Suspension and Debarment Not Verified Prior to Awarding Contracts(Governor?s Office of Planning and Budget)Federal Agency: Department of the TreasuryAssistance Listing Number and Title: 21.027 Coronavirus State & Local Fiscal Recovery FundsFederal Award Number: N/AQuestioned Costs: $0Pass-through Entity: N/APrior Year Single Audit Report Finding Number: 2021-022We identified 26 of 42 contract agreements sampled (61.9 percent error) where, under GOPB?s oversight, the state agency awarded SLFRF without verifying the entity was not suspended or debarred. These state agencies did not include a suspension and debarment clause in the contract with the entity as required by 2 CFR 200.327 or through a search of the suspension and debarment list on sam.gov: (See the Schedule of Findings and Questioned Costs for the table)2 CFR part 200.303 requires non-federal entities to ?establish and maintain effective internal control?that provides reasonable assurance that the non-federal entity [manages the program] in compliance with?terms and conditions of the federal award.? At the time of the award, GOPB did not provide guidance to these agencies that were inexperienced with federal programs to be aware of the extent that the suspension and debarment requirements were applicable. Although our procedures did not detect noncompliance, failure to properly implement controls and appropriately review each contracted party for suspension and debarment could result in federally suspended or debarred entities receiving federal funds.Recommendation:We recommend GOPB assist agencies to gain an understanding of the suspension and debarment requirements and establish internal controls to ensure compliance with these requirements.GOPB?s Response:GOPB agrees with this finding. In September 2022, GOPB distributed an ARPA Agency Checklist to remind those managing SLFR funds of compliance, monitoring, and reporting requirements, which included the requirement of monitoring for suspension and debarment. This checklist tool was not consistently used. A retroactive check was performed and no entities receiving federal funds had been suspended or debarred.
Suspension and Debarment Not Verified Prior to Awarding Contracts(Governor?s Office of Planning and Budget)Federal Agency: Department of the TreasuryAssistance Listing Number and Title: 21.027 Coronavirus State & Local Fiscal Recovery FundsFederal Award Number: N/AQuestioned Costs: $0Pass-through Entity: N/APrior Year Single Audit Report Finding Number: 2021-022We identified 26 of 42 contract agreements sampled (61.9 percent error) where, under GOPB?s oversight, the state agency awarded SLFRF without verifying the entity was not suspended or debarred. These state agencies did not include a suspension and debarment clause in the contract with the entity as required by 2 CFR 200.327 or through a search of the suspension and debarment list on sam.gov: (See the Schedule of Findings and Questioned Costs for the table)2 CFR part 200.303 requires non-federal entities to ?establish and maintain effective internal control?that provides reasonable assurance that the non-federal entity [manages the program] in compliance with?terms and conditions of the federal award.? At the time of the award, GOPB did not provide guidance to these agencies that were inexperienced with federal programs to be aware of the extent that the suspension and debarment requirements were applicable. Although our procedures did not detect noncompliance, failure to properly implement controls and appropriately review each contracted party for suspension and debarment could result in federally suspended or debarred entities receiving federal funds.Recommendation:We recommend GOPB assist agencies to gain an understanding of the suspension and debarment requirements and establish internal controls to ensure compliance with these requirements.GOPB?s Response:GOPB agrees with this finding. In September 2022, GOPB distributed an ARPA Agency Checklist to remind those managing SLFR funds of compliance, monitoring, and reporting requirements, which included the requirement of monitoring for suspension and debarment. This checklist tool was not consistently used. A retroactive check was performed and no entities receiving federal funds had been suspended or debarred.
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.318 General Procurement Standards requires entities to have documented procurement procedures that conform to the procurement standards identified in 2 CFR 200.317 through 200.327. Condition: The City does not have formal documented procurement policies and procedures related to expenditures of federal awards. Cause: The City Council forms a committee to review and approve disbursements of federal funds. This process is the City’s general practice but does not follow written procurement policies and procedures. Effect: The City is out of compliance with general procurement standards under 2 CFR 200.318. Recommendation: The City should adopt formal documented procurement policies and procedures related to expenditures of federal awards. Response: The City Clerk and Mayor, with help from the Treasurer, will develop and implement documented procurement procedures that conform to the procurement standards relating to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.317 through 200.327.
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.318 General Procurement Standards requires entities to have documented procurement procedures that conform to the procurement standards identified in 2 CFR 200.317 through 200.327. Condition: The City does not have formal documented procurement policies and procedures related to expenditures of federal awards. Cause: The City Council forms a committee to review and approve disbursements of federal funds. This process is the City’s general practice but does not follow written procurement policies and procedures. Effect: The City is out of compliance with general procurement standards under 2 CFR 200.318. Recommendation: The City should adopt formal documented procurement policies and procedures related to expenditures of federal awards. Response: The City Clerk and Mayor, with help from the Treasurer, will develop and implement documented procurement procedures that conform to the procurement standards relating to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.317 through 200.327.
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.318 General Procurement Standards requires entities to have documented procurement procedures that conform to the procurement standards identified in 2 CFR 200.317 through 200.327. Condition: The City does not have formal documented procurement policies and procedures related to expenditures of federal awards. Cause: The City Council forms a committee to review and approve disbursements of federal funds. This process is the City’s general practice but does not follow written procurement policies and procedures. Effect: The City is out of compliance with general procurement standards under 2 CFR 200.318. Recommendation: The City should adopt formal documented procurement policies and procedures related to expenditures of federal awards. Response: The City Clerk and Mayor, with help from the Treasurer, will develop and implement documented procurement procedures that conform to the procurement standards relating to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.317 through 200.327.
