FINDING NUMBER 2024-005 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT PROCUREMENT SUSPENSION & DEBARMENT (I) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for two (2) of the three (3) contract agreements evaluated. CRITERIA 2 CFR section 200.327 references Appendix II to Part 200, which establishes the contract provisions must be included in non-federal entity contracts under federal awards. CAUSE There is lack of knowledge about the contract provisions required to be included in federal awards contracts. Therefore, the Municipality has been awarding contracts without the proper procurement procedure. EFFECT The program is in noncompliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327. RECOMMENDATION We recommend the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-005 and 2022-007). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditor’s finding. We implemented policies and procedures in accordance with Uniform Guidance 2 CFR 200.214. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
FINDING NUMBER 2024-005 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT PROCUREMENT SUSPENSION & DEBARMENT (I) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for two (2) of the three (3) contract agreements evaluated. CRITERIA 2 CFR section 200.327 references Appendix II to Part 200, which establishes the contract provisions must be included in non-federal entity contracts under federal awards. CAUSE There is lack of knowledge about the contract provisions required to be included in federal awards contracts. Therefore, the Municipality has been awarding contracts without the proper procurement procedure. EFFECT The program is in noncompliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327. RECOMMENDATION We recommend the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-005 and 2022-007). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditor’s finding. We implemented policies and procedures in accordance with Uniform Guidance 2 CFR 200.214. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
2024-002 – Reporting – Internal Control and Compliance over Reporting (Material Weakness) Information of the Federal Program(s): Assistance Listing Number: 14.218 Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Number(s) and Award Year: B-23-MC-06-0554 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Community Development Block Grants-Entitlement Grants Cluster The OMB Compliance Supplement requires that reports submitted to the Federal awarding agency include all activity of the reporting period, are supported by underlying accounting information and are presented in accordance with program requirements. Pursuant to the Guidance on Cash on Hand Quarterly Report (replaced the Federal Financial Report, SF-425) and financial reporting requirements in the cooperative agreement provisions, and 2 CFR 200.327: Quarterly reports: Program award recipients must submit Cash on Hand Quarterly Report reports to HUD quarterly, 30 days after the reporting period end date. Each report must cover all expenditures on the cooperative agreement from the start date of the reporting period to the reporting period end date. The following federal fiscal year quarter reporting period will be used for all quarterly reports, are due to HUD 30 days after the period end dates noted below: Reporting Period Quarter 1: 7/1-9/30 Due Date of Report October 30 Reporting Period Quarter 2: 10/1-12/31 Due Date of Report January 30 Reporting Period Quarter 3: 1/1-3/31 Due Date of Report April 30 Reporting Period Quarter 4: 4/1-6/30 Due Date of Report July 30 Condition: The City did not submit the required Cash on Hand Quarterly Report in a timely manner. The quarterly Cash on Hand Quarterly Report for the all of the four (4) reporting periods were submitted past deadline. Federal Financial Report 7/1/2023 - 9/30/2023: Report Submission Deadline 10/20/2023, Report Submission Date 2/26/2024. Federal Financial Report 10/01/2023-12/31/2023: Report Submission Deadline 1/20/2024, Report Submission Date 2/26/2024. Federal Financial Report 01/01/2024 - 03/31/2024: Report Submission Deadline 4/30/2024, Report Submission Date 10/16/2024. Federal Financial Report 04/01/2024 - 06/30/2024: Report Submission Deadline 7/30/2024, Report Submission Date 10/16/2024. Cause: Due to staff turnover, the City did not to consistently follow the program’s procedures to ensure that reports were submitted in a timely manner, in accordance with the timelines outlined in the Uniform Guidance. Effect or Potential Effect: Delay in filing the reports resulted in noncompliance with the compliance requirements. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Yes. See prior year finding 2023-005. Recommendation: We recommend that the City strengthen their report submission process and procedures to ensure all required reports are properly reviewed and approved and submitted timely. Views of Responsible Officials: Management concurs.
