FAC Explorer

Finding 1238882 (2025-013)

Material Weakness Repeat Finding
Requirement
I
Questioned Costs
-
Year
2025
Accepted
2026-09-30
Audit: 413792
Organization: South Bend Community School Corporation (IN)
Auditor: INDIANA STATE BOARD OF ACCOUNTS

AI Summary

  • Core Issue: The School Corporation failed to follow proper procurement procedures, resulting in noncompliance with federal and state regulations.
  • Impacted Requirements: Internal controls were inadequate, leading to violations of procurement methods for both small purchases and those exceeding the simplified acquisition threshold.
  • Recommended Follow-Up: Implement stronger internal controls and ensure compliance with procurement policies to avoid future violations and improve oversight.

Finding Text

FINDING 2025-013 Subject: Gaining Early Awareness and Readiness for Undergraduate Programs - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Gaining Early Awareness and Readiness for Undergraduate Programs Assistance Listings Number: 84.334 Federal Award Number and Year (or Other Identifying Number): P334A210080 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. When the value of the procurement for property or services exceeds the simplified acquisition threshold, formal procurement methods are required. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure it complied with the procurement compliance requirement for small purchase and simplified acquisition procurement methods. During the audit period, the School Corporation paid 40 vendors from the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) that fell into the small purchase threshold. Of those 40 vendors 3 vendors were tested. All 3 vendors did not have any rate quotes from qualified sources. The total dollar amount paid to these three vendors was $156,175. INDIANA STATE BOARD OF ACCOUNTS 47 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation had two vendors during the audit period, which exceeded the simplified acquisition threshold that were paid from the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP). Both vendors were tested and it was determined that the School Corporation did not follow the formal procurement method of sealed bids or competitive proposals, nor was a circumstance documented that would have allowed for noncompetitive procurement for the purchases. The total dollar amount paid to these vendors was $724,290. In addition, the School Corporation did not follow its own purchasing policy #6325, in which the School Corporation had set a threshold of $3,500 for small purchases. The lack of internal controls and noncompliance were 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 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. INDIANA STATE BOARD OF ACCOUNTS 48 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for vendors that fell within the small purchase and the exceeded simplified acquisition thresholds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement an effective internal control system over small purchases and purchases exceeding the simplified acquisition threshold to ensure compliance with federal grant requirements. Appropriate documentation should be maintained to ensure the procurement methods are being followed. INDIANA STATE BOARD OF ACCOUNTS 49 SOUTH BEND COMMUNITY 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.

Corrective Action Plan

FINDING 2025-013 Finding Subject: Gaining Early Awareness and Readiness for Undergraduate Programs – Procurement, Suspension, Debarment Contact Person Responsible for Corrective Action: Chad Addie, Ahnaf Tahmid & Marlaina Johns Contact Phone Number and Email Address: 574-393-6000, caddie@sbcsc.k12.in.us, atahmid@sbcsc.k12.in.us, mjohns2@sbcsc.k12.in.us Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: Enforced updated Internal Controls Manual purchasing thresholds and pre-approval workflows. Executing a multi-step resolution: board approval workflows established in 2025–2026, proper procurement/bidding compliance expanded through 2026–2027, and updating board policy to enforce uniform federal guidelines in 2026–2027. Anticipated Completion Date: June 30, 2027

