Finding 25061 (2022-003)

Material Weakness
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2023-03-29

AI Summary

  • Core Issue: The School Corporation lacked effective internal controls for procurement and vendor verification, leading to noncompliance with federal grant requirements.
  • Impacted Requirements: Compliance with procurement procedures for purchases over $150,000 and verification of vendors to ensure they are not suspended or debarred.
  • Recommended Follow-Up: Management should implement a robust internal control system to ensure adherence to grant agreements and compliance requirements.

Finding Text

FINDING 2022-003 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program, COVID-19 - Summer Food Service for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 20-21, FY 21-22 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 MILAN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement The School Corporation did not properly design and implement internal controls to ensure that procurement requirements for purchases of food which exceeded the simplified acquisition threshold of $150,000 were followed. The School Corporation did not have internal controls in place to ensure that price or rate quotes for purchases of milk, produce, or food exceeding $10,000 from an adequate number of sources were obtained, which fell under the small purchase procedures. Suspension and Debarment There were no internal controls in place to ensure that vendors were not suspended or debarred from participation in federal programs. The School Corporation did not perform procedures to verify that vendors paid with federal grant monies were not suspended or debarred from participation in federal programs before entering into a covered transaction. As a result, one of the two vendors tested for FY 20-21, and two of the three vendors tested for FY 21-22, did not include evidence the School Corporation had verified that the vendors were not suspended or debarred. The lack of internal controls and noncompliance for suspension and debarment 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 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 18 MILAN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Categories

Procurement, Suspension & Debarment School Nutrition Programs

Other Findings in this Audit

  • 25058 2022-002
    Material Weakness
  • 25059 2022-003
    Material Weakness
  • 25060 2022-002
    Material Weakness
  • 25062 2022-002
    Material Weakness
  • 25063 2022-003
    Material Weakness
  • 25064 2022-002
    Material Weakness
  • 25065 2022-003
    Material Weakness
  • 25066 2022-002
    Material Weakness
  • 25067 2022-003
    Material Weakness
  • 25068 2022-002
    Material Weakness
  • 25069 2022-003
    Material Weakness
  • 25070 2022-002
    Material Weakness
  • 25071 2022-003
    Material Weakness
  • 25072 2022-002
    Material Weakness
  • 25073 2022-003
    Material Weakness
  • 601500 2022-002
    Material Weakness
  • 601501 2022-003
    Material Weakness
  • 601502 2022-002
    Material Weakness
  • 601503 2022-003
    Material Weakness
  • 601504 2022-002
    Material Weakness
  • 601505 2022-003
    Material Weakness
  • 601506 2022-002
    Material Weakness
  • 601507 2022-003
    Material Weakness
  • 601508 2022-002
    Material Weakness
  • 601509 2022-003
    Material Weakness
  • 601510 2022-002
    Material Weakness
  • 601511 2022-003
    Material Weakness
  • 601512 2022-002
    Material Weakness
  • 601513 2022-003
    Material Weakness
  • 601514 2022-002
    Material Weakness
  • 601515 2022-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.027 Special Education_grants to States Fy 22 $278,212
84.027 Special Education_grants to States Fy 21 $244,393
84.010 Title I Grants to Local Educational Agencies Fy 22 $191,228
84.425 Education Stabilization Fund Fy 22 $113,880
10.553 School Breakfast Program Fy 22 $105,859
10.555 National School Lunch Program Fy 21 $61,574
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance Fy 22 $59,968
84.010 Title I Grants to Local Educational Agenciesfy 21 $44,893
84.367 Improving Teacher Quality State Grants Fy 22 $28,944
10.555 National School Lunch Program Fy 22 $28,460
10.553 School Breakfast Program Fy 21 $14,414
93.778 Medical Assistance Program Fy 21 $13,857
84.424 Student Support and Academic Enrichment Program Fy 21 $10,000
93.778 Medical Assistance Program Fy 22 $9,748
10.559 Summer Food Service Program for Children Fy 22 $9,607
10.649 Pandemic Ebt Administrative Costsfy 22 $614
84.173 Special Education_preschool Grants Fy 21 $155