH did not provide documentation to demonstrate DPH verified that the vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendor is not suspended or debarred. Cause The Office of the County Counsel stated the contract was privileged from disclosure under attorney-client privilege and did not provide the contract or procurement related documentation. In addition, County Counsel stated the contract did not contain an explicit debarment provision and did not provide documentation that Sam.gov was reviewed or a certification from the vendor. Effect Not providing sufficient documentation to auditors to demonstrate compliance with federal compliance results in an audit scope limitation. Failure to document verification of suspension and debarment results in noncompliance with 2 CFR § 180.300, and there is a risk that federal funds may be used to pay subrecipients and vendors that are suspended or debarred. Questioned Costs Questioned costs were not identified. Context For the six (6) contracts selected for testing, which totaled $37,256,347 from a population of eight (8) contracts with expenditures totaling $37,874,851, DPH did not provide procurement and suspension and debarment documentation for one (1) contract with expenditures totaling $1,499,482. The sample was not a statistically valid sample. Recommendation We recommend County departments discuss and document sensitive legal matters funded by federal funds with respective grantors to obtain guidance and direction on addressing audit requests. In addition, we recommend that DPH ensure sufficient documentation is maintained and available to demonstrate compliance with suspension or debarment. Acceptable items to confirm that vendors and subrecipients are not suspended or debarred are: 1) include a contract clause or condition to the covered transaction with that contractor, 2) search SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from the contractor.
Reference Number: 2023-006 Federal Program Title: Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Federal Assistance Listing Number: 93.354 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU90TP922183-01-03; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria Procurement In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.318: (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR § 200.319 states: (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR § 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Suspension and Debarment In addition, in accordance with 2 CFR § 180.200 a covered transaction is a nonprocurement or procurement transaction that is subject to the prohibitions of this part. Per 2 CFR § 180.970(a), nonprocurement transaction means any transaction, regardless of type (except procurement contracts), including, but not limited to grants. According to 2 CFR § 180.300, when the County enters into a covered transaction with another person at the next lower tier, the County must verify that the person is not excluded or disqualified. The County can do this by: 1. Checking System for Award Management (SAM) exclusions 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. Per 2 CFR § 180.985, person means any individual, corporation, partnership, association, unit of government, or legal entity, however organized. Condition During our audit of the Department of Public Health (DPH) compliance with the procurement and suspension and debarment requirements for the Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Program, we noted that for one (1) contract, DPH did not provide documentation related to the history of the procurement. Therefore, we were unable to determine whether DPH complied with the procurement requirements related to the method of procurement, competition, and the basis for the contract price. In addition, for the same one (1) contract, DPH did not provide documentation to demonstrate DPH verified that the vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendor is not suspended or debarred. Cause The Office of the County Counsel stated the contract was privileged from disclosure under attorney-client privilege and did not provide the contract or procurement related documentation. In addition, County Counsel stated the contract did not contain an explicit debarment provision and did not provide documentation that Sam.gov was reviewed or a certification from the vendor. Effect Not providing sufficient documentation to auditors to demonstrate compliance with federal compliance results in an audit scope limitation. Failure to document verification of suspension and debarment results in noncompliance with 2 CFR § 180.300, and there is a risk that federal funds may be used to pay subrecipients and vendors that are suspended or debarred. Questioned Costs Questioned costs were not identified. Context For the six (6) contracts selected for testing, which totaled $37,256,347 from a population of eight (8) contracts with expenditures totaling $37,874,851, DPH did not provide procurement and suspension and debarment documentation for one (1) contract with expenditures totaling $1,499,482. The sample was not a statistically valid sample. Recommendation We recommend County departments discuss and document sensitive legal matters funded by federal funds with respective grantors to obtain guidance and direction on addressing audit requests. In addition, we recommend that DPH ensure sufficient documentation is maintained and available to demonstrate compliance with suspension or debarment. Acceptable items to confirm that vendors and subrecipients are not suspended or debarred are: 1) include a contract clause or condition to the covered transaction with that contractor, 2) search SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from the contractor.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that 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 to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. 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. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
