Finding Text
U.S. Department of Agriculture 2025-008 Weakness in Internal Control Over Compliance of Suspension and Debarment Federal Program: Child Nutrition Cluster — USDA Commodities (15.550), School Breakfast Program (10.553), National School Lunch Program (10.555), Summer Food Service Program for Children (10.559) Grant Period: Year Ended June 30, 2025; Pass-through Entity: Louisiana Department of Education Condition: During review of transactions entered into during the audit period under the Child Nutrition Cluster, the School Board did not have internal controls adequately designed to ensure verification of suspension and debarment status for all covered transactions. While the Child Nutrition Cluster maintains a separate Procurement Plan that includes suspension and debarment requirements, those requirements are explicitly stated only within the formal procurement and formal bid provisions of the plan. The Procurement Plan does not clearly state that nonprocurement suspension and debarment requirements apply to all covered transactions, including those executed through micro‑purchase and small purchase procurement methods, even though federal regulations require these prohibitions to apply regardless of procurement method. Audit testing determined that no vendors were suspended or debarred during the period tested; however, the absence of clearly designed controls applicable to all procurement methods increases the risk of noncompliance in the future. Criteria: The requirements for nonprocurement suspension and debarment are contained in Office of Management and Budget (OMB) guidance at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension,” and are adopted by federal agencies through 2 CFR Part 200, applicable program legislation, and the terms and conditions of the federal award. When a recipient or subrecipient enters into a covered transaction with an entity at a lower tier, the recipient or subrecipient must verify that the entity, as defined in 2 CFR § 180.995 and the applicable agency adopting regulations, is not suspended, debarred, or otherwise excluded from participation in the transaction. Verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions, (2) obtaining a written certification from the entity, or (3) including a clause or condition in the covered transaction with that entity (2 CFR § 180.300). These requirements apply to all covered transactions regardless of procurement method, as further described in the OMB Compliance Supplement. Cause of Condition: Review of the Child Nutrition Procurement Plan and procurement activity indicated that internal controls were not adequately designed to clearly apply nonprocurement suspension and debarment verification requirements to all covered transactions, including those executed through micro‑purchase and small purchase procurement methods. As a result, controls were not consistently designed to ensure compliance with federal suspension and debarment requirements for all covered transactions under the Child Nutrition Cluster. Potential Effect of Condition: Although no vendors were identified that were suspended or debarred during the period tested, the absence of clearly designed and implemented verification controls applicable to all covered transactions, including those executed through various procurement methods, increases the risk that the School Board could enter into transactions with ineligible vendors in the future. Such transactions could result in noncompliance with applicable federal requirements and may expose the School Board to potential repayment of questioned costs, withholding of funding, or other administrative remedies should noncompliance occur. Recommendation: Management should revise the Child Nutrition Procurement Plan to clearly require verification of suspension and debarment status for all covered transactions, including those executed through micro‑purchase and small purchase procurement methods. In addition, management should design, implement, and maintain effective internal controls to ensure suspension and debarment verifications are performed and documented for all applicable vendors prior to entering into covered transactions under the Child Nutrition Cluster. Management’s Response: Management agrees with the finding and will update the Child Nutrition Procurement Plan and related procedures to ensure suspension and debarment requirements are clearly applied to all covered transactions, including those executed through various procurement methods. Management will also work to design and implement internal controls to ensure suspension and debarment verifications are consistently performed and documented for covered transactions under the Child Nutrition Cluster.