School District U-46

Condition: During audit fieldwork, our testing resulted in significant audit adjustments in order to present materially accurate financial statements. Criteria: A good system of internal controls would provide for accurate representations of adjusted account balances for all District accounts prior to audit fieldwork. Cause: Year-end entries related to various accruals and other items were required in order to accurately present the District’s financial statements. Effect: The District’s financial statements were not fully adjusted prior to audit fieldwork. Recommendation: A vital process of effective internal controls is the review and subsequent adjustment of general ledger balances. This review and adjustment will aid in the appropriate budgeting and management of the District’s financial activities and resources. Corrective Action Plan: The District will review year-end adjustments as part of the audit preparation process and work to reduce the number of entries proposed by the auditors and prepare fully adjusted financial statements prior to audit fieldwork.

Data Collection Form Submission Condition: The 2023 data collection form and audit package were not submitted timely. Criteria: As required by the Office of Management and Budget, auditees are required to submit a completed data collection form and audit package to the Federal Audit Clearinghouse on or before the earlier of 30 days after receipt of the auditor's report or nine months after the end of the audit period. During 2023, this requirement due on March 31, 2024. Cause: The late filing is due to timing of generating grant detail by prior staff. Effect: The District is at risk of jeopardizing the continued funding provided by the federal agencies. Recommendation: We recommend the District implement policies and procedures related to the Uniform Guidance reporting requirements. Corrective Action Plan: The Assistant Superintendent for Business, along with staff, will review and evaluate the reporting requirements of all grants to ensure timely reporting requirements.

Finding 2023-007: Procurement Federal Programs: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.555 – National School Lunch Program, 10.553 – School Breakfast Program, and 10.559 – Summer Food Service Program under award numbers 22N1099 (Federal Award Year 2022), 22N1199 (Federal Award Year 2022), and 23N1199 (Federal Award Year 2023). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 23-4210-00, 22-4210-00, 22-4210-BT, 23-4210-SC, 23-4220-00, 22-4220-00, 23-4225-00, and 22-4225-00. Special Education Cluster (IDEA) awarded by the U.S. Department of Education under assistance listing numbers 84.173 – Special Education - Preschool Grants (includes COVID-19 funding) and 84.027 – Special Education – Grants to States (includes COVID-19 funding) under award numbers H027A210072 (Federal Award Year 2021), H027X210072 (Federal Award Year 2021), H173X210101 (Federal Award Year 2021), H027A220072 (Federal Award Year 2022), and H173A220101 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 22-4998-PS, 23-4600-00, 22-4998-ID, 23-4620-00, 23-4620-EI, 23-4625-00, and 22-4625-00. Condition: The District did not maintain adequate records for procurement transactions in the IDEA and Child Nutrition Clusters. Criteria: Uniform Grant Guidance (2 CFR 200.318(i)) states procurement records must be maintained in sufficient detail to document the history of the procurement. The records must include, but are not limited to, the rationale for the method of the procurement, the selection of the vendor, and the basis for the price. Uniform Grant Guidance (2 CFR 200.320) also specifies the methods of procurement that must be used based on the dollar value of the procurement. If small purchase procedures are used, the District must obtain a sufficient number of quotes from qualified vendors. Cause: There was turnover at the department of the District responsible for ensuring procurements are made in accordance with state and federal regulations. Additionally, the District’s electronic system of record for procurement is not used consistently. Supporting documents are sometimes kept at individual departments in paper or e-mail. Questioned Cost: None, the expenditures are allowable uses of grant funds. Context: For eight of the eight vendors selected for procurement testing in the IDEA cluster, the District was unable to provide documentation prepared at the time of the procurement action that supported why the vendor was selected and why no competitive bids or quotations were obtained. Once selected for testing, the District was able to prepare memos for seven of the eight vendors supporting why the vendor was selected and that the procurement was exempt from competitive bidding or obtaining quotations from multiple vendors. For the remaining vendor, which under federal requirements would be considered a small purchase, the District was unable to determine why the vendor was selected for the procurement opportunity. For one of the five vendors selected for procurement testing in the Child Nutrition Cluster, which under federal requirements would be considered a small purchase, the District was unable to determine why the vendor was selected for the procurement opportunity. Recommendation: We recommend the District review its policies and procedures for purchasing goods and services to ensure procurement history is maintained to document compliance with federal regulations and that all support related to why a vendor was selected be maintained centrally. District’s Response: The District will train its employees on the documentation trail needed for procurement actions and review its policies and procedures for any needed updates. Potential Effect: Failure to fully comply with federal regulations could result in amounts being considered unallowable by granting agencies. Prior Finding Number: 2022-001