Federal Program Research and Development Cluster ALNs 12.RD, 81.087, 93.RD, 93.173, 93.273, 93.336, 93.837, 93.839, 93.847, 93.855, 93.865, 93.866 Federal Agencies Department of Defense, Department of Energy, Department of Health and Human Services Pass-through Entity Various Federal Award Year Ranges from September 23, 2016 – September 30, 2025 Criteria or Requirement 2 CFR 200.320(a)(2)(i) states that small purchase procedures for non-Federal entities includes 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. The University's procurement policies and procedures for small purchases requires the University's purchaser to conduct and select a supplier through a competitive bidding process for items ranging between $10,000 and $50,000. The University's procurement policies state that competitive bidding is not required when purchasing goods or services from a University contracted supplier or for directed sole source purchases. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to comply with the University's purchasing policies and procedures. Condition Found, including perspective University purchasers have the ability to request payment for goods or services purchased by submitting a requisition in Panther Express for the order to be routed to the Purchasing Department for review and approval, or an other payment request (OPR) specialty form is completed and submitted with the invoice in Panther Express which bypasses the Purchasing Department to Payment Processing for review and check processing. We identified one out of the 40 procurements sampled for testing did not have the required competitive bidding documentation for purchases ranging between $10,000 and $50,000 because the University purchaser utilized the OPR form bypassing the Purchasing Department review. The Purchasing Department subsequently ran queries from its system for a list of all Research and Development cluster (R&D) expenditures exceeding $10,000 that utilized the OPR form that did not have the required competitive bidding documentation and identified 24 purchases (including our sampled item) from multiple University purchasers totaling approximately $402,000, which is 0.04% of total R&D expenditures. None of these purchases were from a University contracted supplier, and there was no directed or sole source documentation filed, which is a violation of the University procurement policies. Cause University purchasers did not follow University payment procedures for procurements exceeding $10,000 to be reviewed and approved by the Purchasing Department prior to disbursement. Effect Failure to properly follow University payment and procurement policies could result in noncompliance and/or the use of an inappropriate vendor. Questioned Costs No questioned costs were identified. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University reinforce its procurement policies and procedures to all departments to ensure all the University’s procurement policies are being followed. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. First, although all purchasers are required to complete training on purchasing and payment policies prior to obtaining system access, a refresher policy training will be provided to the 13 departments in which exceptions were discovered along with a reminder communication to all the approximately 4,300 department purchasers. This will be completed by June 30, 2024. Second, for certain types of purchases such as those involving intellectual property rights, suppliers may complete work in good faith and request payment in the absence of a purchase order or contract. A new procedure has been instituted requiring the department/supplier to execute a contract prior to payment in order to minimize legal risks to the University and its funding agencies. This new procedure is complete. Finally, we are analyzing legitimate uses of the OPRS form and evaluating whether placing a maximum dollar limit, such as $5,000, for the use of the form will further strengthen internal controls. The evaluation will be completed by June 30, 2024. Implementing maximum dollar limits on the OPRS form will require IT changes, and therefore implementation will not occur until December 31, 2024.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Communities in Schools’ totaling $26,000.CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records 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. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $26,000 CAUSE: It was not readily determinable as to why the District did not adhere to its Procurement Policy for Federal Programs (#626.5) which addresses the issue of noncompetitive procurement as outline in Section 2 CFR 200.320(c’). RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626.5), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Communities in Schools’ totaling $26,000.CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records 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. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $26,000 CAUSE: It was not readily determinable as to why the District did not adhere to its Procurement Policy for Federal Programs (#626.5) which addresses the issue of noncompetitive procurement as outline in Section 2 CFR 200.320(c’). RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626.5), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Communities in Schools’ totaling $26,000.CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records 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. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $26,000 CAUSE: It was not readily determinable as to why the District did not adhere to its Procurement Policy for Federal Programs (#626.5) which addresses the issue of noncompetitive procurement as outline in Section 2 CFR 200.320(c’). RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626.5), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Communities in Schools’ totaling $26,000.CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records 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. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $26,000 CAUSE: It was not readily determinable as to why the District did not adhere to its Procurement Policy for Federal Programs (#626.5) which addresses the issue of noncompetitive procurement as outline in Section 2 CFR 200.320(c’). RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626.5), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Finding 2023-002: Procurement Information of the Federal Program: Assistance Listing Number 19.345 Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: The Organization did not provide supporting documentation for certain procurement decisions, and we noted instances where a memo was used to justify noncompetitive procurement when it was not clearly justified by one of the reasons permitted within CFR 200.320: The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; The item is available only from a single source; The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; After solicitation of a number of sources, competition is determined inadequate. Cause: The Organization has a procedure in place to ensure all vendors or suppliers paid with Federal funding are engaged in compliance with the Federal regulations but compliance with the policy was not always documented. Effect or Potential Effect: The Organization may have disallowed costs for not properly procuring goods or services. Questioned Costs: None noted Context: The Organization is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that the Organization update its policies and procedures to ensure compliance with CFR 200.320 regarding noncompetitive procurement. In addition, we recommend that documentation be maintained for all procurement decisions in accordance with established policy.
