Finding Text
FINDING 2024-004
Subject: Child Nutrition Cluster - Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program,
Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY22-23, FY23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
An effective system of internal controls 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.
Prior to entering into subawards and covered transactions with federal award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the SAM exclusions, collecting a certification from that person,
or adding a clause or condition to the covered transaction with that person.
INDIANA STATE BOARD OF ACCOUNTS
20
NORTH NEWTON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
A population of two covered transactions for purchases that equaled or exceeded $25,000 paid
from the School Lunch fund were identified. The transactions totaling $76,138 were tested; however, the
School Corporation did not verify the suspension and debarment status prior to entering into the contracts.
The lack of internal controls and noncompliance 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 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
The School Corporation's process was to check for SAM Exclusions, collect a certification from the
vendor, or add a clause or condition to the covered transaction with the vendor. However, the SAM
exclusion check process was not properly implemented for the vendors tested nor was a certification
collected, or a clause or condition added to the covered transaction.
Effect
Noncompliance with the grant agreement and the compliance requirement could result in the
repayment of federal funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the School Corporation's management evaluate the procedures established
to ensure processes are functioning as intended to prevent, or detect and correct, material noncompliance.
INDIANA STATE BOARD OF ACCOUNTS
21
NORTH NEWTON SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.