Finding Text
2023-002 The District did not have adequate controls for ensuring compliance with procurement requirements for the Special Education program.
Assistance Listing Number and Title: 84.027 Special Education – Grants to States
84.027 COVID – 19 Special Education – Grants to States
84.173 Special Education – Preschool Grants
84.173 COVID – 19 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
Pass-through Award/Contract Number: 84.027 - 312301
84.027 - 307757
84.027 - GT-01031
84.173 - 371270
84.173 - 367149
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
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 2023, the District spent $939,648 in federal funds through its Special Education program.
Federal regulations require recipients to establish and maintain internal controls to 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 and services, governments must apply the more restrictive of federal, state or local laws by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Federal regulations and District policy require the District to solicit sealed bids or competitive proposals for personal services more than $250,000. The District may procure services using noncompetitive proposals when the service is only available from a single source. The District must also keep documentation supporting the procurement method used.
Description of Condition
The District did not follow its policy and federal regulations for formally procuring a contract for personal services costing more than $250,000. Specifically, the District used the sole-source method to waive competitive procurement for language therapy services totaling $287,800 and charged $166,790 to the federal program for these services. The District did not research to evaluate whether this service was limited to a single source. We determined this contract should have been formally procured as there were multiple contractors that could have performed these services.
We consider this deficiency in internal controls to be material weakness that led to material noncompliance.
Cause of Condition
District staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy. The District posted the language therapist position on its website as a job posting. When a contractor responded to the posting, the District entered into a personal service contract instead of continuing its search for an employee to perform these services. The District completed its sole-source form but did not adequately research to verify if there were other contractors that could have provided these services.
Effect of Condition
Without competitively procuring the services, the District cannot demonstrate it received the best price for the services it purchased or selected the most qualified contractor. Additionally, the District cannot demonstrate that it complied with federal regulations 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 ensure all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy
• Follow its procurement policy and federal regulations for services and purchases made with federal funds
• Maintain documentation to demonstrate compliance with federal requirements, including sole-source evaluations
District’s Response
Thank you for providing valuable feedback on our procurement practices within the Special Education program. We appreciate the opportunity to address the findings outlined in your report.
Upon review of the audit finding indicating inadequate controls for ensuring compliance with procurement requirements, we acknowledge the importance of this matter and are committed to taking immediate corrective actions to rectify the identified deficiencies.
Our initial analysis indicates that several factors may have contributed to the lack of adequate controls in procurement compliance within the Special Education program. These include potential gaps in understanding procurement regulations as well as insufficient staff training.
To address these issues effectively, we have developed a comprehensive corrective action plan, which includes the following key steps:
1. Staff Training and Capacity Building: We recognize the importance of providing adequate training to staff members involved in procurement within the Special Education program. Training sessions will be conducted to enhance their understanding of procurement regulations, policies, and ethical practices.
2. Enhanced Oversight and Monitoring: We will designate responsible individuals or a team to oversee procurement activities within the Special Education program. Regular monitoring mechanisms will be implemented to review procurement processes and transactions for compliance with established procedures.
3. Strengthening Documentation and Record-keeping: Emphasis will be placed on maintaining accurate and complete documentation throughout the procurement process. Standardized templates and forms will be introduced to streamline documentation and record-keeping practices.
4. Continuous Improvement and Evaluation: We are committed to fostering a culture of continuous improvement by soliciting feedback from stakeholders and conducting periodic evaluations of our procurement processes. Lessons learned will be incorporated into our practices to drive ongoing enhancement.
5. Communication and Transparency: We will communicate the details of our corrective action plan to all relevant stakeholders within the District, fostering transparency and ensuring alignment with our objectives. Regular updates on the progress of implementation will be provided to keep stakeholders informed.
We understand the importance of compliance with procurement requirements in safeguarding the integrity of our Special Education program. By diligently implementing our corrective action plan, we are confident in our ability to address the identified deficiencies and strengthen our procurement practices moving forward.
Auditor’s Remarks
We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to improving the condition described. We will review the status of this issue 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.
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.