Finding 2023-008: Compliance with Federal Wage Requirements Federal Program: COVID-19 - Education Stabilization Funds awarded by the U.S. Department of Education under assistance listing number 84.425U - American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) under award number S425U210041 (Federal Award Year 2023). Passed through the Illinois State Board of Education under award number 22-4998-E3. Condition: The District did not include federal wage rate requirements in construction contracts which were partially funded with federal grant funds. Additionally, the District did not require the contractors in those agreements to submit weekly certified payrolls. Criteria: Federal regulations, 29 CFR 5.5(a), require contracts in excess of $2,000 for the construction, alteration, or repair of a public building to include specific clauses or references to the applicable federal requirements for the wage rates to be paid, reporting of the wages, and retention of records. Federal regulations, 29 CFR 5.5(a)(3)(ii), also require the contractor submit weekly certified payrolls to the contracting entity. Cause: The District has not historically used federal funds for construction projects and therefore had not designed and implemented internal control procedures for ensuring compliance with grant management specific to the federal requirements. The District’s contracts contain language to comply with state regulations related to wages and certified reporting, but those requirements differ from what is required under federal regulations. Questioned Costs: Between $3,067,000 and $4,735,000. Context: Of the expenditures reported on the schedule of federal expenditures of federal awards, $12,768,670, related to construction contracts which do not have the federal wage requirement language in the contracts and for which the District did not receive weekly certified payrolls. The District’s contracts did contain language to comply with the State of Illinois’ wage requirements which requires contractors to submit certified payrolls directly to the Illinois Department of Labor on a monthly basis. Recommendation: We recommend the District update its standard contract language for construction contracts to include the federal wage rate requirement clauses and start to obtain weekly certified payrolls from the contractors working on projects that are partially or wholly funded with federal funds. District’s Response: The District will update the language used for construction contracts and develop an internal process for the collection and retention of the required weekly certified payrolls. Potential Effect: Failure to fully comply with federal regulations could result in amounts being considered unallowable by granting agencies.

Finding 2023-009: Untimely Data Collection Form Submittance Federal Program: All Condition: The District submitted its data collection form more than nine months after the end of the fiscal year 2023 audit period. Criteria: Per 2 CFR 200.512(a)(1), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period. Cause: A request for audit support was submitted, by the auditor, a week before the nine month filing deadline. Due to the timing of the request and despite the efforts of the District staff, the District was not able to provide the support until several weeks later. Questioned Cost: None. Context: The District submitted its data collection form more than nine months after the end of the fiscal year 2023 audit period. Recommendation: We recommend the District implement procedures to ensure documentation related to the use of federal funds are stored centrally and can be located timely. District’s Response: The District will work with its auditors to ensure timely completion of the single audit in the future. Potential Effect: Noncompliance with federal regulations could result in the loss of future federal awards.

Federal Program: Child Nutrition Cluster awarded by the U.S. Department of Agriculture under assistance listing numbers 10.553 ? School Breakfast Program (SBP); 10.555 ? National School Lunch Program (NSLP); and 10.559 ? (Summer Food Service Program for Children (SFSP) under award numbers 21N1199 (Federal Award Year 2021) and 22N1099 (Federal Award Year 2022). Passed through the Illinois State Board of Education under award numbers 31045046022A1, 22-4210-00, 22-4210-SC, 21-4210-00, 21-4210-BT, 21-4210-SN, 22-4220-00, 21-4220-00, and 21-4225-00. Condition: The District procured $4,666,376 of food commodities from a vendor without publicizing the procurement opportunity or obtaining sealed bids or competitive proposals. Instead, the District obtained the commodities under a group purchasing agreement through a group purchasing organization in which the District participates. The District also procured $18,797 of goods from a vendor and was unable to provide documentation of how the vendor was selected for the procurement or that the vendor was properly reviewed to determine the vendor was not debarred. Criteria: Uniform Grant Guidance (2 CFR 200.320(b)) states good or services which exceed the simplified acquisition threshold (which in 2022 was $250,000) must be acquired via competitive selection using sealed bids or proposals received in response to a publicized procurement opportunity. The U.S. Department of Agriculture memo SP-05-2017 ?Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services? states child nutrition program operators must publish procurement opportunities which are over the simplified acquisition threshold for goods available through a group purchasing organization and must evaluate the group purchasing organization?s response compared to those of the other responders. Uniform Grant Guidance (2 CFR 200.320(a)(2)) states if small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. The District?s procurement policy sets its small purchase threshold at $1,500. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained. Cause: The District was unaware that procurement through a group purchasing organization would not meet the competitive selection criteria of Uniform Guidance. The District also experienced turnover in its procurement and food services departments which lead to its inability to locate some information. Questioned Cost: The difference between the amount paid and what would have been paid if competitive bids/proposals were received in response to a publicized procurement opportunity for the procurement that exceeded $4 million in response to a publicized procurement opportunity. This amount is not quantifiable. Context: The District made procurements from 50 vendors during fiscal year 2022 that met either the small purchase threshold or the simplified acquisition threshold. The samples tested were not intended to be, and were not, statistically valid samples. Recommendation: We recommend the District review its procurement procedures for when purchases are made with federal funds from group purchasing organizations and retain quotes and other information used when selecting a vendor in the associated procurement file. District?s Response: The District accepts the auditor?s finding and has created a corrective action plan. Potential Effect: Not publicizing procurement opportunities for large purchases could result in the District not receiving the best price available while not retaining documentation of how procurements were awarded and evaluated could lead to the District approving payments to vendors that do not meet federal requirements. (Finding Code No. 2022-001)

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