FINDING 2022-002 Information on the federal program: Subject: Child Nutrition Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: There were two small purchase method procurements selected for sample testing for the audit period. One procurement was performed by the School?s Service Center, Wilson Education Center (Service Center). During the 2020-2021 school year, the Service Center solicited, evaluated, and awarded a bid for the milk on behalf of its members that School Corporation used. The Service Center was not audited for the 2020-2021 school year. During our testing of procurement and suspension and debarment for 2020-2021, it was noted that the School Corporation was not have a review control in place to monitor that the Service Center performed all necessary procedures to maintain compliance with federal regulations surrounding procurement and suspension and debarment. For 2020-2021, the School Corporation obtained procurement documents from the Service Center supporting procurements performed during the audit period. There was no documented review control in place at the School Corporation to ensure proper monitoring of the Service Center activities occur to verify federal procurement regulations were followed by the Service Center. There was one vendor that exceeded the $10,000 threshold for the School Corporation during fiscal year 2020-2021 that would require a procurement check. The error in the sample procurement performed by the Service Center selected for testing was isolated to fiscal year 2020-2021. The amount paid to the vendor for 2020-2021 was $22,211. The vendor did not met the suspension and debarment threshold ($25,000) for fiscal year 2020-2021. Proper controls over the same vendor selected for procurement and debarment and suspension were in place for the fiscal year 2021-2022 The second procurement selected for testing was a small purchase performed by the School Corporation for food purchases totaling $103,671 in fiscal year 2020-2021 and $142,368 in fiscal year 2021-2022. We noted that the School Corporation did not obtain three quotes from separate vendors. Additionally, the School Corporation did not perform a suspension and debarment check on the vendor sampled for fiscal years 2020-2021 and 2021-2022. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish controls to ensure compliance with Procurement and Suspension and Debarment compliance requirement. We recommend that management meet periodically with the Wilson Education Center and review and maintain procurement contract files as evidence of proper periodic monitoring of the Service Center. Additionally, we recommended that the School Corporation's management establish a system of internal controls related to ensure that 3 quotes are obtained as required for small purchase method procurements and to ensure the vendors are not debarred or suspended for small purchases procurements performed by the School Corporation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-002 Information on the federal program: Subject: Child Nutrition Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: There were two small purchase method procurements selected for sample testing for the audit period. One procurement was performed by the School?s Service Center, Wilson Education Center (Service Center). During the 2020-2021 school year, the Service Center solicited, evaluated, and awarded a bid for the milk on behalf of its members that School Corporation used. The Service Center was not audited for the 2020-2021 school year. During our testing of procurement and suspension and debarment for 2020-2021, it was noted that the School Corporation was not have a review control in place to monitor that the Service Center performed all necessary procedures to maintain compliance with federal regulations surrounding procurement and suspension and debarment. For 2020-2021, the School Corporation obtained procurement documents from the Service Center supporting procurements performed during the audit period. There was no documented review control in place at the School Corporation to ensure proper monitoring of the Service Center activities occur to verify federal procurement regulations were followed by the Service Center. There was one vendor that exceeded the $10,000 threshold for the School Corporation during fiscal year 2020-2021 that would require a procurement check. The error in the sample procurement performed by the Service Center selected for testing was isolated to fiscal year 2020-2021. The amount paid to the vendor for 2020-2021 was $22,211. The vendor did not met the suspension and debarment threshold ($25,000) for fiscal year 2020-2021. Proper controls over the same vendor selected for procurement and debarment and suspension were in place for the fiscal year 2021-2022 The second procurement selected for testing was a small purchase performed by the School Corporation for food purchases totaling $103,671 in fiscal year 2020-2021 and $142,368 in fiscal year 2021-2022. We noted that the School Corporation did not obtain three quotes from separate vendors. Additionally, the School Corporation did not perform a suspension and debarment check on the vendor sampled for fiscal years 2020-2021 and 2021-2022. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish controls to ensure compliance with Procurement and Suspension and Debarment compliance requirement. We recommend that management meet periodically with the Wilson Education Center and review and maintain procurement contract files as evidence of proper periodic monitoring of the Service Center. Additionally, we recommended that the School Corporation's management establish a system of internal controls related to ensure that 3 quotes are obtained as required for small purchase method procurements and to ensure the vendors are not debarred or suspended for small purchases procurements performed by the School Corporation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-002 Information on the federal program: Subject: Child Nutrition Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: There were two small purchase method procurements selected for sample testing for the audit period. One procurement was performed by the School?s Service Center, Wilson Education Center (Service Center). During the 2020-2021 school year, the Service Center solicited, evaluated, and awarded a bid for the milk on behalf of its members that School Corporation used. The Service Center was not audited for the 2020-2021 school year. During our testing of procurement and suspension and debarment for 2020-2021, it was noted that the School Corporation was not have a review control in place to monitor that the Service Center performed all necessary procedures to maintain compliance with federal regulations surrounding procurement and suspension and debarment. For 2020-2021, the School Corporation obtained procurement documents from the Service Center supporting procurements performed during the audit