Finding 2023-002: Procurement Information of the Federal Program: Assistance Listing Number 19.345 Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: The Organization did not provide supporting documentation for certain procurement decisions, and we noted instances where a memo was used to justify noncompetitive procurement when it was not clearly justified by one of the reasons permitted within CFR 200.320: The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; The item is available only from a single source; The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; After solicitation of a number of sources, competition is determined inadequate. Cause: The Organization has a procedure in place to ensure all vendors or suppliers paid with Federal funding are engaged in compliance with the Federal regulations but compliance with the policy was not always documented. Effect or Potential Effect: The Organization may have disallowed costs for not properly procuring goods or services. Questioned Costs: None noted Context: The Organization is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that the Organization update its policies and procedures to ensure compliance with CFR 200.320 regarding noncompetitive procurement. In addition, we recommend that documentation be maintained for all procurement decisions in accordance with established policy.
2023-002: Compliance and Internal Control over Procurement - Sole Source and Suspension and Debarment Special Education Cluster Assistance Listing Numbers – 84.027A; 84.027X; 84.173A; and 87.173X Passthrough Agency: Louisiana Department of Education Questioned Costs: $84,880 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.320 requires, among other things, that specific criteria be met for the procurement of noncompetitive proposals. Procurement of noncompetitive proposals is procurement through solicitation of a proposal from only one source, also known as a sole source vendor. This method may only be used when one or more of the following circumstances apply: • The item is available only from a single source. • The purchase is in response to a public emergency that will not permit a delay resulting from the competitive process. • The purchase is expressly authorized by awarding or pass-through agency in response to a written request from the non-Federal entity or after solicitation of a number of sources, competition is determined inadequate. To ensure compliance with these requirements, justification of the use of noncompetitive proposals and research on the availability from multiple sources must be documented. Documentation of authorization must be retained, and any initial solicitations from multiple sources which are concluded to be inadequate, and such reasoning must be documented. In addition, non-federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods or services awarded under a non-procurement transaction (e.g. a grant or cooperative agreement) that is expected to equal or exceed $25,000. Universe/Population: The total population for procurement considerations was all vendors of the Special Education Cluster whose transactions for the year ended June 30, 2023, exceeded the micro-purchase threshold of $10,000. Payroll and benefit-related transactions were excluded from the population. Based on these requirements, the population consisted of thirty-eight vendors totaling $1,729,409. There was a total of twenty-four vendors whose payments exceeded $25,000 when considering compliance with suspension and debarment regulations. Only five of the twenty-four were related to covered transactions.Condition: Five vendors with expenditures totaling $654,205 were selected for testing. We noted one of the vendors selected for testing was deemed to be a sole source provider of reading teacher support packages by the School Board totaling $84,880. A sole source letter was obtained from the vendor, which outlined the uniqueness of the goods and services to be provided. However, it was determined that School Board did not appropriately follow the process for reviewing and documentation a sole source provider, per their federal procurement policy. This is a partially repeated finding from the prior fiscal year. For the five vendors selected for testing over suspension and debarment, the School Board asserts it checked the sam.gov website and none of the vendors were suspended or debarred. Our testing confirmed that these five vendors were not suspended or debarred. However, documentary evidence that a vendor was not suspended or debarred was not maintained in the School Board’s records. Cause: The School Board did not adhere to its established procurement policy for noncompetitive proposals to sole source vendors and control and internal review process was not properly followed. In addition, turnover in job functions without properly documented procedures resulted in the School Board not maintaining the records needed to evidence compliance with suspension and debarment requirements. Effect: Without proper internal controls over procurement to sole source or professional service vendors or suspension and debarment regulations, the School Board may enter into contracts with vendors where the price may not be fair or reasonable or disallowed if the vendor has been suspended or debarred from doing business with the federal government. Recommendations: The School Board should strengthen controls at the program administration level to ensure appropriate consideration to competitors are given and adequate documentation is obtained with respect to procurement of professional services and sole source products in accordance with the Uniform Guidance 2 CFR section 200.320(f). In addition, all vendors paid with federal resources should be checked for suspension or debarment. This documentation should be approved by the program director, as well as the purchasing director, and retained as evidence of the internal controls over procurement and suspension and debarment. View of Responsible Official: Management concurs with this finding, see corrective action plan dated March 27, 2024.