2022-003 Procurement Policies and Covered Transactions Compliance Requirement Procurement, Suspension, and Debarment Category Significant Deficiency in Internal Control and Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria 2 CFR section 200.318 General procurement standards. (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. 2 CFR section 180.220 Are any procurement contracts included as covered transactions? (a) Covered transactions under this part— (1) Do not include any procurement contracts awarded directly by a Federal agency; but (2) Do include some procurement contracts awarded by non-Federal participants in nonprocurement covered transactions. (b) Specifically, a contract for goods or services is a covered transaction if any of the following applies: (1) The contract is awarded by a participant in a nonprocurement transaction that is covered under § 180.210, and the amount of the contract is expected to equal or exceed $25,000. (2) The contract requires the consent of an official of a Federal agency. In that case, the contract, regardless of the amount, always is a covered transaction, and it does not matter who awarded it. For example, it could be a subcontract awarded by a contractor at a tier below a nonprocurement transaction, as shown in the appendix to this part. (3) The contract is for Federally-required audit services. (c) A subcontract also is a covered transaction if,— (1) It is awarded by a participant in a procurement transaction under a nonprocurement transaction of a Federal agency that extends the coverage of paragraph (b)(1) of this section to additional tiers of contracts (see the diagram in the appendix to this part showing that optional lower tier coverage); and (2) The value of the subcontract is expected to equal or exceed $25,000. Condition General Procurement Standards - Written Policies The Corporation has an outdated institutional procurement manual approved in 2014 that lacks written policies to ascertain compliance with the provisions of federal statutes, regulations, or the terms and conditions of federal awards regarding procurement, suspension, and debarment requirements. Suspension and Debarment - Covered Transaction From a population of nineteen disbursements, we selected nine disbursements to ascertain compliance with 2 CFR section 180.220 by examining the procurement documents provided by the Corporation. From that sample, we identified nine instances in which the SAM.gov registration verification process was not performed. Of the nine instances, we found eight suppliers properly registered, but one supplier appears as validated as unique and existing but not registered in SAM.gov. Cause Lack of understanding of procurement compliance requirements for federal awards. Fiscal year 2023 was the first year for the Corporation to be subjected to a single audit compliance requirement for receiving and expending COVID-19 public health emergency programs. Effect Noncompliance with sections 200.318 and 180.220 of 2 CFR may lead to temporary withholding of cash payments until the deficiency is corrected, and/or withholding further federal program awards. Questioned Costs None Recommendation General Procurement Standards - Written Policies and Suspension and Debarment - Covered Transaction We recommend the Corporation update its internal procurement written policies following the provisions of current state statutes and regulations and develop separate procurement written policies following the provisions of federal laws and regulations or the terms and conditions of federal awards, which includes the Procurement Standards described in 2 CFR section 200.317 through 200.327, as applicable. By updating, developing, and implementing the required written procurement policies, the Corporation will be able to comply with the federal government compliance requirements. Views of responsible officials Refer to Corrective Action Plan section.
Material Instance of Non-Compliance and Significant Deficiency Written Procurement Policy This finding impacts the procurement and suspension and debarment compliance requirement for the major program, Assistance Listing Number 10.555, Child Nutrition Cluster, funded by the U.S. Department of Agriculture and passed through by the Commonwealth of Massachusetts, Department of Elementary and Secondary Education (DESE). Criteria: The School must follow the procurement standards set out at 2 CFR sections 200.317 through 200.327. The School also must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: During our compliance testing, we reviewed the School's procurement policy against Uniform Guidance standards. The policy did not meet all of the considerations that are required through Uniform Guidance, Federal and state regulations. The School followed their procurement policy during fiscal year 2022, but should update this policy in accordance with these regulations. Cause: The School’s existing procurement policy did not document all of the elements required by the Uniform Guidance. Effect: Non-compliance with the Uniform Guidance, potentially resulting in an increase in questioned costs. Was the finding a repeat of a finding in the immediately prior year?: No Recommendation: AAFCPAs recommends that management revise their policy to comply with current standards under the Uniform Guidance. Management Response: During the audit, it was recognized that the School did not have an updated procurement policy to comply with the current standards under the Uniform Guidance. This is the first year that the School received funds that exceeded the Uniform Guidance threshold and was not aware that there was a difference between Federal policy and state policy that we operated under. During the audit, it was recognized that the School had obtained appropriate bids and performed an adequate and documented comparison of qualifications amongst vendors before selecting the current vendor. These practices, which are outlined in the Uniform Guidance Standard, although followed, are not accurately reflected in our current procurement policy. This policy will be updated during fiscal year 2023.
Finding 2022-011 - Noncompliance Over Procurement and Suspension and Debarment – Coronavirus State and Local Fiscal Recovery Funds PASS THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) FEDERAL AWARD NUMBER: SLFRP3720 FEDERAL AWARD YEAR: 2022 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $203,000 Condition: During our review of the disbursement data from Muskogee County regarding procurement and suspension and debarment as per the Uniform Guidance 2 CFR 200.317 through 200.327, we identified the following: • One (1) ambulance was purchased in the amount of $203,000 for the Muskogee County EMS. There were no bids or quotes provide by the County or found in the BOCC meeting minutes supporting expenditure documentation. • There were six (6) vendors, in which the County did not check the www.SAM.gov website to review if the vendor had been suspended or debarred for those disbursements that warranted a bid, on the 6-month bid list, or received quotes. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance of expenditures for all federal awards. Effect of Condition: This condition resulted in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Muskogee County. Internal control procedures should be designed and implemented to ensure accurate procurement and suspension and debarment and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: Muskogee County has hired an internal grant administrator to assist in keeping the county compliant with all local, state, and federal requirements. Efforts will be made going forward to ensure that all grant funds are properly expended. This includes that all expenditures are properly documented and that all vendors are federally eligible to perform services. Criteria: 2 CFR § 200.317 through 200.327 General Procurement Standards reads as follows: When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with §§ 200.321, 200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required by § 200.327. All other non-Federal entities, including subrecipients of a State, must follow the procurement standards in §§ 200.318 through 200.327. 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. 2 CFR 180.700 – 180.760 Suspension and 2 CFR 180.800 – 180.885 Debarment Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-002 Financial Statement Reconciliations/Tie-In Procedures Significant Deficiency CONDITION: A weakness existed in the overall reconciliation/tie-in procedures performed over the School’s financial statement accounts for the fiscal year ended June 30, 2022. Financial accounts were either reconciled untimely or in some cases, accounts were not reconciled at all. Most of these accounts should be reconciled on a monthly basis. The major areas where reconciliation procedures were weak included:A) Beginning Balances B) Cash Balances C) Account Receivables D) Grant Receivables/Unearned Revenues E) Accounts Payable F) Grant Revenue CRITERIA: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. CAUSE: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. EFFECT: In the course of performing the audit, the auditor recommended 10 adjusting journal entries be made to the financial statements for fiscal year ending June 30, 2022. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature.
