Finding 1106210 (2024-001)

Material Weakness
Requirement
I
Questioned Costs
$1
Year
2024
Accepted
2025-03-24
Audit: 347727
Organization: Monticello Academy, INC (UT)

AI Summary

  • Core Issue: The School failed to maintain proper documentation for procurement, leading to payments for fraudulent charges totaling $62,246.
  • Impacted Requirements: Compliance with federal procurement standards (2 CFR sections 200.317-326) was not met, specifically regarding documentation of procurement history.
  • Recommended Follow-Up: The School should enhance its documentation practices and regularly monitor compliance to prevent future issues.

Finding Text

.S. Department of Education passed through State of Utah Board of Education 2024-001 Procurement and Suspension and Debarment Program Name of Federal Program (Assistance Listing Number) Child Nutrition Cluster: School Breakfast Program (10.553) National School Lunch Program (10.555) Criteria - Recipients of federal awards must follow the procurement standards set out at 2 CFR section 200.317 through 200.326. They must use their own documented procurement procedures, which reflect applicable State laws and regulations, provided that the procedures conform to applicable Federal law and the procurement requirements identified in 2 CFR part 200. Recipients “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 section 200.318(i). The School’s procurement procedures include the requirement to maintain sufficient documentation of the history of procurement. The School also has procedures to identify procurement transactions requiring competitive bids or proposals. Context and Condition - We selected three contracts to test for compliance with procurement standards. Records for one contract lacked documentation sufficient to detail procurement history. Upon further investigation, the School determined that the vendor in question was a fraudulent vendor and transactions charged to this vendor for the program were all fraudulent charges. Of the $738,725 charged to the child nutrition program on the Annual Program Report (APR) submitted to the Utah State Board of Education for the year ended June 30, 2024, $62,246 (8%) were fraudulent charges. Cause - The School did not follow its documentation policy for obtaining contracts or bids. Effect - The School paid this vendor $62,246 for goods that were not provided during the year ended June 30, 2024. Questioned Costs - $62,246 – This amount represents the costs that were charged to the federal award but did not meet program requirements and are considered fraudulent transactions. Repeat finding - No Statistically valid - Yes Recommendation - We recommend the School ensures it 1) maintains documentation of the history of procurement and 2) monitors compliance with documentation requirements. Views of responsible officials - The School will review its procurement policies and internal controls and ensure timely action is taken when noncompliance is identified.

Categories

Questioned Costs Procurement, Suspension & Debarment School Nutrition Programs

Other Findings in this Audit

  • 529767 2024-001
    Material Weakness
  • 529768 2024-001
    Material Weakness
  • 1106209 2024-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program $345,243
84.027 Special Education Grants to States $189,492
84.010 Title I Grants to Local Educational Agencies $157,867
84.424 Student Support and Academic Enrichment Program $67,824
10.553 School Breakfast Program $54,192
84.425 Education Stabilization Fund $26,418
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $25,699
84.365 English Language Acquisition State Grants $14,347
84.173 Special Education Preschool Grants $4,080
10.649 Pandemic Ebt Administrative Costs $653