J STERLING MORTON HSDLocal Government

1. FINDING NUMBER: 2025 - 005 2. THIS FINDING IS: New X Repeat from Prior year Year originally reported? 3 .Federal Program Name and Year: Child Nutrition Cluster 4. Project No.:4210, 4220 5. AL No.: 10.555, 10.553 6. Passed Through: ISBE 7. Federal Agency: U.S. Department of Argriculture 8. Criteria or specific requirement (including statutory, regulatory, or other citation): Section 200.318(i) of Title 2 of the Code of Federal Regulations states that entities must maintain detailed records showing the history of procurement, including rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Section 200.318(b) of Title 2 of the Code of Federal Regulations states that entities must ensure that suppliers are following the terms, conditions, and specifications of their contracts. 9. Condition: The District did not maintain sufficient records to detail the history of procurement. The District did not ensure that vendors complied with all contract terms, conditions, and specifications. This is considered an instance of non-compliance. 10. Questioned Costs: None 11. Context: During testing of procurement under the Child Nutrition Cluster, a sample of vendors was selected for review. We requested supporting documentation to verify the selection of one of the vendors and the District was unable to provide such documentation. 12. Effect:The District is not in compliance with the requirements to have detailed records of the procurement history and to ensure that their vendors and suppliers follow the terms of their contracts. 13. Cause: The District did not maintain or was unable to locate required supporting documentation for procurement procedures when selecting a vendor charged to the Child Nutrition Cluster, indicating weaknesses in record retention and documentation controls. 14. Recommendation: We recommend that the District review its Uniform Guidance policies with all staff to ensure procurement requirements are understood and implement controls to ensure compliance. 15. Management's response: Management agrees with this finding and response is included within the corrective action plan.

Criteria 2 CFR 200.313, Equipment , requires the following with respect to equipment purchased with Federal Funds: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. Condition: The District does not currently maintain a detailed accounting/list of its capital assets, including Federal assets. The District does not have a recent replacement cost valuation for insurance purposes. We consider this finding to be a material weakness in internal control over major programs. Questioned Costs: N/A Context: The District has not updated or prepared a detailed listing of capital assets in recent years, but rather has relied upon the auditor to provided non-auditing services in this area. The District has not obtained an insurance valuation of its property in recent years. Effect: The District is out of compliance with Federal property regulations as a result of this condition. Cause: The cause of the condition is because the District has not contracted with any third parties to accomplish the task, nor has it allocated internal resources to the condition. Recommendation: We recommend that the District contract with a third party asset vendor or allocate internal business office resources to performing a detailed inventory and accounting of capital assets. We also recommend the District obtain an appraisal for insurance purposes to ensure that the District's property is appropriately insured in the event of loss. Management Response: Management agrees with this finding. Management is in the process of determining the most efficient way to handle this process and is evaluating the cost-benefit of implementing various processes and procedures.

Criteria 2 CFR 200.313, Equipment , requires the following with respect to equipment purchased with Federal Funds: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. Condition: The District does not currently maintain a detailed accounting/list of its capital assets, including Federal assets. The District does not have a recent replacement cost valuation for insurance purposes. We consider this finding to be a material weakness in internal control over major programs. Questioned Costs: N/A Context: The District has not updated or prepared a detailed listing of capital assets in recent years, but rather has relied upon the auditor to provided non-auditing services in this area. The District has not obtained an insurance valuation of its property in recent years. Effect: The District is out of compliance with Federal property regulations as a result of this condition. Cause: The cause of the condition is because the District has not contracted with any third parties to accomplish the task, nor has it allocated internal resources to the condition. Recommendation: We recommend that the District contract with a third party asset vendor or allocate internal business office resources to performing a detailed inventory and accounting of capital assets. We also recommend the District obtain an appraisal for insurance purposes to ensure that the District's property is appropriately insured in the event of loss. Management Response: Management agrees with this finding. Management is in the process of determining the most efficient way to handle this process and is evaluating the cost-benefit of implementing various processes and procedures.

Criteria or specific requirement (including statutory, regulatory, or other citation) "2 CFR 200.313, Equipment, requires the following with respect to equipment purchased with Federal Funds: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated." Condition The District does not currently maintain a detailed accounting/list of its capital assets, including Federal assets. The District does not have a recent replacement cost valuation for insurance purposes. Questioned Costs N/A Context The District has not updated or prepared a detailed listing of capital assets in recent years, but rather has relied upon the auditor to provided non-auditing services in this area. The District has not obtained an insurance valuation of its property in recent years. Effect The District is out of compliance with Federal property regulations as a result of this condition. Cause The cause of the condition is because the District has not contracted with any third parties to accomplish the task, nor has it allocated internal resources to the condition. Recommendation We recommend that the District contract with a third party asset vendor or allocate internal business office resources to performing a detailed inventory and accounting of capital assets. We also recommend the District obtain an appraisal for insurance purposes to ensure that the District's property is appropriately insured in the event of loss. Management's response Management agrees with this finding. Management is in the process of determining the most efficient way to handle this process and is evaluating the cost-benefit of implementing various processes and procedures.

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