Walla Walla School District No. 140
September 1, 2023 through August 31, 2024
2024-001 The District did not have adequate internal controls to ensure
compliance with federal procurement requirements.
Assistance Listing Number and Title: 10.553 School Breakfast Program
10.555 National School Lunch
Program
10.559 Summer Food Service
Program for Children
Federal Grantor Name: U.S. Department of Agriculture
(USDA)
Federal Award/Contract Number: NA
Pass-through Entity Name: Office of Superintendent of Public
Instruction (OSPI)
Pass-through Award/Contract
Number:
NA
Known Questioned Cost Amount: $0
Prior Year Audit Finding: Yes, Finding 2023-001
Background
The District participates in the Child Nutrition Cluster, which includes the School
Breakfast Program, National School Lunch Program, and Summer Food Service
Program for Children. These programs provide funding for free and reduced-price
meals for students of low-income families. For the 2023-2024 school year, the
District received $2,807,195 total to administer these programs.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding program requirements and monitoring the effectiveness of
established controls.
When using federal funds to purchase goods or services, governments must apply
the most restrictive of federal requirements, state law or local policies by obtaining
quotes or following a competitive bid process, depending on the estimated purchase
cost. Under District policy, purchases between $10,000 and $75,000 must be
procured using price or rate quotations from three or more qualified sources and
any purchase more than $75,000 requires formal bidding or proposals.
State and federal requirements allow local entities to bypass normal procurement
laws through a process commonly referred to as “piggybacking.” This process
allows entities to purchase goods and services using contracts awarded by another
government or group of governments via an interlocal agreement or cooperative.
To comply with piggybacking requirements under state law, the entity must enter
into this interlocal agreement or cooperative before it purchases services or goods
from the other entity’s bid contract. If the District uses such an agreement, federal
regulations require it to confirm the awarding agency followed all procurement
laws and regulations applicable to the District before it purchases goods or services
from the other entity’s contract.
Description of Condition
The District did not have a process to ensure it complied with procurement
requirements when purchasing food products. The District piggybacked onto
another school district’s contract for dairy purchases. However, the District did not
confirm that the procurement methods the awarding agency followed met its own
procurement requirements before purchasing. Additionally, the District did not
have a process in place to ensure it obtained at least three quotes for equipment
maintenance services, as required by District policy.
We consider this internal control deficiency to be a significant deficiency.
Cause of Condition
District staff responsible for procuring nutrition services’ food products did not
fully understand federal procurement requirements and the District’s procurement
policy. District staff did not know they were required to obtain procurement
documentation, when they piggybacked on the awarding agency’s contract, to
verify the process complied with the District’s federal procurement requirements.
Also, they did not know how many quotes the District’s procurement policy
required for purchases.
Effect of Condition
The District piggybacked on one contract without reviewing the bid documentation
and spent $155,200 of federal funds to purchase dairy products. In addition, the
District spent $14,970 in program funds for equipment maintenance services and
did not obtain at least three quotes, as required. Without effective internal controls,
the District cannot demonstrate it complied with federal procurement requirements
and District policy, allowed for full and open competition, and received the best
price for the food products and services it purchased.
Recommendation
We recommend the District strengthen internal controls to ensure it complies with
applicable federal procurement requirements and District policy for purchases of
goods and services.
District’s Response
As a result of this finding for federal procurement requirements the District has
reviewed the procurement requirements with the food service director and staff. In
addition, the district has reviewed current spending with vendors within food
services to determine procurement requirements for the 25-26 fiscal year. This
review will be done on an annual basis. In the future the district will review and
document the requirements of the awarding agency to ensure they align with our
own requirements based on local spending patterns. The district did implement
these changes for 2024-2025 Fiscal Year.
Auditor’s Remarks
We thank the District for its cooperation throughout the audit and the steps it is
taking to address these concerns. We will review the status of the District’s
corrective action during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement
standards, establishes requirements for written procedures and maintaining records
sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to
be followed, establishes requirements for procuring with Federal funds by
nonfederal entities.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.