Finding Text
Material Weakness in Internal Control over Compliance and Material Noncompliance - Child Nutrition Cluster Criteria: Federal regulations require non-federal entities to follow specific procurement standards when making purchases with federal award funds: • 2 CFR 200.320 requires the use of specific procurement methods (micro-purchase, small purchase, sealed bids, competitive proposals, etc.) based on the value of the transaction. • 2 CFR 200.318 requires the District to maintain oversight that ensures contractors perform in accordance with terms, conditions, and specifications. • 2 CFR 200.319 requires full and open competition and prohibits practices that restrict competition. • 2 CFR 200.324 requires cost or price analysis for certain procurements. • 2 CFR 200.213 requires verification that contractors are not suspended or debarred Condition: During testing of procurement transactions charged to the Child Nutrition Cluster, we noted that the District did not consistently follow the federal procurement standards required by 2 CFR 200.318-327. Specifically: The District did not obtain the required number of price or rate quotations for purchases exceeding the micro-purchase threshold. • For procurements that exceeded the simplified acquisition threshold, the District did not maintain documentation supporting full and open competition. • In several cases, the District was unable to provide evidence that vendors were verified against the SAM.gov exclusion list prior to contract award. • Procurement files did not contain required elements such as cost/price analysis, written procurement method selection, or justification for sole-source procurements. The transactions identified totaled approximately $50,000, which represents a material portion of federal expenditures tested under this major program. Cause: The District did not employ adequate internal controls to ensure that all federally funded procurements consistently followed the federal procurement standards. Staff turnover and insufficient training regarding federal procurement requirements also contributed to the deficiencies. Recommendation: We recommend that the School District design and follow internal controls to ensure proper procurement procedures are followed to comply with Uniform Guidance standards. Effect: Failure to follow federal procurement requirements increases the risk of: • Noncompliance with the Uniform Guidance, • Potential favoritism or lack of competition, • Unallowable costs being charged to federal programs, and • Federal funds being used inefficiently or in a manner inconsistent with federal regulations. The nature and extent of the exceptions identified represent a material weakness in internal control and material noncompliance with procurement requirements. Views of Responsible Official and Planned Corrective Action: See corrective action plan included in this report package.