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 1238847 2025-003
    Material Weakness Repeat
  • 1238848 2025-003
    Material Weakness Repeat
  • 1238849 2025-003
    Material Weakness Repeat
  • 1238850 2025-003
    Material Weakness Repeat
  • 1238851 2025-003
    Material Weakness Repeat
  • 1238852 2025-003
    Material Weakness Repeat
  • 1238853 2025-003
    Material Weakness Repeat
  • 1238854 2025-004
    Material Weakness Repeat
  • 1238855 2025-004
    Material Weakness Repeat
  • 1238856 2025-004
    Material Weakness Repeat
  • 1238857 2025-004
    Material Weakness Repeat
  • 1238858 2025-004
    Material Weakness Repeat
  • 1238859 2025-004
    Material Weakness Repeat
  • 1238860 2025-004
    Material Weakness Repeat
  • 1238861 2025-005
    Material Weakness Repeat
  • 1238862 2025-005
    Material Weakness Repeat
  • 1238863 2025-005
    Material Weakness Repeat
  • 1238864 2025-005
    Material Weakness Repeat
  • 1238865 2025-005
    Material Weakness Repeat
  • 1238866 2025-005
    Material Weakness Repeat
  • 1238867 2025-006
    Material Weakness Repeat
  • 1238868 2025-006
    Material Weakness Repeat
  • 1238869 2025-007
    Material Weakness Repeat
  • 1238870 2025-007
    Material Weakness Repeat
  • 1238871 2025-008
    Material Weakness Repeat
  • 1238872 2025-008
    Material Weakness Repeat
  • 1238873 2025-009
    Material Weakness Repeat
  • 1238874 2025-009
    Material Weakness Repeat
  • 1238875 2025-010
    Material Weakness Repeat
  • 1238876 2025-010
    Material Weakness Repeat
  • 1238877 2025-011
    Material Weakness Repeat
  • 1238878 2025-011
    Material Weakness Repeat
  • 1238879 2025-012
    Material Weakness Repeat
  • 1238880 2025-012
    Material Weakness Repeat
  • 1238881 2025-013
    Material Weakness Repeat
  • 1238883 2025-014
    Material Weakness Repeat
  • 1238884 2025-014
    Material Weakness Repeat
  • 1238885 2025-015
    Material Weakness Repeat
  • 1238886 2025-015
    Material Weakness Repeat
  • 1238887 2025-016
    Material Weakness Repeat
  • 1238888 2025-016
    Material Weakness Repeat
  • 1238889 2025-017
    Material Weakness Repeat
  • 1238890 2025-017
    Material Weakness Repeat
  • 1238891 2025-018
    Material Weakness Repeat
  • 1238892 2025-018
    Material Weakness Repeat
  • 1238893 2025-019
    Material Weakness Repeat
  • 1238894 2025-019
    Material Weakness Repeat
  • 1238895 2025-019
    Material Weakness Repeat
  • 1238896 2025-019
    Material Weakness Repeat
  • 1238897 2025-019
    Material Weakness Repeat
  • 1238898 2025-019
    Material Weakness Repeat
  • 1238899 2025-019
    Material Weakness Repeat
  • 1238900 2025-019
    Material Weakness Repeat
  • 1238901 2025-020
    Material Weakness Repeat
  • 1238902 2025-020
    Material Weakness Repeat
  • 1238903 2025-020
    Material Weakness Repeat
  • 1238904 2025-020
    Material Weakness Repeat
  • 1238905 2025-020
    Material Weakness Repeat
  • 1238906 2025-020
    Material Weakness Repeat
  • 1238907 2025-020
    Material Weakness Repeat
  • 1238908 2025-020
    Material Weakness Repeat
  • 1238909 2025-021
    Material Weakness Repeat
  • 1238910 2025-021
    Material Weakness Repeat
  • 1238911 2025-021
    Material Weakness Repeat
  • 1238912 2025-021
    Material Weakness Repeat
  • 1238913 2025-021
    Material Weakness Repeat
  • 1238914 2025-022
    Material Weakness Repeat
  • 1238915 2025-022
    Material Weakness Repeat
  • 1238916 2025-022
    Material Weakness Repeat
  • 1238917 2025-023
    Material Weakness Repeat
  • 1238918 2025-023