Finding 2024-02: Noncompliance with Timely Financial Reporting for Federal Grant Award and State Reporting requirements Criteria: 2 CFR § 200.327(a) states that grantees must submit financial reports no less frequently than annually. Further, SEFA to the Federal Audit Clearinghouse website within nine (9) months of June 30, 2024. UMARC also didn’t submit its audited financial statements, CYEFR, and other required information to the GATA portal within six (6) months after June 30, 2024. Condition: The report for the quarter ended June 30, 2024, was due on July 30, 2024, was not submitted as of the date of this Audit, and the annual financial reports for FY24, were due on December 31, 2024, were also not submitted to the GATA portal as of the date of this audit. Cause: The grantee's internal controls over financial reporting were inadequate, lacking tracking, formal review, and approvals. As well as the late appointment of a new auditor. Effect: Late submission of financial reports hinders the federal agency's ability to monitor the financial health and programmatic progress of the grant. This can delay funding disbursements, impede program evaluation, and potentially lead to closer scrutiny of the grantee's activities. It also prevents the agency from fulfilling its oversight responsibilities as outlined in 2 CFR Part 200. Recommendation: Develop and implement a comprehensive financial reporting calendar that clearly identifies deadlines for all required reports and assigns responsibility for their preparation and submission. This calendar should be distributed to all relevant staff. Also provide comprehensive training to the finance staff on federal financial reporting requirements, including 2 CFR Part 200 and the specific requirements of this grant agreement. Include training on the grantee's internal financial reporting policies and procedures. Questioned Costs None noted Auditee Response: Management concurs with the finding. A new financial reporting calendar has been implemented and distributed to all staff. A formal review and approval process for financial reports has been implemented. The report for the quarter ended June 2024 will be submitted by end of March 2025.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. Therefore, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. INDIANA STATE BOARD OF ACCOUNTS 19 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The informal process is divided between two methods based on thresholds: Micro-purchases, typically for those purchases $10,000 or under; and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The school corporation did not have policies and procedures with regards to purchases that exceed $10,000. Two separate vendor transactions were identified in the range below the simplified acquisition threshold and above the micro-purchase threshold as traditional procurement transactions. No quotes or bids related to each transaction were presented for audit purposes, and no documentation to support the rationale for not providing full and open competition was provided. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Four vendors were selected to confirm the school corporation was verifying suspension and debarment status. The school corporation informed examiners they confirm status to Sam.gov, a sufficient procedure, however they did not retain documentation that this was performed prior to disbursing federal funds to the vendors. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (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. . . . (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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions, or (b) Collecting a certification from that person, or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 21 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the School Corporation had not established policies and procedures related to federal procurement standards or suspension and debarment verification, as such no procedures were performed to maintain documentation related to the procurement and suspension and debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the School Corporation could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the procurement and suspension and debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implementing an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of NBCC’s internal controls over compliance, while the Organization did have a procurement policy, the policy was not being followed. This included not obtaining and documenting competitive bids or quotes, as well as not verifying whether vendors are suspended or debarred entities. Cause NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Additionally, lack of compliance may lead to contracting with ineligible vendors. Recommendation We recommend NBCC implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of NBCC’s internal controls over compliance, while the Organization did have a procurement policy, the policy was not being followed. This included not obtaining and documenting competitive bids or quotes, as well as not verifying whether vendors are suspended or debarred entities. Cause NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Additionally, lack of compliance may lead to contracting with ineligible vendors. Recommendation We recommend NBCC implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of NBCC’s internal controls over compliance, while the Organization did have a procurement policy, the policy was not being followed. This included not obtaining and documenting competitive bids or quotes, as well as not verifying whether vendors are suspended or debarred entities. Cause NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Additionally, lack of compliance may lead to contracting with ineligible vendors. Recommendation We recommend NBCC implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of NBCC’s internal controls over compliance, while the Organization did have a procurement policy, the policy was not being followed. This included not obtaining and documenting competitive bids or quotes, as well as not verifying whether vendors are suspended or debarred entities. Cause NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Additionally, lack of compliance may lead to contracting with ineligible vendors. Recommendation We recommend NBCC implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The District was unable to provide documentation of the evaluation each proposal received and reason for selection of the winning bid for the procurement of a consulting firm to conduct the site selection study for the Woodland Transit Center project. The District also did not include a Debarment and Suspension clause in the request for proposal or contract and did not require a certificate confirming the contractor was not debarred in the final agreement. The District was not able to find records of the District verifying that the awarded consulting firm is not on the governmentwide exclusions in the System for Award Management (SAM). Criteria: 2 CFR Part 200 Subpart E (Uniform Guidance) states the following: Section 200.318(a) states that “The non-federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or service required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in Sections 200.317 through 200.327.” Section 200.318(i) states that “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.” Section 200.327 states that “The recipient's or subrecipient's contracts must contain the applicable provisions described in Appendix II of this part.” Appendix II(H) includes “Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR 180.220) must not be made to parties listed on the governmentwide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), “Debarment and Suspension.” SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549.” Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the Uniform Guidance requirement to maintain documentation of procurement procedures. Context: The original procurement for the consulting firm for the Woodland Transit Project was performed in late December 2017 and awarded in January 2018 and then extended during 2024. This procurement precedes the current staff. It was verified the contractor selected was not debarred during the 2024 single audit. Recommendation: We recommend the District establish a procurement folder on its server with subfolders for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals, proposals received, analysis of reasons for selecting the winning bid, executed contract, certifications by contractor if not part of the proposal or executed contract, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. We also recommend training be provided to staff that work on procurements of the requirements under Uniform Guidance Section 2 CFR 200.318 to 200.326. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding: Procurement and Suspension & Debarment Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Treasury Passed-Through from Colorado Mental Health Services Award Year: 2024 Award Number: CMS 179319 Criteria: In accordance with 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State and local regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. In accordance with 2 CFR Part 180, contracts cannot be entered with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in federal awards. WellPower's procurement policy requires the following: A. For purchases between $10,000 and $49,999 WellPower is required to obtain a minimum of two quotes and for purchases exceeding $50,000 WellPower is required to obtain three written quotes or bids. All bids and quotes received must be attached to the purchase requisition. B. For purchases using sponsored project funds, such as federal grants, the policy states that procurement has to be made in accordance with grant's terms and conditions. To be compliant with the grant and in accordance with 2 CFR Part 180, WellPower must verify that the vendor selected for procurement is not suspended or debarred when procurement or non-procurement transaction exceeds or is equal to $25,000. Condition: WellPower did not obtain price quotes related to a purchase of $61,526, which fell within the small purchases threshold. In addition, WellPower did not retain support for a check of suspension and debarment. Questioned Costs: $61,526 Context: We tested one out of five of WellPower's small procurement purchases, which was related to an information technology purchase during fiscal year 2024 in the amount of $61,526 and noted the above issue. A non-statistical sampling methodology was used to select the sample. Effect: WellPower was not in compliance with its procurement and suspension and debarment policies and the Uniform Guidance. Cause: WellPower did not follow its internal control policies by obtaining adequate documentation to support its procurement decisions and did not retain timely suspension and debarment checks. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that WellPower follows its procurement procedures in accordance with 2 CFR 200.317 through 200.327 and suspension and debarment policies and requirements in accordance to 2 CFR Part 180 for the acquisition of property or services as required under a Federal award or sub-award. We also recommend that WellPower review its procurement policy to ensure that it complies with Uniform Guidance. In addition, in order to facilitate compliance with its internal control policies, we recommend training for the procurement department and other authorized purchasers within WellPower. Views of responsible officials: WellPower agrees with the finding. See separate report for planned corrective actions.
