Finding Text
FINDING 2024-005
Information on the federal program:
Subject: Child Nutrition Cluster – Internal Controls over Procurement and Suspension and Debarment
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 200.303 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 200.318(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. . . ."
Condition: An effective internal control system was not in place at the School Corporation to ensure
compliance with requirements related to the Child Nutrition Program and Procurement compliance
requirements.
Cause: The School Corporation's management had not developed a system of internal controls that would
Fohave ensured compliance with the Procurement and Suspension and Debarment compliance
requirement.
Effect: The failure to establish an effective internal control system placed the School Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties
within an internal control system could have also 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:
Procurement
The School Corporation participates in K12’s Leading Indiana Cooperative (KLIC), which procures vendors
for food purchases and other supplies on behalf of its members. During the audit period, the School
Corporation also purchased food and supplies from vendors not procured by the Cooperative. One vendor
with aggregate annual purchases of $62,545 and $49,614 for fiscal year 2023 and 2024, respectively,
exceeded the small purchase threshold ($10,000 - $150,000). For the 2023 fiscal year, the School
Corporation could not provide documentation showing the bids received from other vendors that were used
to compare pricing. As it pertains to the 2024 fiscal year, the School Corporation could not provide any
documentation surrounding the procurement of the small purchase vendor.
Suspension and Debarment
For the small purchase vendor noted above that was 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 provide documentation confirming that the vendor was not suspended or debarred
before disbursing federal funds during fiscal year 2024.
Identification as a repeat finding, if applicable: Yes, see finding 2022-003.
Recommendation: We recommended that the School Corporation's management establish a system of
internal controls related to ensure that the School Corporation’s procurement policy is adhered to and
quotes are obtained from an adequate number of qualified sources as required for small purchase method
procurements.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.