2022-008 Procurement Policy and Procedures U.S. Department of Justice, Passed through Illinois Criminal Justice Information Authority Crime Victim Assistance – Assistance Listing Number 16.575 Criteria: Non-federal entities other than states must follow the procurement standards set out in 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Corporation does not maintain a formal procurement policy and procedures that meets the requirements of the Uniform Guidance, including procedures addressing allowable costs exceeding the small purchase threshold. The lack of such a formal policy increases the risk that purchases are made that do not comply with Uniform Guidance requirements. Cause: The Corporation has not implemented a formal procurement policy and procedures that meets the requirements of the Uniform Guidance. Effect: The lack of such a formal policy increases the risk that purchases are made that do not comply with Uniform Guidance requirements. Questioned costs: None Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: We recommend that the Corporation implement a formal procurement policy and procedures that meets the requirements of the Uniform Guidance. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
2022 ? 001: Procurement Federal Agency: U.S. Department of Justice Federal Program Name: Crime Victim Services Assistance Listing Number: 16.575 Pass-Through Agency: Minnesota Department of Public Safety Office of Justice Programs Pass-Through Number(s): A-CVS-2020-CADA-00030 Award Period: October 1, 2019 through September 30, 2021 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR section 200.318(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. Condition: The Organization's procurement policy is limited in terms of documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Questioned costs: None Context: We noted the Organization?s current policy states ?expenditures in excess of $5,000 for the purchase of a single item is required to have bids from three suppliers if possible.? However, the federal guidelines have increased those same thresholds to $10,000 for quotations and $250,000 for sealed bids. The policy is silent as to when sealed bids are required. Cause: The process of ensuring grant requirements are understood. Effect: Procurement transactions may be not be compliant with Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization update the purchasing section of its current Fiscal Policies and Procedures manual. The updated procedures should at a minimum address general procurement standards. Views of responsible officials: There is no disagreement with the audit finding.
2022 ? 001: Procurement Federal Agency: U.S. Department of Justice Federal Program Name: Crime Victim Services Assistance Listing Number: 16.575 Pass-Through Agency: Minnesota Department of Public Safety Office of Justice Programs Pass-Through Number(s): A-CVS-2020-CADA-00030 Award Period: October 1, 2019 through September 30, 2021 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR section 200.318(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. Condition: The Organization's procurement policy is limited in terms of documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Questioned costs: None Context: We noted the Organization?s current policy states ?expenditures in excess of $5,000 for the purchase of a single item is required to have bids from three suppliers if possible.? However, the federal guidelines have increased those same thresholds to $10,000 for quotations and $250,000 for sealed bids. The policy is silent as to when sealed bids are required. Cause: The process of ensuring grant requirements are understood. Effect: Procurement transactions may be not be compliant with Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization update the purchasing section of its current Fiscal Policies and Procedures manual. The updated procedures should at a minimum address general procurement standards. Views of responsible officials: There is no disagreement with the audit finding.
2022-001 - Procurement Contracts Federal Program Information: Department of Housing and Urban Development: ALN - 14.900 - Lead Hazard Reduction Grant Program Criteria: The following CFR(s) apply to this finding: 2 CFR 200.327. Condition: During audit procedures, it was identified that the City of Lewiston did not include the required contract provisions as specified in the criteria above and included in the City?s procurement policy. Cause: The City does not have the necessary internal controls to ensure compliance with the City?s procurement policy. Effect: Procurement contracts were not executed in compliance with both the criteria above and the City?s procurement policy. Identification of Questioned Costs: None identified. Context: Three procurement contracts were reviewed out of a population of 11. It was determined that the three procurement contracts reviewed did not include the required contract provisions. This was a statisically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the City of Lewiston implement internal control processes and procedures to ensure that they are following both the criteria above and the City?s procurement policy. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the City of Lewiston.
Identification of the Federal Program: U.S. Department of Agriculture ? Community Facilities Loans and Grants Cluster, Community Facilities Loans and Grants ? 10.766 Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Noncompliance Criteria: The Hospital must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Hospital is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with program requirements. Terms and conditions of the federal award require the Hospital to maintain a reserve fund at specified balance levels. Condition: During 2022, the accounts that represented the reserve fund had a balance below that required by the loan resolution agreements and required deposits were not being made to restore the balances to required levels. Cause: The Hospital did not have an effective internal control process in place to ensure the reserve fund had an adequate balance. Effect: The required reserve fund balance at June 30, 2022 is $245,553 and the balance of the Hospital?s reserve funds at year end is $240,166, a shortage of $5,387. Questioned Costs: None reported. Context: Sampling was not used. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance and establish a process to review the reserve balance on a recurring basis to determine if additional reserves are needed. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Condition and Context ? Two of three monthly programmatic reports tested were submitted past the deadline for the WIOA Cluster. Specifically, the January 2022 and June 2022 reports were submitted 9 days late and 26 days late, respectively. Effect ? The effect of the reporting delays is that funding agencies are receiving untimely information. Cause ? The cause is insufficient monitoring of reporting deadlines. Criteria ? Federal regulations (2 CFR ?200.327) and the terms of the federal grants and contracts require that financial reports be filed in a timely manner. Recommendation ? We recommend that Pinal County improve controls over grant reporting that includes a process for identifying reporting requirements and monitoring the timely grant reporting. The system of control should include evaluating and documenting the reporting requirements of each grant and, assignment of both the employees responsible for preparation of the grant reports and a secondary employee assignment for overall monitoring of the timeliness of all grant reports.
Condition and Context ? Two of three monthly programmatic reports tested were submitted past the deadline for the WIOA Cluster. Specifically, the January 2022 and June 2022 reports were submitted 9 days late and 26 days late, respectively. Effect ? The effect of the reporting delays is that funding agencies are receiving untimely information. Cause ? The cause is insufficient monitoring of reporting deadlines. Criteria ? Federal regulations (2 CFR ?200.327) and the terms of the federal grants and contracts require that financial reports be filed in a timely manner. Recommendation ? We recommend that Pinal County improve controls over grant reporting that includes a process for identifying reporting requirements and monitoring the timely grant reporting. The system of control should include evaluating and documenting the reporting requirements of each grant and, assignment of both the employees responsible for preparation of the grant reports and a secondary employee assignment for overall monitoring of the timeliness of all grant reports.
Condition and Context ? Two of three monthly programmatic reports tested were submitted past the deadline for the WIOA Cluster. Specifically, the January 2022 and June 2022 reports were submitted 9 days late and 26 days late, respectively. Effect ? The effect of the reporting delays is that funding agencies are receiving untimely information. Cause ? The cause is insufficient monitoring of reporting deadlines. Criteria ? Federal regulations (2 CFR ?200.327) and the terms of the federal grants and contracts require that financial reports be filed in a timely manner. Recommendation ? We recommend that Pinal County improve controls over grant reporting that includes a process for identifying reporting requirements and monitoring the timely grant reporting. The system of control should include evaluating and documenting the reporting requirements of each grant and, assignment of both the employees responsible for preparation of the grant reports and a secondary employee assignment for overall monitoring of the timeliness of all grant reports.