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES 2024 $11.75M
10.555 NATIONAL SCHOOL LUNCH PROGRAM 2024 $9.52M
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES 2025 $8.27M
10.555 NATIONAL SCHOOL LUNCH PROGRAM 2025 $8.02M
84.027 SPECIAL EDUCATION GRANTS TO STATES 2025 $4.53M
84.374 TEACHER AND SCHOOL LEADER INCENTIVE GRANTS (FORMERLY THE TEACHER INCENTIVE FUND) 2024 $3.40M
10.553 SCHOOL BREAKFAST PROGRAM 2024 $3.00M
10.553 SCHOOL BREAKFAST PROGRAM 2025 $2.41M
84.334 GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE PROGRAMS 2024 $1.83M
84.184 SCHOOL SAFELY NATIONAL ACTIVITIES 2024 $1.69M
84.334 GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE PROGRAMS 2025 $1.63M
84.367 SUPPORTING EFFECTIVE INSTRUCTION STATE GRANTS (FORMERLY IMPROVING TEACHER QUALITY STATE GRANTS) 2024 $1.11M
84.336 TEACHER QUALITY PARTNERSHIP GRANTS 2024 $1.05M
84.336 TEACHER QUALITY PARTNERSHIP GRANTS 2025 $1.01M
10.558 CHILD AND ADULT CARE FOOD PROGRAM 2024 $957,987
84.011 MIGRANT EDUCATION STATE GRANT PROGRAM 2024 $929,569
84.215 INNOVATIVE APPROACHES TO LITERACY; PROMISE NEIGHBORHOODS; FULL-SERVICE COMMUNITY SCHOOLS; AND CONGRESSIONALLY DIRECTED SPENDING FOR ELEMENTARY AND SECONDARY EDUCATION COMMUNITY PROJECTS 2024 $910,537
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) 2024 $881,458
84.184 SCHOOL SAFELY NATIONAL ACTIVITIES 2025 $855,321
84.051 CAREER AND TECHNICAL EDUCATION -- NATIONAL PROGRAMS 2025 $839,868
10.558 CHILD AND ADULT CARE FOOD PROGRAM 2025 $707,849
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM 2024 $698,029
32.004 UNIVERSAL SERVICE FUND - SCHOOLS AND LIBRARIES 2024 $689,885
84.011 MIGRANT EDUCATION STATE GRANT PROGRAM 2025 $639,019
84.215 INNOVATIVE APPROACHES TO LITERACY; PROMISE NEIGHBORHOODS; FULL-SERVICE COMMUNITY SCHOOLS; AND CONGRESSIONALLY DIRECTED SPENDING FOR ELEMENTARY AND SECONDARY EDUCATION COMMUNITY PROJECTS 2025 $610,051
93.778 GRANTS TO STATES FOR MEDICAID 2024 $518,707
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM 2025 $456,802
84.367 SUPPORTING EFFECTIVE INSTRUCTION STATE GRANTS (FORMERLY IMPROVING TEACHER QUALITY STATE GRANTS) 2025 $408,733
93.778 GRANTS TO STATES FOR MEDICAID 2025 $402,182
84.048 CAREER AND TECHNICAL EDUCATION -- BASIC GRANTS TO STATES 2024 $346,769
84.027 SPECIAL EDUCATION GRANTS TO STATES 2024 $340,862
84.365 ENGLISH LANGUAGE ACQUISITION STATE GRANTS 2024 $328,319
84.048 CAREER AND TECHNICAL EDUCATION -- BASIC GRANTS TO STATES 2025 $308,148
10.559 SUMMER FOOD SERVICE PROGRAM FOR CHILDREN 2025 $270,301
32.004 UNIVERSAL SERVICE FUND - SCHOOLS AND LIBRARIES 2025 $262,809
10.559 SUMMER FOOD SERVICE PROGRAM FOR CHILDREN 2024 $217,903
84.002 ADULT EDUCATION - BASIC GRANTS TO STATES 2024 $209,421
84.365 ENGLISH LANGUAGE ACQUISITION STATE GRANTS 2025 $206,296
84.002 ADULT EDUCATION - BASIC GRANTS TO STATES 2025 $146,692
84.374 TEACHER AND SCHOOL LEADER INCENTIVE GRANTS (FORMERLY THE TEACHER INCENTIVE FUND) 2025 $131,008
93.566 REFUGEE AND ENTRANT ASSISTANCE STATE/REPLACEMENT DESIGNEE ADMINISTERED PROGRAMS 2024 $120,657
84.173 SPECIAL EDUCATION PRESCHOOL GRANTS 2025 $114,612
84.425 EDUCATION STABILIZATION FUND 2025 $78,748
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE 2024 $57,647
84.196 EDUCATION FOR HOMELESS CHILDREN AND YOUTH 2025 $35,554
84.051 CAREER AND TECHNICAL EDUCATION -- NATIONAL PROGRAMS 2024 $29,386
84.425 EDUCATION STABILIZATION FUND 2024 $27,119
93.566 REFUGEE AND ENTRANT ASSISTANCE STATE/REPLACEMENT DESIGNEE ADMINISTERED PROGRAMS 2025 $26,191
10.582 FRESH FRUIT AND VEGETABLE PROGRAM 2024 $13,468
84.173 SPECIAL EDUCATION PRESCHOOL GRANTS 2024 $7,749