Finding 30701 (2022-003)

Material Weakness Repeat Finding
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2023-03-29
Audit: 26815
Auditor: Crowe LLP

AI Summary

  • Core Issue: The School Corporation lacks an effective internal control system for managing federal awards, leading to noncompliance with procurement requirements.
  • Impacted Requirements: Compliance with 2 CFR sections 200.303, 200.318, and 200.320 regarding procurement processes and record-keeping.
  • Recommended Follow-Up: Management should implement necessary controls to ensure compliance with grant agreements and procurement methods, as outlined in their corrective action plan.

Finding Text

FINDING 2022-003 Information on the federal program: Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553 and 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 200.318 states: "(i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states: "(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Condition: 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 requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: For the audit period, there were four vendors that fell within the small purchases procurement threshold. Small purchases are those vendors that the School Corporation has purchased between $10,000 - $150,000 of products and goods. During the testing of Procurement and Suspension and Debarment, we noted one instance in a sample of one, where the School Corporation did not obtain three price or rate quotations from other vendors or document the basis for purchasing form the vendor that was utilized. The School Corporation compared the prices from the selected vendor to one vendor from their purchasing cooperative but did not obtain any additional quotes to meet the three-quote requirement for the small purchases procurement threshold. The lack of controls and noncompliance occurred throughout the audit period. Identification as a repeat finding, if applicable: Yes. Was identified as finding 2020-001 in the prior audit. Recommendation: We recommended that the School Corporation's management establish controls related to the grant agreement and the small purchase procurement method of the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Corrective Action Plan

Information on the federal program: Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553 and 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition: 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 requirements. Context: For the audit period, there were four vendors that fell within the small purchases procurement threshold. Small purchases are those vendors that the School Corporation has purchased between $10,000 - $150,000 of products and goods. During the testing of Procurement and Suspension and Debarment, we noted one instance in a sample of one, where the School Corporation did not obtain three price or rate quotations from other vendors or document the basis for purchasing form the vendor that was utilized. The School Corporation compared the prices from the selected vendor to one vendor from their purchasing cooperative but did not obtain any additional quotes to meet the three-quote requirement for the small purchases procurement threshold. The lack of controls and noncompliance occurred throughout the audit period. Views of Responsible Official: We concur with the finding. Description of Corrective Action Plan: The Food Service Director (FSD) will obtain a minimum of three price or rate quotes for each vendor with expected purchases of $10,000 to $150,000 each school year. Those quotes may be from vendors within and/or outside of the purchasing cooperative. Those quotes will be sent to the Assistant Superintendent who will then present those quotes with a recommendation to the School Board at a meeting open to the public. The School Board will award the appropriate vendor with the purchase of goods for the school year. The discussion, vote and award will be noted in the minutes of the school board meeting. The Assistant Superintendent will notify the FSD of the school board?s decision via email with signed & dated quotes attached. The FSD will maintain copies of all quotes including the quotes that were not accepted in each school year folder. The FSD will send suspension & debarment documents to the Assistant Superintendent for review, signature and date within three business days of selection of the vendor. The Assistant Superintendent will return the suspension & debarment documents to the FSD within three business days of receipt of the documents. The FSD will maintain all reviewed, signed & dated documents in each school year folder. Responsible Party and Timeline for Completion: The corrective action plan will take effect immediately. All tasks will be completed before each new school year begins. The FSD is responsible to obtain three rate or price quotes. The FSD will conduct the suspension & debarment search. The FSD is responsible A District Accredited School Corporation Since 2007 to maintain the files for each school year. The FSD will send all required information to the Assistant Superintendent. The Assistant Superintendent will present and make recommendations to the School Board. The Assistant Superintendent will notify the FSD of the School Board?s decision. SUMMARY

Categories

Procurement, Suspension & Debarment School Nutrition Programs

Other Findings in this Audit

  • 30702 2022-003
    Material Weakness Repeat
  • 30703 2022-003
    Material Weakness Repeat
  • 30704 2022-002
    Material Weakness
  • 30705 2022-002
    Material Weakness
  • 30706 2022-002
    Material Weakness
  • 30707 2022-002
    Material Weakness
  • 30708 2022-002
    Material Weakness
  • 607143 2022-003
    Material Weakness Repeat
  • 607144 2022-003
    Material Weakness Repeat
  • 607145 2022-003
    Material Weakness Repeat
  • 607146 2022-002
    Material Weakness
  • 607147 2022-002
    Material Weakness
  • 607148 2022-002
    Material Weakness
  • 607149 2022-002
    Material Weakness
  • 607150 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.553 School Breakfast Program $244,728
84.010 Title I Grants to Local Educational Agencies $204,743
10.555 National School Lunch Program $167,267
84.425 Covid-19 - Education Stabilization Fund $103,183
93.778 Medical Assistance Program $64,699
84.173 Special Education_preschool Grants $28,372
84.367 Supporting Effective Instruction State Grants $27,103
84.424 Student Support and Academic Enrichment Program $21,665
84.027 Special Education_grants to States $107