Finding 1206435 (2025-001)

2025 – 001 Federal Agency: U.S. Department of Agriculture Federal Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Federal Award Identification Number and Year: 142607000-2025 Pass-Through Agency: State of Arizona Department of Education Award Period: 07/01/2024 – 06/30/2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per 2 CFR 200.303(a), WACOG must establish and maintain effective internal control over the Federal award. WACOG Finance Policies & Procedures requires periodic vendor due diligence, including evaluation of multiple prequalified contractors and confirmation of suspension and debarment status, to ensure compliance with procurement standards and eligibility requirements. Condition: Per WACOG Finance Policies & Procedures, the entity is required to perform vendor due diligence at least once every three years. Due diligence procedures include, at a minimum, (1) evaluation of at least two pre-qualified contractors and (2) verification that vendors are not suspended or debarred. For the single vendor tested, sufficient documentation and support for evidence of vendor due diligence was not furnished. Questioned costs: No questioned costs noted. Context: WACOG utilized cooperative contracts and external vendors to support program operations during the audit period. Per WACOG Finance Policies & Procedures, vendors used by the entity are subject to periodic due diligence requirements designed to ensure continued eligibility and compliance with procurement standards. These procedures are intended to be performed at least once every three years and documented to support ongoing vendor use. Cause: Program management encountered internal changes and due diligence procedures were performed informally, resulting in supporting documentation not being retained in a central or systematic manner. Effect: WACOG is not in compliance with its established procurement policies related to vendor due diligence and suspension and debarment requirements. Failure to document these procedures increases the risk of continued engagement with ineligible vendors and noncompliance with internal control expectations. Repeat Finding: No. Recommendation: WACOG should enhance internal procedures related to the continued review and monitoring of vendors used under cooperative contracts. Management should implement standardized checklists and maintain a centralized repository for documenting vendor due diligence activities, including prequalification evaluations and suspension and debarment verifications. Views of responsible officials: There is no disagreement with the audit finding.