Finding Text
The District did not have adequate internal controls and did not
comply with federal suspension and debarment requirements.
Assistance Listing Number and Title: 10.553 – School Breakfast Program
10.555 – National School Lunch
Program
10.582 – Fresh Fruits and
Vegetables Program (FFVP)
Federal Grantor Name: U.S. Department of Agriculture
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public
Instruction (OSPI)
Pass-through Award/Contract
Number:
N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The District participates in the Child Nutrition Cluster, which includes the School
Breakfast, National School Lunch, and Fresh Fruits and Vegetables programs.
These programs provide funding for free and reduced-price meals to students from
low-income families. The District received $586,846 to administer these programs
during the 2023-2024 school year.
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.
Federal requirements prohibit recipients from contracting with or purchasing from
parties suspended or debarred from doing business with the federal government.
Whenever the District enters into contracts or purchases goods and services that it
expects to equal or exceed $25,000, paid all or in part with federal funds, it must
verify that contractors are not suspended, debarred or otherwise excluded from
participating in federal programs. The District may verify this by obtaining a
written certification from the contractor, adding a clause or condition into the
contract that states the contractor is not suspended or debarred, or checking for
exclusion records in the U.S. General Services Administration’s System for Award
Management at SAM.gov. The District must verify this before entering into the
contract and must maintain documentation demonstrating compliance with this
federal requirement.
Description of Condition
Our audit found the District did not have internal controls to verify all contractors
it paid more than $25,000 in federal funds were not suspended or debarred from
participating in federal programs.
We consider this deficiency in internal controls to be a material weakness that led
to material noncompliance.
Cause of Condition
The District experienced turnover among key staff, and current staff could not
locate documentation to demonstrate compliance with federal suspension and
debarment requirements.
Effect of Condition
The District did not obtain a written certification from the contractors, insert a
clause into the contracts, or check for exclusion records at SAM.gov to verify the
two contractors it paid $42,602 and $26,830, respectively, using federal funds were
not suspended or debarred before contracting. Without adequate internal controls,
the District increases its risk of awarding federal funds to contractors who are
excluded from participating in federal programs. Any payments the District made
to an ineligible party would be unallowable, and the awarding agency could
potentially recover them.
We subsequently verified the contractors were not suspended or debarred.
Therefore, we are not questioning the costs.
Recommendation
We recommend the District strengthen internal controls to verify all contractors it
pays $25,000 or more, all in part with federal funds, are not suspended or debarred
from participating in federal programs, and maintains documentation
demonstrating this verification.
District’s Response
The District will strengthen internal controls to verify all contractors it pays
$25,000 or more, all or in part with federal funds, are not suspended or debarred
from participating in federal programs and maintains documentation
demonstrating this verification.
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 180, OMB Guidelines to Agencies on Government wide
Debarment and Suspension (Nonprocurement), establishes non-procurement
debarment and suspension regulations implementing Executive Orders 12549 and
12689.
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.