Finding 2022-001 - Procurement Federal Agency: U.S. Department of Health and Human Services Passed through City of Boston Commission on Affairs of the Elderly Federal Program Title: National Family Caregiver Support, Title III, Part E Assistance Listing Number: 93.052 Type of Finding: Material Instance of Noncompliance and Significant Deficiency in Internal Controls over Compliance. Criteria: BSHC is required to maintain policies and procedures over the procurement of goods and services with Federal funds in accordance with 2 CFR Part 200.318 through 200.327. Additionally, the City of Boston requires Title III grantees to comply with the Boston Age Strong Commission?s contract manual, which contains specific procurement requirements. Condition: During our testing of 22 purchases charged to Title III funds, we noted that BSHC did not have supporting documentation or evidence that the Federal and City of Boston procurement procedures were followed. Cause: Fiscal year 2022 was the first year BSHC was subject to a Federal Uniform Guidance audit. Accordingly, management had not instituted separate procurement procedures over Federal and non-Federal procurements. All purchases were subject to BSHC?s general procurement/purchasing procedures. Effect: BSHC procured goods and services using Federal funds under their internal policy that was not in full compliance with the requirements set forth by the Uniform Guidance which could affect future Title III funding. Questioned Costs: None Recommendation: BSHC should implement a formal, Board approved, procurement policy and procedures which encompass the requirements in Federal CFR Part 200.318 through 200.327 and the Boston Age Strong Commission contract manual requirements. These procedures should be applied to any purchases made with Federal funds. In addition, BSHC should review its vendor files to ensure that appropriate procurement documentation exists throughout. Repeated finding: No Management?s Response: Management is in agreement with the recommendation. Subsequent to the Board review of the fiscal year 2022 audit package, Boston Senior Home Care?s procurement policy will be revised to align with Federal guidelines. The policy will go to the Audit Committee or full Board for approval.
FINDING NO. 2022-001 FINANCIAL STATEMENTS Federal programs All federal financial assistance programs Category Internal control Condition found. The Organization accounted for its activities based on the services provided, which are educational services and food services. During our financial and compliance audit procedures for the fiscal year ended June 30, 2022, we noted the following conditions related to the accounting procedures and financial reporting practices of the Organization: a. Accounting and interim financial reports are not executed on a current (month-to-month) basis. Accounting journals, general ledger and interim financial reports, such as Balance Sheet, Statement of Activities and Bank Reconciliations, monthly analysis of certain accounts are executed after the end of the related accounting year. Criteria 2 CFR 200.302 (b) (2), (4), (5) and (7) establish that the financial management system of each nonFederal entity must provide for the following: i. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause Contracted outsource for the general accounting of the institution have been unable to prepare the monthly accounting and the related interim financial reports on a current basis. Effect Weaknesses in the internal controls of the institution, requiring extra efforts from the administration to compensate for the lack of current accountability with additional alternative measures and procedures. Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. Questioned costs None Identification as a Repeated Finding Included in prior years Findings No. 2017-001,2018-001, 2019-001,2020-001 and 2021-001. Recommendations The Organization should enforce its policies and procedures in order to accurately maintain its financial information, and on a timely basis, assuring that they reflect its assets and liabilities, and to maintain an appropriate control over its revenues and the amounts expended, which will allow a proper management and monitoring of operations. These policies and procedures should be enforced to consider the following: ? Establish monthly and year end closing procedures. ? Prepare monthly or quarterly financial reports for management evaluation and analysis. Views of Responsible Officials The Organization agrees with the finding. Executed actions have substantially improved their year-end closing procedures. They contracted a new accounting firm to improve their accounting and the interim financial reporting. Also, during the year ended June 30, 2022, an internal accountant was hired, who among other things, is coordinating and supervising the record keeping and compilation of interim and year end closing and reporting process. Subsequent to June 30, 2022, the institution decided to perform the accounting and reporting function internally, commencing on July 1, 2022.
FINDING NO. 2022-001 FINANCIAL STATEMENTS Federal programs All federal financial assistance programs Category Internal control Condition found. The Organization accounted for its activities based on the services provided, which are educational services and food services. During our financial and compliance audit procedures for the fiscal year ended June 30, 2022, we noted the following conditions related to the accounting procedures and financial reporting practices of the Organization: a. Accounting and interim financial reports are not executed on a current (month-to-month) basis. Accounting journals, general ledger and interim financial reports, such as Balance Sheet, Statement of Activities and Bank Reconciliations, monthly analysis of certain accounts are executed after the end of the related accounting year. Criteria 2 CFR 200.302 (b) (2), (4), (5) and (7) establish that the financial management system of each nonFederal entity must provide for the following: i. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause Contracted outsource for the general accounting of the institution have been unable to prepare the monthly accounting and the related interim financial reports on a current basis. Effect Weaknesses in the internal controls of the institution, requiring extra efforts from the administration to compensate for the lack of current accountability with additional alternative measures and procedures. Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. Questioned costs None Identification as a Repeated Finding Included in prior years Findings No. 2017-001,2018-001, 2019-001,2020-001 and 2021-001. Recommendations The Organization should enforce its policies and procedures in order to accurately maintain its financial information, and on a timely basis, assuring that they reflect its assets and liabilities, and to maintain an appropriate control over its revenues and the amounts expended, which will allow a proper management and monitoring of operations. These policies and procedures should be enforced to consider the following: ? Establish monthly and year end closing procedures. ? Prepare monthly or quarterly financial reports for management evaluation and analysis. Views of Responsible Officials The Organization agrees with the finding. Executed actions have substantially improved their year-end closing procedures. They contracted a new accounting firm to improve their accounting and the interim financial reporting. Also, during the year ended June 30, 2022, an internal accountant was hired, who among other things, is coordinating and supervising the record keeping and compilation of interim and year end closing and reporting process. Subsequent to June 30, 2022, the institution decided to perform the accounting and reporting function internally, commencing on July 1, 2022.
FINDING NO. 2022-001 FINANCIAL STATEMENTS Federal programs All federal financial assistance programs Category Internal control Condition found. The Organization accounted for its activities based on the services provided, which are educational services and food services. During our financial and compliance audit procedures for the fiscal year ended June 30, 2022, we noted the following conditions related to the accounting procedures and financial reporting practices of the Organization: a. Accounting and interim financial reports are not executed on a current (month-to-month) basis. Accounting journals, general ledger and interim financial reports, such as Balance Sheet, Statement of Activities and Bank Reconciliations, monthly analysis of certain accounts are executed after the end of the related accounting year. Criteria 2 CFR 200.302 (b) (2), (4), (5) and (7) establish that the financial management system of each nonFederal entity must provide for the following: i. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause Contracted outsource for the general accounting of the institution have been unable to prepare the monthly accounting and the related interim financial reports on a current basis. Effect Weaknesses in the internal controls of the institution, requiring extra efforts from the administration to compensate for the lack of current accountability with additional alternative measures and procedures. Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. Questioned costs None Identification as a Repeated Finding Included in prior years Findings No. 2017-001,2018-001, 2019-001,2020-001 and 2021-001. Recommendations The Organization should enforce its policies and procedures in order to accurately maintain its financial information, and on a timely basis, assuring that they reflect its assets and liabilities, and to maintain an appropriate control over its revenues and the amounts expended, which will allow a proper management and monitoring of operations. These policies and procedures should be enforced to consider the following: ? Establish monthly and year end closing procedures. ? Prepare monthly or quarterly financial reports for management evaluation and analysis. Views of Responsible Officials The Organization agrees with the finding. Executed actions have substantially improved their year-end closing procedures. They contracted a new accounting firm to improve their accounting and the interim financial reporting. Also, during the year ended June 30, 2022, an internal accountant was hired, who among other things, is coordinating and supervising the record keeping and compilation of interim and year end closing and reporting process. Subsequent to June 30, 2022, the institution decided to perform the accounting and reporting function internally, commencing on July 1, 2022.