Finding: Procurement and Suspension & Debarment Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Treasury Passed-Through from Colorado Mental Health Services Award Year: 2024 Award Number: CMS 179319 Criteria: In accordance with 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State and local regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. In accordance with 2 CFR Part 180, contracts cannot be entered with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in federal awards. WellPower's procurement policy requires the following: A. For purchases between $10,000 and $49,999 WellPower is required to obtain a minimum of two quotes and for purchases exceeding $50,000 WellPower is required to obtain three written quotes or bids. All bids and quotes received must be attached to the purchase requisition. B. For purchases using sponsored project funds, such as federal grants, the policy states that procurement has to be made in accordance with grant's terms and conditions. To be compliant with the grant and in accordance with 2 CFR Part 180, WellPower must verify that the vendor selected for procurement is not suspended or debarred when procurement or non-procurement transaction exceeds or is equal to $25,000. Condition: WellPower did not obtain price quotes related to a purchase of $61,526, which fell within the small purchases threshold. In addition, WellPower did not retain support for a check of suspension and debarment. Questioned Costs: $61,526 Context: We tested one out of five of WellPower's small procurement purchases, which was related to an information technology purchase during fiscal year 2024 in the amount of $61,526 and noted the above issue. A non-statistical sampling methodology was used to select the sample. Effect: WellPower was not in compliance with its procurement and suspension and debarment policies and the Uniform Guidance. Cause: WellPower did not follow its internal control policies by obtaining adequate documentation to support its procurement decisions and did not retain timely suspension and debarment checks. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that WellPower follows its procurement procedures in accordance with 2 CFR 200.317 through 200.327 and suspension and debarment policies and requirements in accordance to 2 CFR Part 180 for the acquisition of property or services as required under a Federal award or sub-award. We also recommend that WellPower review its procurement policy to ensure that it complies with Uniform Guidance. In addition, in order to facilitate compliance with its internal control policies, we recommend training for the procurement department and other authorized purchasers within WellPower. Views of responsible officials: WellPower agrees with the finding. See separate report for planned corrective actions.
Assistance Listing Number 84.181 Special Education Department of Education Passed Through Turtle Mountain Band of Chippewa Indians Procurement 2 CFR Part 200.317 through 200.327 Criteria Procurement Standards require for the District to maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in 2 CFR Part 200.317 through 200.327. Condition The District performed a procurement activity that did not follow District policies as well as standards found in 2 CFR Part 200.317 through 200.327. The District failed to obtain quotes or bids for a purchase exceeding $10,000. Context Per discussion with the District staff and review of program expenditures, there were 4 expenditures incurred in which quotes or bids should have been obtained. All four transactions were tested and it was noted that 1 transaction did not have the necessary quotes or bids. Cause District’s internal controls in place failed to ensure all procurement policies are followed. Effect District is not in compliance with their internal procurement policies and procurement standards. Questioned Costs Undeterminable. Repeat Finding This is not a repeat finding. Recommendation Recommend the District to review internal controls to ensure all internal policies and compliance requirements are both being monitored and the District is remaining in compliance. Management’s Response See corrective action plan.
Assistance Listing Number 84.181 Special Education Department of Education Passed Through Turtle Mountain Band of Chippewa Indians Procurement 2 CFR Part 200.317 through 200.327 Criteria Procurement Standards require for the District to maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in 2 CFR Part 200.317 through 200.327. Condition The District performed a procurement activity that did not follow District policies as well as standards found in 2 CFR Part 200.317 through 200.327. The District failed to obtain quotes or bids for a purchase exceeding $10,000. Context Per discussion with the District staff and review of program expenditures, there were 4 expenditures incurred in which quotes or bids should have been obtained. All four transactions were tested and it was noted that 1 transaction did not have the necessary quotes or bids. Cause District’s internal controls in place failed to ensure all procurement policies are followed. Effect District is not in compliance with their internal procurement policies and procurement standards. Questioned Costs Undeterminable. Repeat Finding This is not a repeat finding. Recommendation Recommend the District to review internal controls to ensure all internal policies and compliance requirements are both being monitored and the District is remaining in compliance. Management’s Response See corrective action plan.
Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must confirm to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non- Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. 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. . . ." 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 and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the 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. Cause: Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective system of internal controls, as well as adequately document the procurement process for small purchases, prevented the determination of the School Corporation's compliance with the procurement requirements of the Procurement and Suspension and Debarment compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not obtain price or rate quotes for one out of four vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. Documentation of vendor contract, bids or the School Corporation's process and rationale for the chosen vendor was not available for audit. Further, the School Corporation could not provide evidence that a suspension and debarment check had been performed on the vendor prior to entering into contract. Identification as a repeat finding, if applicable: Yes. See finding 2022-006 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and the system of internal controls outlines how the School Corporation will comply with their procurement policy, requirements of the grant agreement and the Procurement and Suspension and Debarment compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.318(a) (Uniform Guidance) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.318(a) (Revised Uniform Guidance) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must confirm to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320(b) (Uniform Guidance) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 200.320 (Revised Uniform Guidance) states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non- Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. 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. . . ." 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 and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the 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. Cause: Management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective system of internal controls, as well as adequately document the procurement process for small purchases, prevented the determination of the School Corporation's compliance with the procurement requirements of the Procurement and Suspension and Debarment compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not obtain price or rate quotes for one out of four vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. Documentation of vendor contract, bids or the School Corporation's process and rationale for the chosen vendor was not available for audit. Further, the School Corporation could not provide evidence that a suspension and debarment check had been performed on the vendor prior to entering into contract. Identification as a repeat finding, if applicable: Yes. See finding 2022-006 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and the system of internal controls outlines how the School Corporation will comply with their procurement policy, requirements of the grant agreement and the Procurement and Suspension and Debarment compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for the Procurement Standards in 2 CFR §§ 200.318 - 200.327. The Procurement Standards require entities to have and use their own documented procurement procedures, consistent with applicable State and local laws and regulations and the standards of 2 CFR 200.318 - .327, for the acquisition of property or services required under a Federal award or subaward. A non-Federal entity must, in part: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history, or other information and documents it files accordingly (2 CFR 200.320(a)(1)(ii)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(a)(2)(i)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b)(1); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of five circumstances are met, in accordance with 2 CFR 200.320(c). Additionally, Service Center Policy 6325 - Procurement indicates procurement of all supplies, materials, equipment, and services paid for from Federal funds or Educational Service Center matching funds shall be made in accordance with all applicable Federal, State, and local statutes and/or regulations, the terms and conditions of the Federal grant, Governing Board policies, and administrative procedures.The Service Center did not follow the federal procurement requirements and policy 6325 relating to procurement resulting in the following errors: • For six of six tested expenditures that were subject to procurement, the Service Center could not produce support that these expenditures complied with federal procurement requirements and Service Center policy. Five of these expenditures were below the micro-purchase threshold in which the Service Center should have documented and maintained support that the price was reasonable. The remaining expenditure was a small purchase in which the Service Center should have documented and maintained price or rate quotations from an adequate number of qualified sources. Failure to maintain the appropriate procurement documentation could lead to future findings, reduced federal funding and the requirement to repay the Ohio Department of Education. The Service Center should ensure appropriate controls and compliance with federal requirements are maintained with documentation supporting the procurement types. Appropriate supporting documentation could include copies of internet searches or other documented research for micro-purchases and documentation for price or rate quotations from an adequate number of qualified sources for small purchases.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for the Procurement Standards in 2 CFR §§ 200.318 - 200.327. The Procurement Standards require entities to have and use their own documented procurement procedures, consistent with applicable State and local laws and regulations and the standards of 2 CFR 200.318 - .327, for the acquisition of property or services required under a Federal award or subaward. A non-Federal entity must, in part: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history, or other information and documents it files accordingly (2 CFR 200.320(a)(1)(ii)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(a)(2)(i)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b)(1); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of five circumstances are met, in accordance with 2 CFR 200.320(c). Additionally, Service Center Policy 6325 - Procurement indicates procurement of all supplies, materials, equipment, and services paid for from Federal funds or Educational Service Center matching funds shall be made in accordance with all applicable Federal, State, and local statutes and/or regulations, the terms and conditions of the Federal grant, Governing Board policies, and administrative procedures.The Service Center did not follow the federal procurement requirements and policy 6325 relating to procurement resulting in the following errors: • For six of six tested expenditures that were subject to procurement, the Service Center could not produce support that these expenditures complied with federal procurement requirements and Service Center policy. Five of these expenditures were below the micro-purchase threshold in which the Service Center should have documented and maintained support that the price was reasonable. The remaining expenditure was a small purchase in which the Service Center should have documented and maintained price or rate quotations from an adequate number of qualified sources. Failure to maintain the appropriate procurement documentation could lead to future findings, reduced federal funding and the requirement to repay the Ohio Department of Education. The Service Center should ensure appropriate controls and compliance with federal requirements are maintained with documentation supporting the procurement types. Appropriate supporting documentation could include copies of internet searches or other documented research for micro-purchases and documentation for price or rate quotations from an adequate number of qualified sources for small purchases.