2023-002: Compliance and Internal Control over Procurement - Sole Source and Suspension and Debarment Special Education Cluster Assistance Listing Numbers – 84.027A; 84.027X; 84.173A; and 87.173X Passthrough Agency: Louisiana Department of Education Questioned Costs: $84,880 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.320 requires, among other things, that specific criteria be met for the procurement of noncompetitive proposals. Procurement of noncompetitive proposals is procurement through solicitation of a proposal from only one source, also known as a sole source vendor. This method may only be used when one or more of the following circumstances apply: • The item is available only from a single source. • The purchase is in response to a public emergency that will not permit a delay resulting from the competitive process. • The purchase is expressly authorized by awarding or pass-through agency in response to a written request from the non-Federal entity or after solicitation of a number of sources, competition is determined inadequate. To ensure compliance with these requirements, justification of the use of noncompetitive proposals and research on the availability from multiple sources must be documented. Documentation of authorization must be retained, and any initial solicitations from multiple sources which are concluded to be inadequate, and such reasoning must be documented. In addition, non-federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods or services awarded under a non-procurement transaction (e.g. a grant or cooperative agreement) that is expected to equal or exceed $25,000. Universe/Population: The total population for procurement considerations was all vendors of the Special Education Cluster whose transactions for the year ended June 30, 2023, exceeded the micro-purchase threshold of $10,000. Payroll and benefit-related transactions were excluded from the population. Based on these requirements, the population consisted of thirty-eight vendors totaling $1,729,409. There was a total of twenty-four vendors whose payments exceeded $25,000 when considering compliance with suspension and debarment regulations. Only five of the twenty-four were related to covered transactions.Condition: Five vendors with expenditures totaling $654,205 were selected for testing. We noted one of the vendors selected for testing was deemed to be a sole source provider of reading teacher support packages by the School Board totaling $84,880. A sole source letter was obtained from the vendor, which outlined the uniqueness of the goods and services to be provided. However, it was determined that School Board did not appropriately follow the process for reviewing and documentation a sole source provider, per their federal procurement policy. This is a partially repeated finding from the prior fiscal year. For the five vendors selected for testing over suspension and debarment, the School Board asserts it checked the sam.gov website and none of the vendors were suspended or debarred. Our testing confirmed that these five vendors were not suspended or debarred. However, documentary evidence that a vendor was not suspended or debarred was not maintained in the School Board’s records. Cause: The School Board did not adhere to its established procurement policy for noncompetitive proposals to sole source vendors and control and internal review process was not properly followed. In addition, turnover in job functions without properly documented procedures resulted in the School Board not maintaining the records needed to evidence compliance with suspension and debarment requirements. Effect: Without proper internal controls over procurement to sole source or professional service vendors or suspension and debarment regulations, the School Board may enter into contracts with vendors where the price may not be fair or reasonable or disallowed if the vendor has been suspended or debarred from doing business with the federal government. Recommendations: The School Board should strengthen controls at the program administration level to ensure appropriate consideration to competitors are given and adequate documentation is obtained with respect to procurement of professional services and sole source products in accordance with the Uniform Guidance 2 CFR section 200.320(f). In addition, all vendors paid with federal resources should be checked for suspension or debarment. This documentation should be approved by the program director, as well as the purchasing director, and retained as evidence of the internal controls over procurement and suspension and debarment. View of Responsible Official: Management concurs with this finding, see corrective action plan dated March 27, 2024.