period. There was no documented review control in place at the School Corporation to ensure proper monitoring of the Service Center activities occur to verify federal procurement regulations were followed by the Service Center. There was one vendor that exceeded the $10,000 threshold for the School Corporation during fiscal year 2020-2021 that would require a procurement check. The error in the sample procurement performed by the Service Center selected for testing was isolated to fiscal year 2020-2021. The amount paid to the vendor for 2020-2021 was $22,211. The vendor did not met the suspension and debarment threshold ($25,000) for fiscal year 2020-2021. Proper controls over the same vendor selected for procurement and debarment and suspension were in place for the fiscal year 2021-2022 The second procurement selected for testing was a small purchase performed by the School Corporation for food purchases totaling $103,671 in fiscal year 2020-2021 and $142,368 in fiscal year 2021-2022. We noted that the School Corporation did not obtain three quotes from separate vendors. Additionally, the School Corporation did not perform a suspension and debarment check on the vendor sampled for fiscal years 2020-2021 and 2021-2022. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish controls to ensure compliance with Procurement and Suspension and Debarment compliance requirement. We recommend that management meet periodically with the Wilson Education Center and review and maintain procurement contract files as evidence of proper periodic monitoring of the Service Center. Additionally, we recommended that the School Corporation's management establish a system of internal controls related to ensure that 3 quotes are obtained as required for small purchase method procurements and to ensure the vendors are not debarred or suspended for small purchases procurements performed by the School Corporation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Subject: Special Education Cluster ? Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 19611-049-PN01, 20611-047-PN01, 19619-49-PN01, 20619-047-PN01, 20611-049-PN01, 21611-047-PN01, 20619-49-PN01, 21619-047- PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters 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 awards 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 200.303 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: 1. Checking SAM Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person.? 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement? ?(c) Procurement by sealed bids (formal advertising). Bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply " Condition: The School Corporation is a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs on behalf of the School Corporation and managed the special education grant funds. As the grant agreement was between the Indiana Department of Education and the School Corporation, the School Corporation was responsible for compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement ? Simplified Acquisition The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions. The Cooperative did not have adequate procedures in place to ensure procurements for simplified acquisitions were properly advertised and bids accepted. There were two vendors who met the Simplified Acquisition threshold during the audit period; neither were properly procured. Suspension and Debarment The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the Suspension and Debarment requirements. During school year 2020, the Cooperative did not have adequate procedures in place to ensure that applicable vendors who received federal funds were not suspended or debarred from participation in federal awards programs. There were three contracted vendors during the audit period; the unit did not perform procedures to ensure the vendors were not excluded or disqualified. During the 2021 school year, The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the suspension and debarment requirements. The Special Education Director obtained suspension and debarment certifications for contracted vendors over $25,000 without an oversight or review process. The lack of controls and noncompliance related to procurement were isolated to school year 2020-2021. The lack of controls related to suspension and debarment were systemic throughout the audit period; however, the noncompliance was isolated to school year 2020-2021. Cause: Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have adequate internal controls in place to ensure the Cooperative complied with the procurement requirements for simplified acquisitions or suspension and debarment requirements for all contracts. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
COVID-19 ? Education Stabilization Fund, Assistance Listing No. 84.425 U.S. Department of Education Award Year 2021-2022 Criteria or specific requirement ? Procurement 2 CFR 200.320 Condition ? The College charged services to the institutional portion of the award that had not been procured. Questioned Costs ? ALN 84.425F - $32,061 ? Questioned costs include amounts charged to the grant for an existing contract that was not procured after the Louisiana State of Emergency for COVID-19 ended, so the noncompetitive procurement method no longer qualified. Context ? Out of $210,105 expenses that were charged to the institutional portion of the grant and were above the College?s micro-purchase threshold, 3 key items of contracts totaling $166,574, were selected for testing. Of the contracts tested, one contract was not procured in accordance with the Uniform Guidance. When the contract was originally entered into, it was not paid for with federal funds, so the College wasn?t required to follow the procurement guide lines. At the start of the pandemic, the contract was expanded to be able to provide on-line instruction, and therefore the College used the noncompetitive procurement option given the public exigency and emergency circumstance that would not permit a delay resulting from publicizing a competitive solicitation. The Louisiana State of Emergency ended in March 2022 and the College did not have a plan in place to procure the services after noncompetitive procurement flexibility ended. Effect ? Expenses were charged to the grant that were not procured in accordance with the Uniform Guidance. Cause ? The College did not follow their procurement policy for expenses charged to federal awards. Identification of repeat finding, if applicable ? N/A Recommendation ? Management should review contracts being charged to federal grants to ensure they have followed their procurement policy. Views of responsible officials and planned corrective actions ? The College concurs with the finding and recommendation and will review contracts supported by federal grants to ensure they meet institutional and federal guidelines. The College will also review our current procurement policies and make any adjustments that may be necessary.
