Condition: Management of the District did not formally document or record the procurement and purchase of electric school buses with Clean School Bus Program grant to evidence compliance with procurement and reporting requirements of grant. The District did not formally accept and authorize with a resolution of the board of education: 1) a subrecipient grant agreement for Clean School Bus Program grant with Van-Con, Inc., a for profit entity; nor 2) the procurement, contract award, and purchase of electric school buses from Van-Con, Inc. using such Clean School Program grant funds. Criteria: Contracts in excess of bid thresholds pursuant to (N.J.S.A. 18A:l8A-2 and 18A:18A-3(a) are required to be advertised for bids in accordance with the provision of Public School Contracts Law (N.J.S.A. 18A:18A-4). The Uniform Guidance, requires grant recipients use their own documented procurement procedures, which reflect 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. Context: The District received a payment of $2,859,449 from Van-Con, Inc that was subsequently paid to Van-Con, Inc as a reimbursement as described on purchase order and accounting of grant in the District’s financial reporting system. Cause: The District formally approved and authorized Van-Con, Inc. as applicant of Clean School Bus Program grant to include the District on its application as a third party among other third parties. Van Con, Inc. was awarded the Clean School Bus Program grant on September 30, 2024 and accepted with a formal grant agreement. On May 7, 2025, Van Con, Inc. provided the District an invoice stipulating a vehicle purchase contract where the downpayment of 70% is due and payable upon receipt of grant funds from Van-Con, Inc. under Clean School Bus Program. On June 3, 2025, the District received payment of $2,859,449 from Van-Con, Inc. On June 26, 2025, the District paid Van-Con, Inc. the same amount of $2,859,449, as a reimbursement as described on purchase order and accounting of grant in the District’s financial reporting system. After independent audit inquiries, the District provided a grant sub-agreement with Van Con, Inc. dated November 18, 2025. The grant sub-agreement stipulates that the District understands and agrees to comply with federal procurement requirements and how it may procure allowable purchases using available grant funds. The grant sub-agreement is not a purchase agreement with Van-Con, Inc. nor does is stipulate that it must purchase from Van-Con, Inc. No further formal documentation was provided at the time of the audit. Effect: It cannot be determined whether the grant sub-agreement with Van-Con, Inc. is valid without approval and authorization from the board of education. It cannot be determined whether the payment to Van-Con, Inc. was a purchase or reimbursement without formal documentation by management and approval and authorization from the board of education. If the payment to Van-Con, Inc. is determined to be a purchase, compliance with procurement laws and regulations cannot be determined without formal documentation by management and approval and authorization from the board of education. Questioned Costs: None. Recommendation: The District review and either nullify or accept and authorize with a resolution of the board of education: 1) a subrecipient grant agreement for Clean School Bus Program grant with Van-Con, Inc., a for profit entity; and 2) the procurement, contract award, and purchase of electric school buses from Van-Con, Inc. using such Clean School Program grant funds. If a contract is awarded with grant funds, such contract be properly encumbered in the District’s financial reporting system. View of Responsible Official and Planned Corrective Action (Unaudited): The District will review the agreement and transactions with Van-Con, Inc and will take appropriate formal action.