Finding 25575 (2022-002)

Significant Deficiency

Requirement

Questioned Costs

Year

2022

Accepted

2023-03-13

Audit: 18536

Organization: Independent School District No. 280 (MN)

Auditor: Malloy Montague Karnowski Radosevich & CO P A

AI Summary

Core Issue: The District lacks adequate controls to ensure it does not contract with vendors who are suspended or debarred from federal programs.
Impacted Requirements: Compliance with 2 CFR 180, which mandates effective internal controls over federal program expenditures.
Recommended Follow-Up: Review and strengthen internal controls to verify vendor eligibility against the federal Excluded Parties List for contracts over $25,000.

Finding Text

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE ? U.S. DEPARTMENT OF AGRICULTURE, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CHILD NUTRITION CLUSTER ? FEDERAL ALN 10.555, 10.553, AND 10.582; U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COVID-19 ? CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS ? FEDERAL ALN 21.027; AND U.S. DEPARTMENT OF EDUCATION, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COMPREHENSIVE LITERACY DEVELOPMENT ? FEDERAL ALN 84.371 2022-002 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria ? 2 CFR ? 180 requires the District to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including suspension and debarment requirements applicable to the child nutrition cluster, coronavirus state and local fiscal recovery funds, and comprehensive literacy development federal programs. Condition ? During our audit, we noted the District did not have sufficient controls in place within its child nutrition cluster, coronavirus state and local fiscal recovery funds, and comprehensive literacy development federal programs to assure that it was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Questioned Costs ? None. Our testing did not indicate any instances of noncompliance with these requirements. Context ? The District did not obtain the appropriate documentation for nine of nine vendors tested to ensure the vendors were not suspended or debarred from participation in federal program contracts. This was not a statistically valid sample. Repeat Finding ? This is a current year finding. Cause ? This was an oversight by district personnel. Effect ? Noncompliance with the procurement requirements could result in the District expending federal funds inappropriately or utilizing vendors that are not eligible to be parties to such transactions, which could be viewed as a violation of the award agreement. Recommendation ? We recommend that the District review its internal control procedures relating to suspension and debarment for all federal programs. Internal controls over compliance for this area should include verification that any vendor with which the District contracts for goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website. View of Responsible Official and Planned Corrective Actions ? The District agrees with the finding. The District will review and update its policies and procedures relating to suspension and debarment for its federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.

Corrective Action Plan

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE ? U.S. DEPARTMENT OF AGRICULTURE, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CHILD NUTRITION CLUSTER ? FEDERAL ALN 10.555, 10.553, AND 10.582; U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COVID-19 ? CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS ? FEDERAL ALN 21.027; AND U.S. DEPARTMENT OF EDUCATION, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COMPREHENSIVE LITERACY DEVELOPMENT ? FEDERAL ALN 84.371 2022-002 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Finding Summary 2 CFR ? 180 requires the District to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including applicable suspension and debarment requirements. The District did not have sufficient controls in place within its to the child nutrition cluster, coronavirus state and local fiscal recovery funds, and comprehensive literacy development federal programs to assure that it was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Corrective Action Plan Actions Planned ? The District will review policies and procedures relating to suspension and debarment for its federal programs and will ensure that all parties with which it contracts for goods or services are eligible to participate in contracts involving the expenditures of federal program funding. Official Responsible ? The District?s Director of Finance, James Gilligan. Planned Completion Date ? June 30, 2023. Disagreement With or Explanation of Finding ? The District agrees with this finding. Plan to Monitor ? The District?s Chief Administrative Officer, Craig Holje, will monitor the implementation of these corrective actions as determined by the Director of Finance to ensure appropriate controls are in place to verify that any vendor with which the District contracts for federal program goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website.

Other Findings in this Audit

25576 2022-002

Significant Deficiency
25577 2022-002

Significant Deficiency
25578 2022-002

Significant Deficiency
25579 2022-002

Significant Deficiency
25580 2022-002

Significant Deficiency
602017 2022-002

Significant Deficiency
602018 2022-002

Significant Deficiency
602019 2022-002

Significant Deficiency
602020 2022-002

Significant Deficiency
602021 2022-002

Significant Deficiency
602022 2022-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
10.555	National School Lunch Program	$2.17M
84.010	Title I Grants to Local Educational Agencies	$1.07M
10.553	School Breakfast Program	$929,591
84.371	Comprehensive Literacy Development	$807,604
32.009	Emergency Connectivity Fund Program	$313,512
93.323	Epidemiology and Laboratory Capacity for Infectious Diseases (elc)	$228,156
21.027	Coronavirus State and Local Fiscal Recovery Funds	$211,441
84.367	Supporting Effective Instruction State Grants	$144,801
84.027	Special Education_grants to States	$128,814
84.365	English Language Acquisition State Grants	$121,965
84.181	Special Education-Grants for Infants and Families	$80,057
10.582	Fresh Fruit and Vegetable Program	$69,823
84.287	Twenty-First Century Community Learning Centers	$65,058
20.205	Highway Planning and Construction	$61,625
10.558	Child and Adult Care Food Program	$55,839
84.425	Education Stabilization Fund	$25,445
84.173	Special Education_preschool Grants	$21,048
84.060	Indian Education_grants to Local Educational Agencies	$10,666
84.048	Career and Technical Education -- Basic Grants to States	$10,193
10.649	Pandemic Ebt Administrative Costs	$3,135