2022-101 Lack of Appropriate Internal Controls Related to Procurement Requirements Assistance Listing Number: 10.555 and 10.553 Name of Federal Agency: United States Department of Agriculture Program Title: National School Lunch Program Compliance Requirement: Procurement Pass-through Entity: State of Florida Department of Agriculture and Consumer Services Federal Grant/Contract Number and Grant Year: N/A (2022) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Company did not obtain the necessary number of quotes for purchases over the small purchase threshold as required. The Company also does not have a process in place to verify vendors are not suspended or debarred when they are determined to be ?covered transactions.? Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, 2 CFR section 200.320(a)(2) requires that if the small purchases procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the nonfederal entity. Finally, 2 CFR 180 Subpart C requires that the nonfederal entity determine if a vendor is excluded or disqualified (i.e. suspended or debarred) before entering into a covered transaction. Cause: Staff responsible for obtaining the quotes were told to do so by management but quotes were not obtained and management did not realize this until requested for the audit. The Company staff were not aware of the requirements associated with suspension and debarment affecting purchases over $25,000. Effect: The Company may not comply with procurement compliance requirements and may purchase something from a suspended or debarred vendor. This could lead to questioned costs for the grant. Recommendation: We recommend that the Company implement appropriate review procedures to verify staff obtain quotes prior to approval of the purchase. CRI also recommends implementing procedures to verify and document vendors are not suspended or debarred prior to purchase when transactions are considered ?covered transactions.? Views of Responsible Officials and Planned Corrective Actions: The Company will implement additional procedures to make sure suspension and debarment requirements are considered as well as additional oversight procedures to verify quotes are being obtained when required. The Company has reprimanded the staff who was told to obtain the quotes and procurement procedures were taken away from the staff in the future.
2022-101 Lack of Appropriate Internal Controls Related to Procurement Requirements Assistance Listing Number: 10.555 and 10.553 Name of Federal Agency: United States Department of Agriculture Program Title: National School Lunch Program Compliance Requirement: Procurement Pass-through Entity: State of Florida Department of Agriculture and Consumer Services Federal Grant/Contract Number and Grant Year: N/A (2022) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Company did not obtain the necessary number of quotes for purchases over the small purchase threshold as required. The Company also does not have a process in place to verify vendors are not suspended or debarred when they are determined to be ?covered transactions.? Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, 2 CFR section 200.320(a)(2) requires that if the small purchases procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the nonfederal entity. Finally, 2 CFR 180 Subpart C requires that the nonfederal entity determine if a vendor is excluded or disqualified (i.e. suspended or debarred) before entering into a covered transaction. Cause: Staff responsible for obtaining the quotes were told to do so by management but quotes were not obtained and management did not realize this until requested for the audit. The Company staff were not aware of the requirements associated with suspension and debarment affecting purchases over $25,000. Effect: The Company may not comply with procurement compliance requirements and may purchase something from a suspended or debarred vendor. This could lead to questioned costs for the grant. Recommendation: We recommend that the Company implement appropriate review procedures to verify staff obtain quotes prior to approval of the purchase. CRI also recommends implementing procedures to verify and document vendors are not suspended or debarred prior to purchase when transactions are considered ?covered transactions.? Views of Responsible Officials and Planned Corrective Actions: The Company will implement additional procedures to make sure suspension and debarment requirements are considered as well as additional oversight procedures to verify quotes are being obtained when required. The Company has reprimanded the staff who was told to obtain the quotes and procurement procedures were taken away from the staff in the future.
