Finding Text
FINDING 2023-002
Subject: Child Nutrition Cluster - Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food
Service Program for Children, Fresh Fruit, and Vegetable Program
Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582
Federal Award Numbers and Years (or Other Identifying Numbers): SY 21-22 and SY 22-23
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
Prior to entering into subawards and covered transactions with federal award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor,
or adding a clause or condition to the covered transaction with that vendor.
INDIANA STATE BOARD OF ACCOUNTS
18
CULVER COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Upon inquiry of the School Corporation in order to review the procedures in place for verifying that
a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise
excluded, the School Corporation noted that all disbursements were approved by the Treasurer who
ensured suspension and debarment procedures were followed. Two covered transactions that equaled or
exceeded $25,000 were identified. Both transactions, totaling $185,699, were selected for testing. For the
two vendors, the School Corporation did not verify either vendor's suspension and debarment status prior
to payment.
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 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."
Cause
A proper system of internal controls was not designed 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 managements statements
of what should be done to effect internal control, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal control, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be
not suspended, debarred, or otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
INDIANA STATE BOARD OF ACCOUNTS
19
CULVER COMMUNITY SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal
controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate are
not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.