Finding No. 2024-001 - Procurement, Suspension and Debarment - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Congressional Directives Assistance Listing Number: 93.493 Federal Award Identification Number and Year: 6 CE1HS46475-01-05 (2023) Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. Condition The Agency did not maintain contract files that documented the history of procurement, including the rationale for the method of procurement, selection of contract type, basis for contractor selection and basis for the contract price. Cause The Agency performed procurement procedures, including soliciting bids/proposals from multiple contractors, evaluating them and selecting the contractor based on their procurement procedures. However, as the project was completed they maintained the contracts related to the contractor selected but inadvertently disposed of the documentation related to the procurement process. Effect or Potential Effect The procedures for procurement were not consistently applied in accordance with 2 CFR sections 200.318 through 200.327. Question Costs None noted Context For 1 of the 2 procurements sampled, the contract file did not include documentation of the history of the procurement. The total population the sample was selected from was 7. Identification as a Repeat Finding N/A - not a repeat finding Recommendation Management should establish procedures and controls to ensure contract files include the history of procurement and the documentation is maintained. Views of Responsible Officials Management agrees with the finding and has updated its procedures and controls to ensure procurement history is adequately documented and maintained in the contract files.
Condition – During our audit, we noted three of seven monthly Federal Financial Reports were filed late. Specifically, the July 2023, August 2023 and May 2024 reports were filed later than 30 days as required under the County’s contract. Effect – There is an increased risk that financial reports are not filed or not filed in a timely manner. Cause – The County does not have an effective system to monitor the preparation and review of the federal reporting process to determine whether the required reports are filed in a timely manner. Criteria – Federal regulations (2 CFR §200.327) and the terms of the federal grants and contracts require that financial reports be filed within 30 days and supported by accurate documentation, such as general ledger reports. Recommendation – We recommend that the County improve internal controls over grant reporting that includes a process that identifies reporting requirements, including reporting deadlines, and monitors timely grant reporting. Management’s Response – The County’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition – During our audit, we noted three of seven monthly Federal Financial Reports were filed late. Specifically, the July 2023, August 2023 and May 2024 reports were filed later than 30 days as required under the County’s contract. Effect – There is an increased risk that financial reports are not filed or not filed in a timely manner. Cause – The County does not have an effective system to monitor the preparation and review of the federal reporting process to determine whether the required reports are filed in a timely manner. Criteria – Federal regulations (2 CFR §200.327) and the terms of the federal grants and contracts require that financial reports be filed within 30 days and supported by accurate documentation, such as general ledger reports. Recommendation – We recommend that the County improve internal controls over grant reporting that includes a process that identifies reporting requirements, including reporting deadlines, and monitors timely grant reporting. Management’s Response – The County’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition – During our audit, we noted three of seven monthly Federal Financial Reports were filed late. Specifically, the July 2023, August 2023 and May 2024 reports were filed later than 30 days as required under the County’s contract. Effect – There is an increased risk that financial reports are not filed or not filed in a timely manner. Cause – The County does not have an effective system to monitor the preparation and review of the federal reporting process to determine whether the required reports are filed in a timely manner. Criteria – Federal regulations (2 CFR §200.327) and the terms of the federal grants and contracts require that financial reports be filed within 30 days and supported by accurate documentation, such as general ledger reports. Recommendation – We recommend that the County improve internal controls over grant reporting that includes a process that identifies reporting requirements, including reporting deadlines, and monitors timely grant reporting. Management’s Response – The County’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Agency: Employment and Training Administration Office of Grants Management ALN: 17.289 Federal Award Identification Number: 23A60C9000032-01-00 Criteria: Under the Committee of Sponsoring Organization framework, control activities are established through policies and procedures that help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out. Segregation of duties is typically built into the selection and development of control activities. According to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 200.327 and 200.328, recipients of federal awards are required to submit performance and financial reports by the due dates specified in the terms and conditions of the federal awards. Context and Condition: There was an overall lack of segregation of duties surrounding the preparation and submission of grant reimbursement requests as the VP of Finance performed this function himself with no review and approval. Cause: The Entity failed to establish a set of internal control procedures to ensure segregation of duties and an appropriate review and approval process. Effect: There was a lack of adequate review and oversight over grant reporting. Repeat Finding: No Recommendation: We recommend that the Entity establish internal control procedures that incorporate segregation of duties and add a level of review and approval for grant reporting. Views of Responsible Officials and Planned Corrective Action: See attached corrective action plan. Questioned Costs: None
Material noncompliance and material weakness in internal control over compliance with procurement and suspension and debarment procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Title: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.732 Award Numbers and Years: All awards Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) , Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a non‐Federal entity use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirement identified in 2 CFR Part 200. Condition/Context The Organization has not enacted a procurement policy which meets the requirements of CFR 200.317 through 200.327. As a result, the Organization could not produce documentation of the history of the procurement, including justification of the procurement method and performance of a suspension and debarment search. The Organizations major program had a single vendor in which the aggregate purchases as part of the contract was greater than the micro-purchase threshold. The Organization determined at the time of procurement that due to the specialized nature of on-site medical professional services being procured that the contract could only be fulfilled by a single source. Cause The Organization did not have internal controls in place to ensure that the Organization’s procurement policy met the requirement of the Uniform Guidance. Effect The Organization entered into agreements to procure goods and services for which no documentation was retained to support the history of the procurement and did not meet the requirement of the Uniform Guidance. Questioned Costs $0 Repeat Finding Not a repeat finding. Recommendation We recommend the Organization implement policies and procedures for procuring goods and services under federal awards that meet the requirements of the Uniform Guidance. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Material noncompliance and material weakness in internal control over compliance with procurement and suspension and debarment procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Title: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.732 Award Numbers and Years: All awards Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) , Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a non‐Federal entity use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirement identified in 2 CFR Part 200. Condition/Context The Organization has not enacted a procurement policy which meets the requirements of CFR 200.317 through 200.327. As a result, the Organization could not produce documentation of the history of the procurement, including justification of the procurement method and performance of a suspension and debarment search. The Organizations major program had a single vendor in which the aggregate purchases as part of the contract was greater than the micro-purchase threshold. The Organization determined at the time of procurement that due to the specialized nature of on-site medical professional services being procured that the contract could only be fulfilled by a single source. Cause The Organization did not have internal controls in place to ensure that the Organization’s procurement policy met the requirement of the Uniform Guidance. Effect The Organization entered into agreements to procure goods and services for which no documentation was retained to support the history of the procurement and did not meet the requirement of the Uniform Guidance. Questioned Costs $0 Repeat Finding Not a repeat finding. Recommendation We recommend the Organization implement policies and procedures for procuring goods and services under federal awards that meet the requirements of the Uniform Guidance. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Finding 2024-003: Lack of Support for Procurement Requirement U.S. Department of Health and Human Services Federal Programs: Health Center Program Cluster (ALN numbers 93.224/93.527) Federal Award Year: 2024 Repeat Finding: No Criteria: The Organization must follow the procurement standards set out in 2 CFR sections 200.318 through 200.327. The Organization must use its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: While testing the procurement requirement for micro purchases, we noted there was one sample selection for which the Organization did not have documentation to support whether the procurement method used was appropriate. Cause: The Organization did not consistently maintain documentation to support the procurement method used. The documentation was maintained by one individual within the Organization, and that individual is no longer with the Organization. Effect: The Organization was not able to provide supporting documentation for one out of the 40 sample selections tested. The missing supporting documentation was for an expense in the amount of $4,000. Questioned Costs: $4,000 Context: We could not verify the appropriate procurement method was used for one out of 40 sample selections. Total likely questioned costs are estimated to be approximately $38,000. Recommendation: We recommend that additional training of responsible staff be performed to ensure that all documentation related to procurement is retained. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
Finding 2024-003: Lack of Support for Procurement Requirement U.S. Department of Health and Human Services Federal Programs: Health Center Program Cluster (ALN numbers 93.224/93.527) Federal Award Year: 2024 Repeat Finding: No Criteria: The Organization must follow the procurement standards set out in 2 CFR sections 200.318 through 200.327. The Organization must use its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: While testing the procurement requirement for micro purchases, we noted there was one sample selection for which the Organization did not have documentation to support whether the procurement method used was appropriate. Cause: The Organization did not consistently maintain documentation to support the procurement method used. The documentation was maintained by one individual within the Organization, and that individual is no longer with the Organization. Effect: The Organization was not able to provide supporting documentation for one out of the 40 sample selections tested. The missing supporting documentation was for an expense in the amount of $4,000. Questioned Costs: $4,000 Context: We could not verify the appropriate procurement method was used for one out of 40 sample selections. Total likely questioned costs are estimated to be approximately $38,000. Recommendation: We recommend that additional training of responsible staff be performed to ensure that all documentation related to procurement is retained. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
Finding 2024-003: Lack of Support for Procurement Requirement U.S. Department of Health and Human Services Federal Programs: Health Center Program Cluster (ALN numbers 93.224/93.527) Federal Award Year: 2024 Repeat Finding: No Criteria: The Organization must follow the procurement standards set out in 2 CFR sections 200.318 through 200.327. The Organization must use its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: While testing the procurement requirement for micro purchases, we noted there was one sample selection for which the Organization did not have documentation to support whether the procurement method used was appropriate. Cause: The Organization did not consistently maintain documentation to support the procurement method used. The documentation was maintained by one individual within the Organization, and that individual is no longer with the Organization. Effect: The Organization was not able to provide supporting documentation for one out of the 40 sample selections tested. The missing supporting documentation was for an expense in the amount of $4,000. Questioned Costs: $4,000 Context: We could not verify the appropriate procurement method was used for one out of 40 sample selections. Total likely questioned costs are estimated to be approximately $38,000. Recommendation: We recommend that additional training of responsible staff be performed to ensure that all documentation related to procurement is retained. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
Finding Reference 2024-06 Assistance Listing Number 20.027 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency Department of Treasury Compliance Requirement Procurement, Suspension and Debarment Type of Finding: Material Weakness on Internal Control and Material Noncompliance Condition: As part of the audit procedures for Procurement, Suspension, and Debarment, the auditors tested a sample of two procurements. One of the procurements tested involved a federally funded rehabilitation project in the Municipality of Fajardo. However, when the auditors requested procurement documentation, management provided bidding records for a different project located in the Municipality of Toa Alta. Upon reviewing the bid, contract, and supporting documentation, the auditors found no reference to the Fajardo project. Instead, the work was certified and billed to the Authority using an "extra work order" under the project number assigned to the Toa Alta project. Since the Fajardo project was not competitively procured and was improperly included under an unrelated procurement process, the Authority failed to comply with federal procurement regulations. Criteria: In accordance with 2 CFR §§ 200.318–200.327 (Procurement Standards), all non-federal entities must conduct procurement in a manner that ensures full and open competition while adhering to established procurement procedures. Cause: The Authority did not conduct a separate competitive procurement process for the rehabilitation project in the Municipality of Fajardo. Instead, they included the project as part of an existing procurement process for a different project in the Municipality of Toa Alta. This occurred due to inadequate oversight and failure to ensure that federally funded projects follow proper procurement procedures. Effect: By not competitively procuring the Fajardo project and instead billing it as an "extra work order" under an unrelated project, the Authority did not comply with federal procurement regulations. This noncompliance could result in questioned costs, potential repayment of federal funds, and increased scrutiny from oversight agencies. Questioned Costs: $421,462 Recommendation: The Authority should strengthen its procurement controls to ensure that all federally funded projects undergo a proper and independent competitive bidding process. Management should implement additional oversight mechanisms, such as enhanced review procedures and staff training, to prevent the misallocation of contracts. Views of Responsible Officials Refer to Management’s unaudited corrective action plan.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 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 2022-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). 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. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 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) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 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 2022-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). 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. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 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) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 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 2022-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). 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. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 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) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 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 2022-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). 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. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 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) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 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 2022-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). 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. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 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) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 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 2022-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. Nonfederal entities may establish a micro-purchase threshold higher than the federal threshold of $10,000 as established in the FAR in accordance with 2 CFR 200.320(a)(1)(iv) and (v). The School Corporation established a higher micropurchase threshold of $50,000. The School Corporation self-certified due to meeting the classification of a public institution and established a higher threshold consistent with state law (Indiana threshold of micropurchases is $50,000). 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. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of the two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2022-2023 totaling $97,773 and 2023-2024 totaling $59,070 but did not provide audit evidence that price quotations had been requested. Additionally, the School Corporation was not able to provide evidence that internal controls over suspension and debarment procedures were in place. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. INDIANA STATE BOARD OF ACCOUNTS 18 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 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) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, INDIANA STATE BOARD OF ACCOUNTS 19 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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. . . ." Cause The School Corporation was not able to provide documentation to demonstrate that quotes were obtained for purchases under the small purchase method. The School Corporation was unable to provide documentation to demonstrate it checked SAM.gov to verify the contractor was not suspended or debarred prior to entering into the contract. The School Corporation did not have proper policies and procedures in place due to being unaware of the grant requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. The School Corporation cannot ensure that contractors paid under the small purchase method were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 20 LIBERTY-PERRY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We recommended the School Corporation document its internal control procedures performed to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure appropriate evidence is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Lack of Internal Controls Over the Reporting Process Significant Deficiency Reclamation States Emergency Drought Relief Program, AL 15.514 Condition During our audit of the District’s compliance with federal program requirements, we noted that the entity does not have established internal controls over the reporting process. Specifically, there are no formal procedures in place to ensure the accuracy, completeness, and timeliness of required federal reports. Criteria Per 2 CFR § 200.303, non-federal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is managing the awards in compliance with applicable regulations. Additionally, 2 CFR § 200.327 requires recipients to submit performance and financial reports that are accurate, complete, and timely. Cause This is the first year the District has been subject to a single audit, exceeding the $750,000 expenditure threshold, and has not yet developed formal policies or procedures for reviewing and approving required financial and programmatic reports. Effect The lack of internal controls increases the risk of inaccurate, incomplete, or untimely reporting, which could result in noncompliance with federal requirements and potential future corrective actions by granting agencies. Recommendation We recommend that the District develop and implement formal policies and procedures to ensure that federal reports are reviewed for accuracy, completeness, and timeliness prior to submission. Management should assign responsibility for report preparation and review, implement checklists or reconciliation processes, and provide training to staff involved in federal reporting. Views of Responsible Officials See the attached Corrective Action Plan.
Finding 2024-007 – Reporting Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number (ALN): 21.027 Federal Agency: U.S. Department of the Treasury Grant Year: 2023 Criteria In accordance with 2 CFR §200.303, the City is required to establish and maintain effective internal controls over federal awards to ensure accurate and timely reporting of expenditures in compliance with federal regulations. Additionally, 2 CFR §200.327 and the terms of the award require timely and accurate submission of required reports. Condition The City did not submit the required federal financial reports in a timely basis. Additionally, the amounts reported in the SLFRF Compliance Report – WY4581 – P&E Report – 2024 included encumbered amounts rather than actual expenditures incurred during the reporting period. Cause The City does not have adequate internal controls in place to ensure the timely preparation, reconciliation, review, and submission of required reports for federal awards. Additionally, turnover in key personnel during the reporting period contributed to these issues, as new staff did not have access to the proper login credentials or training necessary to prepare and submit reports timely and accurately. There was also no established process for reconciling reported expenditures to the City’s general ledger and supporting documentation prior to submission. Effect or Potential Effect As a result of the lack of internal controls and reconciliation procedures, the City submitted inaccurate and untimely financial reports. Reporting encumbrances instead of actual expenditures misrepresents program activity and may impact the City’s compliance with federal requirements. Continued inaccuracies could result in questioned costs, increased oversight by federal agencies, or delays in future funding. Questioned Costs None noted, as expenditures were ultimately supported by documentation; however, the reporting inaccuracies are considered a significant deficiency in internal control over compliance. Context The State and Local Fiscal Recovery Funds (SLFRF) program, established under the American Rescue Plan Act, provides significant funding to municipalities for pandemic recovery and infrastructure initiatives. Accurate and timely reporting of expenditures is not only a regulatory requirement but also essential for transparency, accountability, and continued eligibility for funding. Internal control deficiencies in reporting may compromise the City’s ability to demonstrate effective stewardship of federal funds and could trigger additional scrutiny, audits, or corrective action plans from federal agencies. Given the substantial financial and operational impact of SLFRF funds on the City’s budget and community initiatives, it is imperative that robust processes are in place to ensure reports reflect actual expenditures and are reconciled to the City’s general ledger. Strengthening these controls will protect the City from potential compliance risks, maintain public trust, and ensure uninterrupted access to federal resources critical for ongoing community projects. Identification as a Repeat Finding This is a new finding for the fiscal year ended June 30, 2024. Recommendation We recommend that the City develop and implement formal policies and procedures to ensure timely preparation, reconciliation, and submission of all federal reports. Management should assign clear oversight responsibility for federal reporting and establish a formal reconciliation process requiring that all reported amounts be reviewed and compared to the City’s accounting records and supporting documentation prior to submission. Additionally, procedures should be developed to ensure that login credentials and system access for federal reporting platforms are promptly updated and assigned during periods of staff turnover. Views of Responsible Officials The City concurs with the finding. The City will implement new internal control procedures by June 30, 2025, to ensure timely submission and reconciliation of federal reports and the Treasurer will review and approve all submissions prior to filing. See Corrective Action Plan.