2022-101 Lack of Appropriate Internal Controls Related to Procurement Requirements Assistance Listing Number: 10.555 and 10.553 Name of Federal Agency: United States Department of Agriculture Program Title: National School Lunch Program Compliance Requirement: Procurement Pass-through Entity: State of Florida Department of Agriculture and Consumer Services Federal Grant/Contract Number and Grant Year: N/A (2022) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Company did not obtain the necessary number of quotes for purchases over the small purchase threshold as required. The Company also does not have a process in place to verify vendors are not suspended or debarred when they are determined to be ?covered transactions.? Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, 2 CFR section 200.320(a)(2) requires that if the small purchases procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the nonfederal entity. Finally, 2 CFR 180 Subpart C requires that the nonfederal entity determine if a vendor is excluded or disqualified (i.e. suspended or debarred) before entering into a covered transaction. Cause: Staff responsible for obtaining the quotes were told to do so by management but quotes were not obtained and management did not realize this until requested for the audit. The Company staff were not aware of the requirements associated with suspension and debarment affecting purchases over $25,000. Effect: The Company may not comply with procurement compliance requirements and may purchase something from a suspended or debarred vendor. This could lead to questioned costs for the grant. Recommendation: We recommend that the Company implement appropriate review procedures to verify staff obtain quotes prior to approval of the purchase. CRI also recommends implementing procedures to verify and document vendors are not suspended or debarred prior to purchase when transactions are considered ?covered transactions.? Views of Responsible Officials and Planned Corrective Actions: The Company will implement additional procedures to make sure suspension and debarment requirements are considered as well as additional oversight procedures to verify quotes are being obtained when required. The Company has reprimanded the staff who was told to obtain the quotes and procurement procedures were taken away from the staff in the future.
Criteria or Specific Requirement: In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: High School for Recording Arts does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Context: This finding impacts the internal control for over compliance with the Uniform Guidance. Questioned Costs: None reported. Effect or Potential Effect: High School for Recording Arts is not in compliance with 2 CFR section 200.317 through 200.320. Cause: High School for Recording Arts has not adopted policies and procedures required by the Uniform Guidance. Recommendation: We recommend that High School for Recording Arts adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320.
Criteria or Specific Requirement: In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: High School for Recording Arts does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Context: This finding impacts the internal control for over compliance with the Uniform Guidance. Questioned Costs: None reported. Effect or Potential Effect: High School for Recording Arts is not in compliance with 2 CFR section 200.317 through 200.320. Cause: High School for Recording Arts has not adopted policies and procedures required by the Uniform Guidance. Recommendation: We recommend that High School for Recording Arts adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320.
Criteria or Specific Requirement: In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: High School for Recording Arts does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Context: This finding impacts the internal control for over compliance with the Uniform Guidance. Questioned Costs: None reported. Effect or Potential Effect: High School for Recording Arts is not in compliance with 2 CFR section 200.317 through 200.320. Cause: High School for Recording Arts has not adopted policies and procedures required by the Uniform Guidance. Recommendation: We recommend that High School for Recording Arts adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320.
Criteria or Specific Requirement: In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: High School for Recording Arts does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Context: This finding impacts the internal control for over compliance with the Uniform Guidance. Questioned Costs: None reported. Effect or Potential Effect: High School for Recording Arts is not in compliance with 2 CFR section 200.317 through 200.320. Cause: High School for Recording Arts has not adopted policies and procedures required by the Uniform Guidance. Recommendation: We recommend that High School for Recording Arts adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320.
Criteria or Specific Requirement: In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: High School for Recording Arts does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Context: This finding impacts the internal control for over compliance with the Uniform Guidance. Questioned Costs: None reported. Effect or Potential Effect: High School for Recording Arts is not in compliance with 2 CFR section 200.317 through 200.320. Cause: High School for Recording Arts has not adopted policies and procedures required by the Uniform Guidance. Recommendation: We recommend that High School for Recording Arts adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320.
Criteria or Specific Requirement: In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: High School for Recording Arts does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Context: This finding impacts the internal control for over compliance with the Uniform Guidance. Questioned Costs: None reported. Effect or Potential Effect: High School for Recording Arts is not in compliance with 2 CFR section 200.317 through 200.320. Cause: High School for Recording Arts has not adopted policies and procedures required by the Uniform Guidance. Recommendation: We recommend that High School for Recording Arts adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320.
