Finding Text
Information on the federal program:
Subject: Child Nutrition Cluster - Internal Controls
Federal Agency: Department of Agriculture
Federal Program: School Breakfast Program, National School Lunch Program
Assistance Listing Number: 10.553, 10.555
Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Material Weakness
Criteria: 2 CFR 200.318 states:
“The Non-Federal entity must have and use documented procurement procedures, consistent with State,
local, and tribal laws and regulations and the standards of this section, for the acquisition of property or
services required under a Federal award or subaward. The non-Federal entity's documented procurement
procedures must conform to the procurement standards identified in 200.317 through 200.327.”
and 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 to ensure
compliance with requirements related to the Child Nutrition Cluster and Procurement and Suspension and
Debarment compliance requirements.
Cause: The School Corporation’s management had not developed a system of internal controls that would
have ensured compliance with the Procurement and Suspension and Debarment compliance requirement
vendors utilized and not procured by the School Corporation’s purchasing cooperative.
Effect: The failure to establish an effective internal control system could place the School Corporation at
risk of noncompliance with the federal program and applicable federal/state procurement regulations. Not
adhering to the School Corporation’s procurement policy designed to follow federal and state regulations,
could result in the misuse and mismanagement of federal funds by conducting business with vendors not
properly procured and verified to not be suspended or debarred.
Questioned Costs: There we no questioned costs identified.
Context:
Procurement
The School Corporation participates in the Region 8 Education Service Center Cooperative which procures
vendors for many food purchases and other supplies on behalf of its members. During the audit period, the
School Corporation contracted with vendors outside of the Cooperative. One vendor with aggregate annual
purchases of $200,000 for fiscal year 2024 exceeded the simplified acquisition purchase threshold (greater
than $150,000) but was subjected to small purchase acquisition instead of the policy to perform a formal
procurement consisting of a request for proposal (RFP) that is publicly advertised.
Suspension and Debarment
For two vendors tested which were not procured by the Cooperative and had aggregate annual
disbursements exceeding the federal suspension and debarment threshold of $25,000, the School
Corporation did not perform suspension and debarment checks to confirm the vendors were not suspended
or debarred before entering into the contract or disbursing federal funds.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommend the School Corporation implement an internal control to monitor
purchases within the Food Service Department with vendors that exceed the simplified acquisition dollar
threshold, either individually or in annual aggregation, to ensure the School Corporation’s
procurement policy is followed which includes advertising a formal request for proposal (RFP) and
performing a full procurement process for purchases with vendors exceeding $150,000.
We also recommend that the School Corporation implement an internal control process to monitor
aggregate vendor disbursements in Fund 800, School Lunch, on annual basis and perform suspension and
debarment checks for all vendors exceeding $25,000 in aggregate disbursements on an annual basis to
ensure compliance with federal suspension and debarment regulations.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.