Finding Text
2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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. 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. Title 2 CFR 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.