FINDING 2023-007
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment
Federal Agency: Department of Agriculture
Federal Programs: School Breakfast Program, National School Lunch Program, Special Milk
Program for Children, Summer Food Service Program for Children
Assistance Listings Numbers: 10.553, 10.555, 10.556, 10.559
Federal Award Numbers and Years (or Other Identifying Numbers): FY22, FY23
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Repeat Finding
This is a repeat finding from the prior audit report. The prior audit finding number was 2021-004.
Condition and Context
Procurement
The School Corporation was to submit a new procurement plan for fiscal year 2022-2023 to
the Indiana Department of Education (IDOE). The School Corporation did not complete or
submit the 2022-2023 Procurement Plan as required. Per inquiry of the Food Service Director,
the plan was not submitted as the School Corporation was unaware that it was required.
Suspension and Debarment
Prior to entering into subawards and covered transactions with program funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAMs
exclusion, collecting a certification from that person, or adding a clause or condition to the
covered transaction with that person.
Upon inquiry of the School Corporation in order to review the procedures in place for verifying
that a person with which it plans to enter into a covered transaction is not suspended, debarred,
or otherwise excluded, the School Corporation disclosed there were not sufficient procedures
in place. Six covered transactions, totaling $403,734, that equaled or exceeded $25,000 were
identified. All six transactions were selected for testing. For four of the six covered
transactions, totaling $171,379, the School Corporation did not verify the vendor's suspension
and debarment status prior to payment.
INDIANA STATE BOARD OF ACCOUNTS 25
RUSH COUNTY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
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 have and use documented procurement procedures, consistent
with State, local, and tribal laws and regulations and the standards of this section, for the
acquisition of property or services required under a Federal award or subaward. The non-
Federal entity's documented procurement procedures must conform to the procurement
standards identified in §§ 200.317 through 200.327."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You do
this by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation's management statements
of what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified
to be not suspended, debarred, or otherwise excluded. In addition, the 2022-2023 procurement plan was
not submitted to the IDOE as required.
INDIANA STATE BOARD OF ACCOUNTS
26
RUSH COUNTY SCHOOLS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal
controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are
not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards and that
the procurement pan is submitted to the IDOE.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.