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states 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 District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)
Finding 2022-001 U. S. Department of Education 84.370C ? DC Opportunity Scholarship Program Significant Deficiency over Compliance and Internal Control over Procurement and Suspension and Debarment Repeat Finding: Yes Condition: For 1 out of 1 selections, management did not follow the appropriate method of procurement for contracts in excess of $25,000, in accordance with the Schools financial policies and procedures and as set forth by the DC PCSB. Criteria: In accordance with 2 CFR ?200.320: When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319. Cause: The contract was initially budgeted to be under $25,000 and was procured using small purchase procedures; however the total contract costs were $25,600 (which is greater than the School?s SAT) for the year ended June 30, 2022. Effect: The subrecipient may not be in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend the School implement a process to monitor its vendors that are above $20,000, to ensure year to date costs do not exceed $25,000. Auditee Response and Corrective Action Plan: Refer to the corrective action plan. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-001 U. S. Department of Education 84.370C ? DC Opportunity Scholarship Program Significant Deficiency over Compliance and Internal Control over Procurement and Suspension and Debarment Repeat Finding: Yes Condition: For 1 out of 1 selections, management did not follow the appropriate method of procurement for contracts in excess of $25,000, in accordance with the Schools financial policies and procedures and as set forth by the DC PCSB. Criteria: In accordance with 2 CFR ?200.320: When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319. Cause: The contract was initially budgeted to be under $25,000 and was procured using small purchase procedures; however the total contract costs were $25,600 (which is greater than the School?s SAT) for the year ended June 30, 2022. Effect: The subrecipient may not be in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend the School implement a process to monitor its vendors that are above $20,000, to ensure year to date costs do not exceed $25,000. Auditee Response and Corrective Action Plan: Refer to the corrective action plan. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-001 U. S. Department of Education 84.370C ? DC Opportunity Scholarship Program Significant Deficiency over Compliance and Internal Control over Procurement and Suspension and Debarment Repeat Finding: Yes Condition: For 1 out of 1 selections, management did not follow the appropriate method of procurement for contracts in excess of $25,000, in accordance with the Schools financial policies and procedures and as set forth by the DC PCSB. Criteria: In accordance with 2 CFR ?200.320: When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319. Cause: The contract was initially budgeted to be under $25,000 and was procured using small purchase procedures; however the total contract costs were $25,600 (which is greater than the School?s SAT) for the year ended June 30, 2022. Effect: The subrecipient may not be in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend the School implement a process to monitor its vendors that are above $20,000, to ensure year to date costs do not exceed $25,000. Auditee Response and Corrective Action Plan: Refer to the corrective action plan. Auditor?s Conclusion: Finding remains as stated.
Ohio Rev. Code ?? 3313.843 and 3313.845 allows traditional schools to contract with Educational Service Centers (ESCs) to provide services as outlined in the agreement between the two parties. Ohio Rev. Code ? 3313.843(C) requires these agreements to be filed with the Ohio Department of Education by the first day of July of the school year for which the agreement is in effect. 2 CFR ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR ? 200.320 which outlines the methods of procurement to be followed by state subrecipient non-Federal entities when expending certain types Federal funds, including those received through Grant Agreements. Ohio Rev. Code ? 3313.843(J) clarifies that a school district may apply for approval from the ODE, and therefore be in compliance with federal law, to use a noncompetitive purchasing method to procure personnel-based services from an ESC if certain conditions are present. Pursuant to Ohio Revised Code 3313.843(J), ODE created a form that allows schools to request that ODE authorize a noncompetitive proposal for their ESC Services. Request for Approval For A Noncompetitive Proposal When Procuring Personnel-based Services From A High-Performing Educational Service Center Under Ohio Revised Code 3313.843(J), Ohio Department of Education. Furthermore, 2 CFR ? 3485 gives regulatory effect to the Department of Education for 2 CFR 180.305 states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR ? 180.135. 2 CFR ? 180.200 identifies that ?covered transactions? include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR ? 180.220. All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR ? 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. School District Federal Procurement Policy #6325 indicates for noncompetitive purchases through an ESC, the Treasurer/CFO will submit an application and any required documentation to ODE on the designated form requesting approval for use of a noncompetitive purchasing method for personnel services. Purchases will not be made until the application is approved and notice of approval will be maintained by the Treasurer/CFO. Additionally, Policy #6325 indicates for the acquisition of services higher than $10,000 but under $50,000, such is considered a small purchase. Small purchase procedures require that price or rate quotations shall be obtained from an adequate number of qualified sources. Policy # 6325, also states for contracts over $25,000, the School District shall confirm that the vendor is not debarred or suspended by either checking the Federal government's System for Award Management, which maintains a list of such debarred or suspended vendors at www.sam.gov; collecting a certification from the vendor; or adding a clause or condition to the covered transaction with that vendor. In fiscal year 2022, the School District contracted with two vendors for Special Education services, the Knox County Educational Service Center (ESC) and Bloom Pediatric Therapy; of which the School District expended $177,668 and $11,130 respectively, which were paid from the Special Education Cluster grant and subject to Federal procurement laws. Under 2 CFR ?200.320, the School District should have competitively bid the services needed or obtained price quotes from qualified sources, as further defined in the School District?s procurement policy, unless validly exempt. The School District?s Federal Procurement Policy #6325 provided guidelines for services provided by the ESC to be considered noncompetitive providing upon approval from ODE. However, the School District did not file the ESC agreement with ODE or attempt to obtain any approval from ODE on the agreement until April 2022, the last three months of the fiscal year, despite the agreement was already in effect. Therefore, all payments to the ESC prior to April 1, 2022 were not in compliance with 2 CFR ? 