FINDING NO. 2022-001 FINANCIAL STATEMENTS Federal programs All federal financial assistance programs Category Internal control Condition found. The Organization accounted for its activities based on the services provided, which are educational services and food services. During our financial and compliance audit procedures for the fiscal year ended June 30, 2022, we noted the following conditions related to the accounting procedures and financial reporting practices of the Organization: a. Accounting and interim financial reports are not executed on a current (month-to-month) basis. Accounting journals, general ledger and interim financial reports, such as Balance Sheet, Statement of Activities and Bank Reconciliations, monthly analysis of certain accounts are executed after the end of the related accounting year. Criteria 2 CFR 200.302 (b) (2), (4), (5) and (7) establish that the financial management system of each nonFederal entity must provide for the following: i. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause Contracted outsource for the general accounting of the institution have been unable to prepare the monthly accounting and the related interim financial reports on a current basis. Effect Weaknesses in the internal controls of the institution, requiring extra efforts from the administration to compensate for the lack of current accountability with additional alternative measures and procedures. Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. Questioned costs None Identification as a Repeated Finding Included in prior years Findings No. 2017-001,2018-001, 2019-001,2020-001 and 2021-001. Recommendations The Organization should enforce its policies and procedures in order to accurately maintain its financial information, and on a timely basis, assuring that they reflect its assets and liabilities, and to maintain an appropriate control over its revenues and the amounts expended, which will allow a proper management and monitoring of operations. These policies and procedures should be enforced to consider the following: ? Establish monthly and year end closing procedures. ? Prepare monthly or quarterly financial reports for management evaluation and analysis. Views of Responsible Officials The Organization agrees with the finding. Executed actions have substantially improved their year-end closing procedures. They contracted a new accounting firm to improve their accounting and the interim financial reporting. Also, during the year ended June 30, 2022, an internal accountant was hired, who among other things, is coordinating and supervising the record keeping and compilation of interim and year end closing and reporting process. Subsequent to June 30, 2022, the institution decided to perform the accounting and reporting function internally, commencing on July 1, 2022.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, Summer Food Service Program for Children, COVID-19 - Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2020-2021, FY2021-2022, FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not obtain price or rate quotes for all seven vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the School Corporation did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. Additionally, the School Corporation did not enter into a contract with four vendors as required by Indiana Code for purchases between $50,000 and $150,000. As such, the School Corporation did not verify that these vendors were not excluded or disqualified from participation in federal assistance programs or activities. In addition, the School Corporation was a member of the Region 8 Educational Service Center (Service Center). The Service Center completed the Procurement and Suspension and Debarment compliance requirement on behalf of the School Corporation. Because the grant agreements were between the Indiana Department of Education and the School Corporation, the School Corporation was ultimately responsible for compliance with the grant agreement and the suspension and debarment requirement of the Procurement and Suspension and Debarment compliance requirement. The bids for bread and milk were originally awarded for fiscal year 2018-2019 and were renewed for 2020-2021. The Service Center could not provide documentation that procedures were performed to verify the vendors were not suspended or debarred from participation in federal programs prior to entering into covered transactions with these vendors. INDIANA STATE BOARD OF ACCOUNTS 14 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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. INDIANA STATE BOARD OF ACCOUNTS 15 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states in part: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 DEKALB COUNTY EASTERN COMMUNITY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2 CFR ? 400.1 gives regulatory effect to the Department of Agriculture and 2 CFR 3474.1 gives regulatory effect for the Department of Education for 2 CFR ? 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR ? 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR ? 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, are purchases made with publicly solicited and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price. In order to be feasible, a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on cost; (d) Procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate, or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a sole source, the non-competitive proposals are specifically authorized in the Federal award, after solicitation through competitive means, competition is deemed in adequate, and/or the item must be purchased without delay due to an emergency or exigent circumstances. 2 CFR ? 200.318(i) indicates 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. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District?s procurement policy does not indicate the number of quotations required when using the simplified acquisition threshold. Ohio Rev. Code ? 3313.46 indicates when a Board of Education determines to build, repair, enlarge, or demolish any school building with a cost in excess of $50,000, the Board is required to: 1. Prepare plans and specifications; 2. Advertised for bids once a week for not less than two consecutive weeks or as provided in Ohio Rev. Code ? 7.16, in a newspaper in general circulation in the district before the date specified for receiving bids. The board may also cause notice to be inserted in trade papers or other publications designated by it or to be distributed by electronic means, including posting the notice on the board?s internet web site. If the board posts the notice on its web site, it may eliminate the second notice otherwise required to be published in a newspaper of general circulation within the school district, provided that the first notice published in such newspaper meets all of the following requirements: (a) It is published at least two weeks before the opening of bids; (b) It includes a statement that the notice is posted on the board of education?s internet web site; (c) It includes the internet address of the board?s internet web site; and (d) It includes instructions describing how the notice may be accessed on the board?s internet web site; 3. Open the bids at the time and place specified by the Board in the advertisement for bids; 4. The award of the contract is to the lowest responsible bidder; 5. The contract is between the board and the bidders. The board is required to approve and retain estimates and make them available to the Auditor of State upon request; and, 6. If two or more bids are equal and are lower than any others, either may be accepted. However, the work is not to be divided among the bidders. The above requirements do not apply to: ? an urgent necessity; ? acquisition of educational materials used for teaching; ? any item which the Board, by a two-thirds vote, determines is available and can be obtained only through a single source; ? energy conservation measures, with the approval of two-thirds of the Board; ? acquisition of computer software or hardware for instructional purposes; or, ? School districts that participate in a joint purchasing contract are exempt from using competitive bidding. For one out of four vendors tested during our procurement testing of the Nutrition Cluster, the District did not maintain written justification documenting the history of the procurement. The vendor performed repairs on kitchen equipment totaling $37,382. The procurement was within the simplified acquisition threshold and quotes should have been obtained. The justification for using the vendor was provided verbally during the audit, with the District indicating the vendor was selected because of quick response time, past visits, and availability. Additionally, the District paid $303,004 for a roof replacement using Education Stabilization Fund- Elementary and Secondary School Emergency Relief (ESSER II) funds, which would be required to be competitively bid under the Ohio Rev. Code ? 3313.46 and 2 CFR 200.320. The District could not provide us with the following documentation: proof of the advertisement for bids of the project in a newspaper of general circulation in the District and/or advertisement of the project on the District?s website, the Board resolution approving the award of the contract, and the bid packages submitted from the losing bidders. Because of the lack of available documentation, the District was in non-compliance of the Federal procurement and Ohio competitive bidding requirements. Both of the issues noted above were due to a lack of internal controls regarding Federal procurement at the District. The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, either because they are from a sole source provider or due to emergency or exigent circumstances are documented and maintain written documentation of such procedures. The District should also amend their procurement policy to indicate the number of quotations required when using the simplified acquisition threshold.
