Finding 539023 (2024-002)

Material Weakness Repeat Finding
Requirement
I
Questioned Costs
-
Year
2024
Accepted
2025-03-28
Audit: 349745
Organization: Milan Community Schools (IN)
Auditor: Crowe LLP

AI Summary

  • Core Issue: The School Corporation lacks an effective internal control system for compliance with federal procurement and suspension/debarment requirements.
  • Impacted Requirements: Non-compliance with 2 CFR 200.303, 200.318(a), and 200.320, risking misuse of federal funds and assets.
  • Recommended Follow-Up: Management should develop a robust internal control system to ensure adherence to procurement policies and obtain necessary quotes for small purchases.

Finding Text

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, Supply Chain Assistance Program, Summer Food Service Program Assistance Listing Number: 10.553, 10.555, 10.559 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 in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement. 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 have 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 Unified Purchasing Cooperative of the Ohio River Valley (the “Cooperative”), 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 $38,261 for fiscal year 2024 exceeded the small purchase threshold ($10,000 - $150,000). The School Corporation could not provide documentation showing the bids received from other vendors that were used to compare pricing. 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.

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 539019 2024-002
    Material Weakness Repeat
  • 539020 2024-002
    Material Weakness Repeat
  • 539021 2024-002
    Material Weakness Repeat
  • 539022 2024-002
    Material Weakness Repeat
  • 539024 2024-003
    Material Weakness
  • 539025 2024-003
    Material Weakness
  • 539026 2024-004
    Material Weakness
  • 539027 2024-003
    Material Weakness
  • 539028 2024-004
    Material Weakness
  • 539029 2024-003
    Material Weakness
  • 539030 2024-004
    Material Weakness
  • 539031 2024-003
    Material Weakness
  • 539032 2024-004
    Material Weakness
  • 1115461 2024-002
    Material Weakness Repeat
  • 1115462 2024-002
    Material Weakness Repeat
  • 1115463 2024-002
    Material Weakness Repeat
  • 1115464 2024-002
    Material Weakness Repeat
  • 1115465 2024-002
    Material Weakness Repeat
  • 1115466 2024-003
    Material Weakness
  • 1115467 2024-003
    Material Weakness
  • 1115468 2024-004
    Material Weakness
  • 1115469 2024-003
    Material Weakness
  • 1115470 2024-004
    Material Weakness
  • 1115471 2024-003
    Material Weakness
  • 1115472 2024-004
    Material Weakness
  • 1115473 2024-003
    Material Weakness
  • 1115474 2024-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $584,758
10.553 School Breakfast Program $167,047
84.010 Title I Grants to Local Educational Agencies $149,085
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $125,000
10.555 National School Lunch Program $111,595
32.009 Emergency Connectivity Fund Program $98,176
10.579 Child Nutrition Discretionary Grants Limited Availability $30,000
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $28,047
84.196 Education for Homeless Children and Youth $24,990
93.778 Medical Assistance Program $17,685
84.027 Special Education Grants to States $10,204
84.424 Student Support and Academic Enrichment Program $10,000
10.559 Summer Food Service Program for Children $5,106
10.649 Pandemic Ebt Administrative Costs $628