MUNICIPALITY OF PATILLAS, PUERTO RICO SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2024 SECTION III – Federal Award Finding and Questioned Costs FINDING 2024-005 FEDERAL PROGRAM COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) (ASSISTANCE LISTING NO.14.228) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PASS THROUGH STATE HOUSING DEPARTMENT CATEGORY INTERNAL CONTROL/COMPLIANCE NONCOMPLIANCE PROCUREMENT AND SUSPENSION AND DEBARMENT CONDITIONS During our audits test we noted that the Municipality did not include the applicable clauses in two of the contracts as required by 2 CRF section 200.327. CRITERIA The contract for the delegation of funds between the Municipality and the Department of Housing of Puerto Rico establishes that the subrecipient must ensure that every contract to purchase goods and services paid with CDBG funds include the applicable contract clauses required by the 2 CFR section 200.327 appendix II. CAUSE The Municipal Secretary Office failed to take internal control measures to ensure that the contracts included all clauses required by applicable regulations. EFFECT The Municipality is in noncompliance with the applicable requirements. RECOMMENDATION The Municipal Secretary Office should implement adequate internal control procedures to ensure that the contracts contain all the clauses required by the federal regulation. QUESTIONED COST: None PRIOR YEAR: 2023-005
FINDING 2024-012 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-027-PN01, 22611-027-ARP, 22619-027-ARP, 23611-027-PN01, 23619-027-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 35 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of eight vendors were determined to require small purchase procedures. Of the vendors, totaling $174,456, three were selected for testing. For the three vendors tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of one covered transaction for goods or services that equaled or exceeded $25,000 paid from the grant funds during the audit period was identified. For this transaction tested, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 36 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 37 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not obtain more than one quote for the small purchases that were tested. The School Corporation was not aware of the suspension and debarment requirement, so it did not check the vendor to ensure they were not suspended and debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments were equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-012 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-027-PN01, 22611-027-ARP, 22619-027-ARP, 23611-027-PN01, 23619-027-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 35 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of eight vendors were determined to require small purchase procedures. Of the vendors, totaling $174,456, three were selected for testing. For the three vendors tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of one covered transaction for goods or services that equaled or exceeded $25,000 paid from the grant funds during the audit period was identified. For this transaction tested, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 36 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 37 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not obtain more than one quote for the small purchases that were tested. The School Corporation was not aware of the suspension and debarment requirement, so it did not check the vendor to ensure they were not suspended and debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments were equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-012 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-027-PN01, 22611-027-ARP, 22619-027-ARP, 23611-027-PN01, 23619-027-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 35 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of eight vendors were determined to require small purchase procedures. Of the vendors, totaling $174,456, three were selected for testing. For the three vendors tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of one covered transaction for goods or services that equaled or exceeded $25,000 paid from the grant funds during the audit period was identified. For this transaction tested, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 36 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 37 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not obtain more than one quote for the small purchases that were tested. The School Corporation was not aware of the suspension and debarment requirement, so it did not check the vendor to ensure they were not suspended and debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments were equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-012 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-027-PN01, 22611-027-ARP, 22619-027-ARP, 23611-027-PN01, 23619-027-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 35 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of eight vendors were determined to require small purchase procedures. Of the vendors, totaling $174,456, three were selected for testing. For the three vendors tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of one covered transaction for goods or services that equaled or exceeded $25,000 paid from the grant funds during the audit period was identified. For this transaction tested, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 36 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 37 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not obtain more than one quote for the small purchases that were tested. The School Corporation was not aware of the suspension and debarment requirement, so it did not check the vendor to ensure they were not suspended and debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments were equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-012 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-027-PN01, 22611-027-ARP, 22619-027-ARP, 23611-027-PN01, 23619-027-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 35 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of eight vendors were determined to require small purchase procedures. Of the vendors, totaling $174,456, three were selected for testing. For the three vendors tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of one covered transaction for goods or services that equaled or exceeded $25,000 paid from the grant funds during the audit period was identified. For this transaction tested, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 36 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 37 HUNTINGTON COUNTY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not obtain more than one quote for the small purchases that were tested. The School Corporation was not aware of the suspension and debarment requirement, so it did not check the vendor to ensure they were not suspended and debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments were equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.