FINDING 2024-001
Subject: Child Nutrition Cluster
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children, Fresh Fruit
and Vegetable Program
Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582
Federal Award Numbers and Years (or Other Identifying Numbers): FY23 & FY24, FY24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
The School Corporation had not properly designed or implemented a system of internal controls,
which would include appropriate segregation of duties, that would likely be effective in preventing, or
detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment
compliance requirement.
Prior to entering into subawards and covered transactions with federal award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor,
or adding a clause or condition to the covered transaction with that vendor.
During the audit period, the School Corporation had expenditures exceeding $25,000 for one
vendor. For this vendor, there was no evidence provided for audit to verify that the vendor was verified to
not be suspended, debarred, or otherwise excluded, prior to entering into the transaction.
The lack of internal controls and noncompliance was isolated to FY24.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 16
GREENWOOD COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the SAM.gov Exclusions, or
(b) Collecting a certification from that person, or
(c) Adding a clause or condition to the covered transaction with that person."
2 CFR 180.220 states:
"(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."
Cause
Management had not developed or implemented a system of internal controls that would have
ensured compliance with the grant agreement and the Procurement and Suspension and Debarment
compliance requirement. This happened because of a change in staffing where more than one person
completed the process.
INDIANA STATE BOARD OF ACCOUNTS 17
GREENWOOD COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. Noncompliance with the Procurement and Suspension and Debarment compliance
requirement could result in a contract to be awarded to a company that was suspended and debarred.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the management of the School Corporation establish a proper 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.