Finding Text
FINDING 2023-003
Information on the federal program:
Subject: Child Nutrition Cluster – Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Services
Assistance Listing Number: 10.553, 10.555, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Significant Deficiency
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(a) states: "The non-Federal entity must use its own documented procurement procedures
which reflect applicable State, local, and tribal laws and regulations, provided that the procurements
conform to applicable Federal law and the standards identified in this part."
2 CFR 200.320 states in part:
"The non-Federal Entity must use one of the following methods of procurement. . . .
(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. . . ."
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 the SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the 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 enabled noncompliance with the grant
agreement and the compliance requirements. A lack of segregation of duties within an internal control
system 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 one selection in a sample of two, the school corporation did not perform the required
suspension and debarment check on the vendor for FY22. For FY23, the school updated their procedures
and properly performed the suspension/debarment check.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior
audit. The prior finding number was 2021-002.
Recommendation: We recommended that the School Corporation's management establish a system of
internal controls related to ensure that quotes are obtained as required for procurements.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.