Finding Text
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program
AL Numbers: 10.553, 10.555
Federal Award Numbers and Years: FY2023, FY2024
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Qualified Opinion
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 section 200.303 states in part: "The non-Federal entity must use one of the following
methods of procurement…
(b) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an
appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its
documented procurement procedures which must not exceed the threshold established in the FAR.
When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be
authorized or not prohibited under State, local, or tribal laws or regulations.
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 simplified acquisitions
procurement method of the Procurement and Suspension and Debarment compliance requirement.
Cause: The School Corporation's management noted that the vendor they chose to work with was one they
could rely on to deliver high quality products on time. Management stated that during the years under audit,
they found it hard to find other vendors that had quality items in stock that they could count on to be delivered
on time when they were needed.
Effect: The failure to establish an effective internal control system enabled noncompliance with the grant
agreement and the simplified acquisition procurement method of the Procurement and Suspension and
Debarment compliance requirement.
Questioned Costs: There were no questioned costs identified.
Context: During the audit period, we tested two vendors that fell within the Small Purchase procurement
threshold. Small purchases are those vendors that the School Corporation has purchased between $10,000
and $150,000 of products and goods from during the fiscal year. For one of the two vendors selected for
testing, we noted the School Corporation did not obtain price or rate quotations from other vendors or
document the basis for purchasing from the vendor that was utilized. The School Corporation had $134,542
and $117,589 of expenditures with the vendor for fiscal years 2023 and 2024, respectively.
The School Corporation was not able to provide verification that the vendor is not suspended or debarred.
The lack of controls and noncompliance occurred throughout the audit period. There were no other issues
noted during the testing of Procurement and Suspension and Debarment.
Identification as a repeat finding, if applicable: Yes. See finding 2022-001 in the prior audit report.
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. Management should obtain
multiple quotes, document rationale for vendor selection and perform suspension and debarment checks.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.