200.320, Ohio Rev. Code ? 3313.843(J) and the District?s procurement policy #6325. Furthermore, the School District?s contract with Bloom Pediatric Therapy would have met the requirements of a small purchase and required the School District to gather, review and document quotations for services from an adequate number of qualified sources. The School District did not maintain any documentation evidencing quotes were obtained and considered as required by 2 CFR ? 200.320. The School District also did not have the proper internal controls in place to verify that all entities, with whom the School District had entered into covered transactions, had not been suspended or debarred. During testing of procurement for the Special Education IDEA program, we noted the School District expended more than $25,000 to the Knox County ESC and there was no evidence the School District checked the SAM exclusions, collected a certification from the ESC, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the only covered transaction in the Special Education IDEA program during fiscal year 2022. Failing to have the appropriate controls in place over procurement procedures may result in vendors who are suspended or debarred receiving federal funds or the School District paying excess costs for services. As a result, we have qualified our opinion over the School District?s Special Education Cluster (IDEA) federal program. Prior to contracting with vendors whom will be paid with federal funds, the School District should establish internal control procedures to help ensure the School District?s procurement policies and procedures are in compliance with 2 CFR ? 200.320 and should verify vendors are not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Ohio Rev. Code ?? 3313.843 and 3313.845 allows traditional schools to contract with Educational Service Centers (ESCs) to provide services as outlined in the agreement between the two parties. Ohio Rev. Code ? 3313.843(C) requires these agreements to be filed with the Ohio Department of Education by the first day of July of the school year for which the agreement is in effect. 2 CFR ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR ? 200.320 which outlines the methods of procurement to be followed by state subrecipient non-Federal entities when expending certain types Federal funds, including those received through Grant Agreements. Ohio Rev. Code ? 3313.843(J) clarifies that a school district may apply for approval from the ODE, and therefore be in compliance with federal law, to use a noncompetitive purchasing method to procure personnel-based services from an ESC if certain conditions are present. Pursuant to Ohio Revised Code 3313.843(J), ODE created a form that allows schools to request that ODE authorize a noncompetitive proposal for their ESC Services. Request for Approval For A Noncompetitive Proposal When Procuring Personnel-based Services From A High-Performing Educational Service Center Under Ohio Revised Code 3313.843(J), Ohio Department of Education. Furthermore, 2 CFR ? 3485 gives regulatory effect to the Department of Education for 2 CFR 180.305 states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR ? 180.135. 2 CFR ? 180.200 identifies that ?covered transactions? include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR ? 180.220. All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR ? 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. School District Federal Procurement Policy #6325 indicates for noncompetitive purchases through an ESC, the Treasurer/CFO will submit an application and any required documentation to ODE on the designated form requesting approval for use of a noncompetitive purchasing method for personnel services. Purchases will not be made until the application is approved and notice of approval will be maintained by the Treasurer/CFO. Additionally, Policy #6325 indicates for the acquisition of services higher than $10,000 but under $50,000, such is considered a small purchase. Small purchase procedures require that price or rate quotations shall be obtained from an adequate number of qualified sources. Policy # 6325, also states for contracts over $25,000, the School District shall confirm that the vendor is not debarred or suspended by either checking the Federal government's System for Award Management, which maintains a list of such debarred or suspended vendors at www.sam.gov; collecting a certification from the vendor; or adding a clause or condition to the covered transaction with that vendor. In fiscal year 2022, the School District contracted with two vendors for Special Education services, the Knox County Educational Service Center (ESC) and Bloom Pediatric Therapy; of which the School District expended $177,668 and $11,130 respectively, which were paid from the Special Education Cluster grant and subject to Federal procurement laws. Under 2 CFR ?200.320, the School District should have competitively bid the services needed or obtained price quotes from qualified sources, as further defined in the School District?s procurement policy, unless validly exempt. The School District?s Federal Procurement Policy #6325 provided guidelines for services provided by the ESC to be considered noncompetitive providing upon approval from ODE. However, the School District did not file the ESC agreement with ODE or attempt to obtain any approval from ODE on the agreement until April 2022, the last three months of the fiscal year, despite the agreement was already in effect. Therefore, all payments to the ESC prior to April 1, 2022 were not in compliance with 2 CFR ? 200.320, Ohio Rev. Code ? 3313.843(J) and the District?s procurement policy #6325. Furthermore, the School District?s contract with Bloom Pediatric Therapy would have met the requirements of a small purchase and required the School District to gather, review and document quotations for services from an adequate number of qualified sources. The School District did not maintain any documentation evidencing quotes were obtained and considered as required by 2 CFR ? 