2 CFR ? 400.1 gives regulatory effect to the Department of Agriculture and 2 CFR 3474.1 gives regulatory effect for the Department of Education for 2 CFR ? 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR ? 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR ? 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, are purchases made with publicly solicited and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price. In order to be feasible, a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on cost; (d) Procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate, or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a sole source, the non-competitive proposals are specifically authorized in the Federal award, after solicitation through competitive means, competition is deemed in adequate, and/or the item must be purchased without delay due to an emergency or exigent circumstances. 2 CFR ? 200.318(i) indicates 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. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District?s procurement policy does not indicate the number of quotations required when using the simplified acquisition threshold. Ohio Rev. Code ? 3313.46 indicates when a Board of Education determines to build, repair, enlarge, or demolish any school building with a cost in excess of $50,000, the Board is required to: 1. Prepare plans and specifications; 2. Advertised for bids once a week for not less than two consecutive weeks or as provided in Ohio Rev. Code ? 7.16, in a newspaper in general circulation in the district before the date specified for receiving bids. The board may also cause notice to be inserted in trade papers or other publications designated by it or to be distributed by electronic means, including posting the notice on the board?s internet web site. If the board posts the notice on its web site, it may eliminate the second notice otherwise required to be published in a newspaper of general circulation within the school district, provided that the first notice published in such newspaper meets all of the following requirements: (a) It is published at least two weeks before the opening of bids; (b) It includes a statement that the notice is posted on the board of education?s internet web site; (c) It includes the internet address of the board?s internet web site; and (d) It includes instructions describing how the notice may be accessed on the board?s internet web site; 3. Open the bids at the time and place specified by the Board in the advertisement for bids; 4. The award of the contract is to the lowest responsible bidder; 5. The contract is between the board and the bidders. The board is required to approve and retain estimates and make them available to the Auditor of State upon request; and, 6. If two or more bids are equal and are lower than any others, either may be accepted. However, the work is not to be divided among the bidders. The above requirements do not apply to: ? an urgent necessity; ? acquisition of educational materials used for teaching; ? any item which the Board, by a two-thirds vote, determines is available and can be obtained only through a single source; ? energy conservation measures, with the approval of two-thirds of the Board; ? acquisition of computer software or hardware for instructional purposes; or, ? School districts that participate in a joint purchasing contract are exempt from using competitive bidding. For one out of four vendors tested during our procurement testing of the Nutrition Cluster, the District did not maintain written justification documenting the history of the procurement. The vendor performed repairs on kitchen equipment totaling $37,382. The procurement was within the simplified acquisition threshold and quotes should have been obtained. The justification for using the vendor was provided verbally during the audit, with the District indicating the vendor was selected because of quick response time, past visits, and availability. Additionally, the District paid $303,004 for a roof replacement using Education Stabilization Fund- Elementary and Secondary School Emergency Relief (ESSER II) funds, which would be required to be competitively bid under the Ohio Rev. Code ? 3313.46 and 2 CFR 200.320. The District could not provide us with the following documentation: proof of the advertisement for bids of the project in a newspaper of general circulation in the District and/or advertisement of the project on the District?s website, the Board resolution approving the award of the contract, and the bid packages submitted from the losing bidders. Because of the lack of available documentation, the District was in non-compliance of the Federal procurement and Ohio competitive bidding requirements. Both of the issues noted above were due to a lack of internal controls regarding Federal procurement at the District. The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, either because they are from a sole source provider or due to emergency or exigent circumstances are documented and maintain written documentation of such procedures. The District should also amend their procurement policy to indicate the number of quotations required when using the simplified acquisition threshold.
2 CFR ? 400.1 gives regulatory effect to the Department of Agriculture and 2 CFR 3474.1 gives regulatory effect for the Department of Education for 2 CFR ? 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR ? 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR ? 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, are purchases made with publicly solicited and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price. In order to be feasible, a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on cost; (d) Procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate, or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a sole source, the non-competitive proposals are specifically authorized in the Federal award, after solicitation through competitive means, competition is deemed in adequate, and/or the item must be purchased without delay due to an emergency or exigent circumstances. 2 CFR ? 200.318(i) indicates 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. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District?s procurement policy does not indicate the number of quotations required when using the simplified acquisition threshold. Ohio Rev. Code ? 3313.46 indicates when a Board of Education determines to build, repair, enlarge, or demolish any school building with a cost in excess of $50,000, the Board is required to: 1. Prepare plans and specifications; 2. Advertised for bids once a week for not less than two consecutive weeks or as provided in Ohio Rev. Code ? 7.16, in a newspaper in general circulation in the district before the date specified for receiving bids. The board may also cause notice to be inserted in trade papers or other publications designated by it or to be distributed by electronic means, including posting the notice on the board?s internet web site. If the board posts the notice on its web site, it may eliminate the second notice otherwise required to be published in a newspaper of general circulation within the school district, provided that the first notice published in such newspaper meets all of the following requirements: (a) It is published at least two weeks before the opening of bids; (b) It includes a statement that the notice is posted on the board of education?s internet web site; (c) It includes the internet address of the board?s internet web site; and (d) It includes instructions describing how the notice may be accessed on the board?s internet web site; 3. Open the bids at the time and place specified by the Board in the advertisement for bids; 4. The award of the contract is to the lowest responsible bidder; 5. The contract is between the board and the bidders. The board is required to approve and retain estimates and make them available to the Auditor of State upon request; and, 6. If two or more bids are equal and are lower than any others, either may be accepted. However, the work is not to be divided among the bidders. The above requirements do not apply to: ? an urgent necessity; ? acquisition of educational materials used for teaching; ? any item which the Board, by a two-thirds vote, determines is available and can be obtained only through a single source; ? energy conservation measures, with the approval of two-thirds of the Board; ? acquisition of computer software or hardware for instructional purposes; or, ? School districts that participate in a joint purchasing contract are exempt from using competitive bidding. For one out of four vendors tested during our procurement testing of the Nutrition Cluster, the District did not maintain written justification documenting the history of the procurement. The vendor performed repairs on kitchen equipment totaling $37,382. The procurement was within the simplified acquisition threshold and quotes should have been obtained. The justification for using the vendor was provided verbally during the audit, with the District indicating the vendor was selected because of quick response time, past visits, and availability. Additionally, the District paid $303,004 for a roof replacement using Education Stabilization Fund- Elementary and Secondary School Emergency Relief (ESSER II) funds, which would be required to be competitively bid under the Ohio Rev. Code ? 3313.46 and 2 CFR 200.320. The District could not provide us with the following documentation: proof of the advertisement for bids of the project in a newspaper of general circulation in the District and/or advertisement of the project on the District?s website, the Board resolution approving the award of the contract, and the bid packages submitted from the losing bidders. Because of the lack of available documentation, the District was in non-compliance of the Federal procurement and Ohio competitive bidding requirements. Both of the issues noted above were due to a lack of internal controls regarding Federal procurement at the District. The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, either because they are from a sole source provider or due to emergency or exigent circumstances are documented and maintain written documentation of such procedures. The District should also amend their procurement policy to indicate the number of quotations required when using the simplified acquisition threshold.
