Finding Text
MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE AND MATERIAL NONCOMPLIANCE – U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION AND MINNESOTA DEPARTMENT OF HUMAN SERVICES, COVID-19 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – FEDERAL ALN 21.027
2023-001 Internal Control Over Compliance and Material Noncompliance With Federal Procurement, and Suspension and Debarment Requirements
Criteria – 2 CFR § 180 and 2 CFR § 200.318-327 requires Northeast Metropolitan Intermediate School District No. 916 (the District) to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including procurement, and suspension and debarment requirements applicable to the coronavirus state and local fiscal recovery funds federal program.
Condition – During our audit, we noted the District did not have sufficient controls in place resulting in material noncompliance within its coronavirus state and local fiscal recovery funds federal program to ensure compliance with federal procurement requirements related to methods of procurement and 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.
Context – For 16 of 16 vendors exceeding the micro-purchase threshold, the District did not document procurement policy and the Uniform Guidance requirements related to methods of procurement, and proper documentation of suspension and debarment testing was not maintained for 4 of 4 vendors tested to ensure compliance with this requirement in the current year. 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 procurement, and suspension and debarment 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 procurement, and suspension and debarment for the coronavirus state and local fiscal recovery funds federal program. Internal controls over compliance for this area should include documentation of procurement policies and the Uniform Guidance requirements related to methods of procurement verification. These controls should also include steps to ensure 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 procurement, and 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.