200.320. The School District also did not have the proper internal controls in place to verify that all entities, with whom the School District had entered into covered transactions, had not been suspended or debarred. During testing of procurement for the Special Education IDEA program, we noted the School District expended more than $25,000 to the Knox County ESC and there was no evidence the School District checked the SAM exclusions, collected a certification from the ESC, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the only covered transaction in the Special Education IDEA program during fiscal year 2022. Failing to have the appropriate controls in place over procurement procedures may result in vendors who are suspended or debarred receiving federal funds or the School District paying excess costs for services. As a result, we have qualified our opinion over the School District?s Special Education Cluster (IDEA) federal program. Prior to contracting with vendors whom will be paid with federal funds, the School District should establish internal control procedures to help ensure the School District?s procurement policies and procedures are in compliance with 2 CFR ? 200.320 and should verify vendors are not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER COMPLIANCE AND MATERIAL NONCOMPLIANCE ? U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COVID 19 ? EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) ? FEDERAL ALN 93.323 2022-002 Internal Control Over Compliance and Noncompliance With Federal Procurement Requirements Criteria ? 2 CFR ? 200.320 requires the District to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including procurement requirements applicable to its COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) federal program. Condition ? During our audit, we noted that the District did not have sufficient controls in place within its COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) federal program to ensure compliance with federal procurement requirements related to methods of procurement. Questioned Costs ? $70,044. Context ? For one of two vendors tested, the District had not awarded a contract based on two or more quotations as required by the Uniform Guidance procurement standards where the value of the goods acquired exceeded the District?s established micro-purchase threshold. This was not a statistically valid sample. Repeat Finding ? This is a current year finding. Cause ? The District attempted to obtain more than one quote, but was unsuccessful and did not retain documentation of its efforts. Effect ? Noncompliance with the procurement requirements could result in the District expending federal funds inappropriately or utilizing vendors that are not eligible to be parties to such transactions, which could be viewed as a violation of the award agreement. Recommendation ? We recommend that the District review its internal control procedures relating to procurement for all federal programs. Internal controls should be in place to ensure compliance with federal procurement procedures, including awarding contracts based on quotations for the purchase of goods or services that exceed the District?s micro-purchase threshold, but not the simplified acquisition threshold. View of Responsible Official and Planned Corrective Actions ? The District agrees with the finding. The District will review its procedures relating to procurement for its federal programs and will ensure that quotations are obtained when required and that adequate documentation is retained. The District has separately issued a Corrective Action Plan related to this finding.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20/21, FY 21/22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Micro-Purchases A sample of 40 micro-purchase procurements from the School Lunch fund was selected for testing to verify proper procurement methods were followed. There were 11 micro-purchase procurements, totaling $7,602, that were paid for which the School Corporation could not provide documentation to support the purchase. As such, the 11 transactions could not be verified as properly procured. Due to the number and magnitude of exceptions, per auditor judgment, we concluded it would not be appropriate to examine the remaining 24 micro-purchase procurements. Small Purchases The School Corporation could not provide supporting documentation that an adequate number of price or rate quotes was obtained to ensure full and open competition for two of six procurements under the small purchase threshold. Furthermore, vendor contracts were not entered into for two total purchases above $50,000 as required by state statute. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. Exceeds Simplified Acquisition The School Corporation did not follow procurement requirements for purchases of commodities which exceeded the simplified acquisition threshold of $150,000. The School Corporation could not provide supporting documentation that a contract was procured for Gordon Food Service for fiscal year 2020-2021. As a result, vendors subject to contracts were not verified for suspension and debarment to ensure vendors were not suspended or debarred from participation in federal award programs. The lack of internal controls, availability of supporting documentation, and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonFederal entity's documented procurement procedures must confirm 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 used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases - (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold ( . . . ? 200.1) To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. . . . (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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . . Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established an effective system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system and retain and provide supporting documentation prevented the determination of the School Corporation's compliance with compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and to comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-21, FY 2021-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-004. Condition and Context An effective internal controls system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. 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. During fiscal year 2020-2021, the School Corporation purchased food and supply items from two vendors with total purchases that fell within the small purchase threshold. During 2021-2022, repair services were purchased from one vendor that fell within the small purchase threshold. Quotes were not obtained nor was full and open competition provided for the three vendors that fell within the small purchase threshold during the audit period. Additionally, there was no documentation available to support the rationale to limit competition. During 2020-2021 the School Corporation did not follow procurement requirements for purchases of food and supply items which exceeded the simplified acquisition threshold of $150,000. The School Corporation did not correctly procure a contract for the one vendor that exceeded the simplified acquisition threshold. The School Corporation only considered one bid which did not adequately meet the formal procurement procedures for a simplified acquisition. INDIANA STATE BOARD OF ACCOUNTS 14 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation did not verify that one of four contracts over $25,000 was not excluded or disqualified from participation in federal award programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 (Uniform Guidance) states in part: "(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. (c) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (d) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. . . . " INDIANA STATE BOARD OF ACCOUNTS 15 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states in part: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal control that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 16 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-21, FY 2021-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-004. Condition and Context An effective internal controls system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. 