2023-002: Compliance and Internal Control over Procurement - Sole Source and Suspension and Debarment Special Education Cluster Assistance Listing Numbers – 84.027A; 84.027X; 84.173A; and 87.173X Passthrough Agency: Louisiana Department of Education Questioned Costs: $84,880 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.320 requires, among other things, that specific criteria be met for the procurement of noncompetitive proposals. Procurement of noncompetitive proposals is procurement through solicitation of a proposal from only one source, also known as a sole source vendor. This method may only be used when one or more of the following circumstances apply: • The item is available only from a single source. • The purchase is in response to a public emergency that will not permit a delay resulting from the competitive process. • The purchase is expressly authorized by awarding or pass-through agency in response to a written request from the non-Federal entity or after solicitation of a number of sources, competition is determined inadequate. To ensure compliance with these requirements, justification of the use of noncompetitive proposals and research on the availability from multiple sources must be documented. Documentation of authorization must be retained, and any initial solicitations from multiple sources which are concluded to be inadequate, and such reasoning must be documented. In addition, non-federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods or services awarded under a non-procurement transaction (e.g. a grant or cooperative agreement) that is expected to equal or exceed $25,000. Universe/Population: The total population for procurement considerations was all vendors of the Special Education Cluster whose transactions for the year ended June 30, 2023, exceeded the micro-purchase threshold of $10,000. Payroll and benefit-related transactions were excluded from the population. Based on these requirements, the population consisted of thirty-eight vendors totaling $1,729,409. There was a total of twenty-four vendors whose payments exceeded $25,000 when considering compliance with suspension and debarment regulations. Only five of the twenty-four were related to covered transactions.Condition: Five vendors with expenditures totaling $654,205 were selected for testing. We noted one of the vendors selected for testing was deemed to be a sole source provider of reading teacher support packages by the School Board totaling $84,880. A sole source letter was obtained from the vendor, which outlined the uniqueness of the goods and services to be provided. However, it was determined that School Board did not appropriately follow the process for reviewing and documentation a sole source provider, per their federal procurement policy. This is a partially repeated finding from the prior fiscal year. For the five vendors selected for testing over suspension and debarment, the School Board asserts it checked the sam.gov website and none of the vendors were suspended or debarred. Our testing confirmed that these five vendors were not suspended or debarred. However, documentary evidence that a vendor was not suspended or debarred was not maintained in the School Board’s records. Cause: The School Board did not adhere to its established procurement policy for noncompetitive proposals to sole source vendors and control and internal review process was not properly followed. In addition, turnover in job functions without properly documented procedures resulted in the School Board not maintaining the records needed to evidence compliance with suspension and debarment requirements. Effect: Without proper internal controls over procurement to sole source or professional service vendors or suspension and debarment regulations, the School Board may enter into contracts with vendors where the price may not be fair or reasonable or disallowed if the vendor has been suspended or debarred from doing business with the federal government. Recommendations: The School Board should strengthen controls at the program administration level to ensure appropriate consideration to competitors are given and adequate documentation is obtained with respect to procurement of professional services and sole source products in accordance with the Uniform Guidance 2 CFR section 200.320(f). In addition, all vendors paid with federal resources should be checked for suspension or debarment. This documentation should be approved by the program director, as well as the purchasing director, and retained as evidence of the internal controls over procurement and suspension and debarment. View of Responsible Official: Management concurs with this finding, see corrective action plan dated March 27, 2024.
Criteria: 2 CFR 200.320 requires the non-Federal entity to have and use documented procurement procedures that are consistent with the standards outlined in that section. The Center has adopted a procurement policy that complies with the applicable procurement requirements. For purchases or contracts that have a value in excess of $10,000, three written proposals must be submitted to the Board of Directors. Condition: Procurement documentation for two vendors was not prepared. Context: We selected two contracts whose expenditures exceeded $10,000 noting that for these selections, the Center’s documentation supporting the procurement process was not prepared. Cause: Although the Center has established procurement policies and procedures, in one instance, there was a misunderstanding regarding the application of the procurement policy. Management believed that having the vendor explicitly specified in the approved grant application exempted the Center from following its procurement policy. In the second instance, management contracted with the service provider as an emergency procurement during the pandemic and did not revisit the procurement of this vendor. Effect: Failure to properly perform the procedures required under the procurement process could result in noncompliance with the procurement requirement. Questioned Costs: None Identification of a repeat finding: N/A. Recommendations: We recommend the Center follow their procurement policies and procedures for purchases using federal funds and maintain evidence that the required procurement procedures were completed. Management Response: To ensure future compliance with procurement policy the following action has/will be taken: 1. Management has developed a Service & Contract Procurement form that will be attached to purchase agreements/contracts for services that is or has the reasonable potential to meet or exceed $10,000 over the contract period. Service & Contract Procurement form contains the following information: a. Description of solicited services; b. Summary of written proposals; c. Basis for the selection of the vendor; d. If an emergency procurement for ongoing services, timeline for complete formal procurement process; and e. Date on which Board of Directors approved the service contract. 2. The entire management team received refresher training on the agency’s procurement policy on March 21, 2024; and 3. Management will solicit formal written proposals for professional accounting services by June 30, 2024.