Finding Text
FINDING 2024-004
Subject: Special Education Cluster (IDEA) - Procurement
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States
Assistance Listings Number: 84.027
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01,
24611-043-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation is a member of the Northwest Indiana Special Education Cooperative
(Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and
spent the federal money on behalf of all its members. As the grant agreement was between the Indiana
Department of Education (IDOE) and each member school, the School Corporation was responsible for
ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed
by the School Corporation in order to ensure compliance with the Procurement and Suspension and
Debarment compliance requirement.
INDIANA STATE BOARD OF ACCOUNTS
21
SCHOOL CITY OF HOBART
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
When the value of the procurement for property or services exceeds the simplified acquisition
threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are
required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive
threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require
adherence to documented procedures and formal methods such as sealed bids or proposals.
The School Corporation did not have internal controls in place to ensure that the Cooperative
complied with procurement requirements. The Cooperative did not have procedures in place to ensure
compliance with procurements in excess of the SAT threshold. During 2023-2024, the Cooperative had
three vendors which exceeded the SAT, and all three vendors were tested. The Cooperative did not obtain
sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a
noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was
$1,417,349.
The lack of internal controls and noncompliance were systemic issues limited to 2023-2024.
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 200.320 states in part:
"The non-Federal entity must have and use documented procurement procedures, consistent
with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
(b) Formal procurement methods. When the value of the procurement for property or
services under a Federal financial assistance awards exceeds the SAT, or a lower
threshold established by a non-Federal entity, formal procurement methods are required.
Formal procurement methods require following documented procedures. Formal
procurement methods also require public advertising unless a non-competitive
procurement can be used in accordance with § 200.319 or paragraph (c) of this section.
The following formal methods of procurement are used for procurement of property or
services above the simplified acquisition threshold or a value below the simplified
acquisition threshold the non-Federal entity determines to be appropriate: . . .
INDIANA STATE BOARD OF ACCOUNTS
22
SCHOOL CITY OF HOBART
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(1) Sealed bids. A procurement method in which bids are publicly solicited and a firm
fixed-price contract (lump sum or unit price) is awarded to the responsible bidder
whose bid, conforming with all the material terms and conditions of the invitation
for bids, is the lowest in price. The sealed bids method is the preferred method for
procuring construction, if the conditions. . . .
(2) Proposals. A procurement method in which either a fixed price or costreimbursement
type contract is awarded. Proposals are generally used when
conditions are not appropriate for the use of sealed bids. . . ."
Cause
The Cooperative noted they were unaware of the procurement requirements of expenditures
exceeding the Simplified Acquisition Threshold. They stated they have used the same vendors to provide
professional services for several years but only recently started using federal grant award funds for the
services.
Effect
Without the proper implementation of an effectively designed system of internal controls, the School
Corporation cannot ensure the vendors paid with federal award funds by the Cooperative are procured
using the required methods. Without following the required methods for procurement, the Cooperative
could be overpaying for services.
Questioned Costs
There were no questioned costs identified.
Recommendation
Management of the School Corporation should develop written policies and procedures which
would require that appropriate procurement methods are used by the Cooperative for vendors that exceed
the Simplified Acquisition Threshold. Appropriate documentation should be maintained to ensure the
procurement methods are being followed and compliance with Procurement methods are being followed.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.