2 CFR ? 400.1 gives regulatory effect to the Department of Agriculture and 2 CFR 3474.1 gives regulatory effect for the Department of Education for 2 CFR ? 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR ? 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR ? 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, are purchases made with publicly solicited and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price. In order to be feasible, a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on cost; (d) Procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate, or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a sole source, the non-competitive proposals are specifically authorized in the Federal award, after solicitation through competitive means, competition is deemed in adequate, and/or the item must be purchased without delay due to an emergency or exigent circumstances. 2 CFR ? 200.318(i) indicates 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. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District?s procurement policy does not indicate the number of quotations required when using the simplified acquisition threshold. Ohio Rev. Code ? 3313.46 indicates when a Board of Education determines to build, repair, enlarge, or demolish any school building with a cost in excess of $50,000, the Board is required to: 1. Prepare plans and specifications; 2. Advertised for bids once a week for not less than two consecutive weeks or as provided in Ohio Rev. Code ? 7.16, in a newspaper in general circulation in the district before the date specified for receiving bids. The board may also cause notice to be inserted in trade papers or other publications designated by it or to be distributed by electronic means, including posting the notice on the board?s internet web site. If the board posts the notice on its web site, it may eliminate the second notice otherwise required to be published in a newspaper of general circulation within the school district, provided that the first notice published in such newspaper meets all of the following requirements: (a) It is published at least two weeks before the opening of bids; (b) It includes a statement that the notice is posted on the board of education?s internet web site; (c) It includes the internet address of the board?s internet web site; and (d) It includes instructions describing how the notice may be accessed on the board?s internet web site; 3. Open the bids at the time and place specified by the Board in the advertisement for bids; 4. The award of the contract is to the lowest responsible bidder; 5. The contract is between the board and the bidders. The board is required to approve and retain estimates and make them available to the Auditor of State upon request; and, 6. If two or more bids are equal and are lower than any others, either may be accepted. However, the work is not to be divided among the bidders. The above requirements do not apply to: ? an urgent necessity; ? acquisition of educational materials used for teaching; ? any item which the Board, by a two-thirds vote, determines is available and can be obtained only through a single source; ? energy conservation measures, with the approval of two-thirds of the Board; ? acquisition of computer software or hardware for instructional purposes; or, ? School districts that participate in a joint purchasing contract are exempt from using competitive bidding. For one out of four vendors tested during our procurement testing of the Nutrition Cluster, the District did not maintain written justification documenting the history of the procurement. The vendor performed repairs on kitchen equipment totaling $37,382. The procurement was within the simplified acquisition threshold and quotes should have been obtained. The justification for using the vendor was provided verbally during the audit, with the District indicating the vendor was selected because of quick response time, past visits, and availability. Additionally, the District paid $303,004 for a roof replacement using Education Stabilization Fund- Elementary and Secondary School Emergency Relief (ESSER II) funds, which would be required to be competitively bid under the Ohio Rev. Code ? 3313.46 and 2 CFR 200.320. The District could not provide us with the following documentation: proof of the advertisement for bids of the project in a newspaper of general circulation in the District and/or advertisement of the project on the District?s website, the Board resolution approving the award of the contract, and the bid packages submitted from the losing bidders. Because of the lack of available documentation, the District was in non-compliance of the Federal procurement and Ohio competitive bidding requirements. Both of the issues noted above were due to a lack of internal controls regarding Federal procurement at the District. The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, either because they are from a sole source provider or due to emergency or exigent circumstances are documented and maintain written documentation of such procedures. The District should also amend their procurement policy to indicate the number of quotations required when using the simplified acquisition threshold.