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. During fiscal year 2020-2021, the School Corporation purchased food and supply items from two vendors with total purchases that fell within the small purchase threshold. During 2021-2022, repair services were purchased from one vendor that fell within the small purchase threshold. Quotes were not obtained nor was full and open competition provided for the three vendors that fell within the small purchase threshold during the audit period. Additionally, there was no documentation available to support the rationale to limit competition. During 2020-2021 the School Corporation did not follow procurement requirements for purchases of food and supply items which exceeded the simplified acquisition threshold of $150,000. The School Corporation did not correctly procure a contract for the one vendor that exceeded the simplified acquisition threshold. The School Corporation only considered one bid which did not adequately meet the formal procurement procedures for a simplified acquisition. INDIANA STATE BOARD OF ACCOUNTS 14 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation did not verify that one of four contracts over $25,000 was not excluded or disqualified from participation in federal award programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 (Uniform Guidance) states in part: "(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. (c) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (d) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. . . . " INDIANA STATE BOARD OF ACCOUNTS 15 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states in part: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal control that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 16 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-21, FY 2021-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-004. Condition and Context An effective internal controls system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. 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. During fiscal year 2020-2021, the School Corporation purchased food and supply items from two vendors with total purchases that fell within the small purchase threshold. During 2021-2022, repair services were purchased from one vendor that fell within the small purchase threshold. Quotes were not obtained nor was full and open competition provided for the three vendors that fell within the small purchase threshold during the audit period. Additionally, there was no documentation available to support the rationale to limit competition. During 2020-2021 the School Corporation did not follow procurement requirements for purchases of food and supply items which exceeded the simplified acquisition threshold of $150,000. The School Corporation did not correctly procure a contract for the one vendor that exceeded the simplified acquisition threshold. The School Corporation only considered one bid which did not adequately meet the formal procurement procedures for a simplified acquisition. INDIANA STATE BOARD OF ACCOUNTS 14 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation did not verify that one of four contracts over $25,000 was not excluded or disqualified from participation in federal award programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 (Uniform Guidance) states in part: "(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. (c) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (d) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. . . . " INDIANA STATE BOARD OF ACCOUNTS 15 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states in part: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal control that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 16 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2020-21, FY 2021-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-004. Condition and Context An effective internal controls system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. 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. During fiscal year 2020-2021, the School Corporation purchased food and supply items from two vendors with total purchases that fell within the small purchase threshold. During 2021-2022, repair services were purchased from one vendor that fell within the small purchase threshold. Quotes were not obtained nor was full and open competition provided for the three vendors that fell within the small purchase threshold during the audit period. Additionally, there was no documentation available to support the rationale to limit competition. During 2020-2021 the School Corporation did not follow procurement requirements for purchases of food and supply items which exceeded the simplified acquisition threshold of $150,000. The School Corporation did not correctly procure a contract for the one vendor that exceeded the simplified acquisition threshold. The School Corporation only considered one bid which did not adequately meet the formal procurement procedures for a simplified acquisition. INDIANA STATE BOARD OF ACCOUNTS 14 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Non-federal entities and contractors are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in Federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation did not verify that one of four contracts over $25,000 was not excluded or disqualified from participation in federal award programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 (Uniform Guidance) states in part: "(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. (c) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (d) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. . . . " INDIANA STATE BOARD OF ACCOUNTS 15 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states in part: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal control that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 16 BROWNSTOWN CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.