2 CFR ? 400.1 gives regulatory effect to the Department of Agriculture and 2 CFR 3474.1 gives regulatory effect for the Department of Education for 2 CFR ? 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR ? 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR ? 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, are purchases made with publicly solicited and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price. In order to be feasible, a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on cost; (d) Procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate, or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a sole source, the non-competitive proposals are specifically authorized in the Federal award, after solicitation through competitive means, competition is deemed in adequate, and/or the item must be purchased without delay due to an emergency or exigent circumstances. 2 CFR ? 200.318(i) indicates 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. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District?s procurement policy does not indicate the number of quotations required when using the simplified acquisition threshold. Ohio Rev. Code ? 3313.46 indicates when a Board of Education determines to build, repair, enlarge, or demolish any school building with a cost in excess of $50,000, the Board is required to: 1. Prepare plans and specifications; 2. Advertised for bids once a week for not less than two consecutive weeks or as provided in Ohio Rev. Code ? 7.16, in a newspaper in general circulation in the district before the date specified for receiving bids. The board may also cause notice to be inserted in trade papers or other publications designated by it or to be distributed by electronic means, including posting the notice on the board?s internet web site. If the board posts the notice on its web site, it may eliminate the second notice otherwise required to be published in a newspaper of general circulation within the school district, provided that the first notice published in such newspaper meets all of the following requirements: (a) It is published at least two weeks before the opening of bids; (b) It includes a statement that the notice is posted on the board of education?s internet web site; (c) It includes the internet address of the board?s internet web site; and (d) It includes instructions describing how the notice may be accessed on the board?s internet web site; 3. Open the bids at the time and place specified by the Board in the advertisement for bids; 4. The award of the contract is to the lowest responsible bidder; 5. The contract is between the board and the bidders. The board is required to approve and retain estimates and make them available to the Auditor of State upon request; and, 6. If two or more bids are equal and are lower than any others, either may be accepted. However, the work is not to be divided among the bidders. The above requirements do not apply to: ? an urgent necessity; ? acquisition of educational materials used for teaching; ? any item which the Board, by a two-thirds vote, determines is available and can be obtained only through a single source; ? energy conservation measures, with the approval of two-thirds of the Board; ? acquisition of computer software or hardware for instructional purposes; or, ? School districts that participate in a joint purchasing contract are exempt from using competitive bidding. For one out of four vendors tested during our procurement testing of the Nutrition Cluster, the District did not maintain written justification documenting the history of the procurement. The vendor performed repairs on kitchen equipment totaling $37,382. The procurement was within the simplified acquisition threshold and quotes should have been obtained. The justification for using the vendor was provided verbally during the audit, with the District indicating the vendor was selected because of quick response time, past visits, and availability. Additionally, the District paid $303,004 for a roof replacement using Education Stabilization Fund- Elementary and Secondary School Emergency Relief (ESSER II) funds, which would be required to be competitively bid under the Ohio Rev. Code ? 3313.46 and 2 CFR 200.320. The District could not provide us with the following documentation: proof of the advertisement for bids of the project in a newspaper of general circulation in the District and/or advertisement of the project on the District?s website, the Board resolution approving the award of the contract, and the bid packages submitted from the losing bidders. Because of the lack of available documentation, the District was in non-compliance of the Federal procurement and Ohio competitive bidding requirements. Both of the issues noted above were due to a lack of internal controls regarding Federal procurement at the District. The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, either because they are from a sole source provider or due to emergency or exigent circumstances are documented and maintain written documentation of such procedures. The District should also amend their procurement policy to indicate the number of quotations required when using the simplified acquisition threshold.
Significant Deficiency ? Item No. 2022-003 Identification of the Federal Program: U.S. Department of Agriculture ? Community Facilities Loans and Grants Cluster, Community Facilities Loans and Grants ? 10.766 Criteria: The Hospital must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Hospital is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with program requirements. Terms and conditions of the federal award require the audited financial statements to be provided to the federal agency annually within 9 months of fiscal year-end, as well as an annual budget and quarterly reports. Condition: The Hospital did not submit the audited financial statements, budget, or quarterly reports within the prescribed period or request an extension. The audit financial statements are readily available to the federal agency through the federal clearinghouse website. The budget and quarterly reports were submitted late. Cause: The Hospital did not have a control in place to assure proper submission or the reports. Effect: The required reports were not submitted timely to the federal agency. Questioned Costs: None reported. Context: Sampling was not used. Recommendation: We recommend that management implement procedures to ensure that the required financial reports are submitted in a timely manner in accordance with the terms and conditions of the federal award. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
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 200.317 through 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. 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); 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 four circumstances are met, in accordance with 2 CFR 200.320(c). All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). During testing of federal compliance, the Center was unable to provide evidence of competitive bidding of a contract nor was a copy of the final contract maintained. As such, we were unable to determine whether the required prevailing wage rate clauses were included in the contract. Further, certified payrolls could not be provided for the projects subject to the contract to indicate that the Center was properly monitoring for prevailing wage requirements. The Center should implement additional procedures to ensure competitive bidding is undertaken when required and that documentation for such processes is maintained; copies of executed contracts are maintained; and documentation is received and reviewed to monitor compliance with prevailing wage rate requirements, when applicable.
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 200.317 through 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. 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); 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 four circumstances are met, in accordance with 2 CFR 200.320(c). All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). During testing of federal compliance, the Center was unable to provide evidence of competitive bidding of a contract nor was a copy of the final contract maintained. As such, we were unable to determine whether the required prevailing wage rate clauses were included in the contract. Further, certified payrolls could not be provided for the projects subject to the contract to indicate that the Center was properly monitoring for prevailing wage requirements. The Center should implement additional procedures to ensure competitive bidding is undertaken when required and that documentation for such processes is maintained; copies of executed contracts are maintained; and documentation is received and reviewed to monitor compliance with prevailing wage rate requirements, when applicable.
FINDING NO. 2022-001 PROCUREMENT (SIGNIFICANT DEFICIENCY) FEDERAL PROGRAM OR CLUSTER: CRIME VICTIM ASSISTANCE ASSISTANCE LISTING NUMBER: 16.575 Criteria Per 2 CFR 200.318, ?The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?200.317 through 200.327.? Condition Prevail does not have a documented procurement policy to ensure it is complying with the above standard. Cause A responsible individual is not monitoring Federal regulations to ensure Prevail?s procurement procedures are properly documented and in line with the regulations. Effect Not documenting these procedures could result in Prevail completing procurement transactions not in compliance with Federal regulations. Additionally, Prevail does not include the requirement to check for suspension or debarment of vendors, as required by Federal regulations. Recommendation We recommend Prevail develop a written procurement policy incorporating the Federal regulations identified above. Views of Responsible Officials Prevail?s Corrective Action Plan is included on page 32.
FINDING NO. 2022-001 PROCUREMENT (SIGNIFICANT DEFICIENCY) FEDERAL PROGRAM OR CLUSTER: CRIME VICTIM ASSISTANCE ASSISTANCE LISTING NUMBER: 16.575 Criteria Per 2 CFR 200.318, ?The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?200.317 through 200.327.? Condition Prevail does not have a documented procurement policy to ensure it is complying with the above standard. Cause A responsible individual is not monitoring Federal regulations to ensure Prevail?s procurement procedures are properly documented and in line with the regulations. Effect Not documenting these procedures could result in Prevail completing procurement transactions not in compliance with Federal regulations. Additionally, Prevail does not include the requirement to check for suspension or debarment of vendors, as required by Federal regulations. Recommendation We recommend Prevail develop a written procurement policy incorporating the Federal regulations identified above. Views of Responsible Officials Prevail?s Corrective Action Plan is included on page 32.
FINDING 2022-004 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 Number and Year (or Other Identifying Number): FY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement The School Corporation did not obtain price or rate quotes for purchases of milk, bread, or food exceeding $10,000 from an adequate number of sources, which fell under the small purchase procedures. Two of the three vendors for small purchase procurements tested did not comply. Suspension and Debarment The School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs. All four of the contracts tested did not comply. The lack of internal controls and noncompliance were isolated to fiscal year 2021-2022. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the Simplified Acquisition Threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not established a system of internal control that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could 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 a system of internal control to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.