Integration Charter Schools

Criteria In accordance with 2 CFR 200.214, non-federal entities are subject to the procurement, debarment and suspension regulations implementing executive orders and 2 CFR part 180. These regulations restrict non-federal entities from entering into covered transactions with certain parties that are deemed debarred, suspended or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Condition and Context: Integration Charter Schools’ internal controls over compliance are not followed despite having a written policy. In accordance with 2 CFR 200 Appendix XI, Part 3-I-2, when an entity enters into a covered transaction, a non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995, is not suspended, or debarred or otherwise excluded from participating in the transaction. Integration Charter Schools has a written policy that states prior to entering into the procurement process, each contractor will be researched to determine that they have not been suspended or debarred. However, Integration Charter Schools did not follow the policy in place. Rather, the Charter School, on a quarterly basis, was verifying entities that received federal awards were not suspended or debarred after the transaction was complete. Effect Due to the verification procedure occurring after the cash disbursement was made the Charter School could have awarded suspended or debarred entities federal awards. Cause: The Charter School did not follow the suspension and debarment policies in place. Recommendation We recommend the Charter School develop a control, with formal written documentation, showing the Charter School has researched the entity prior to the Charter School entering into the covered transaction. This documentation should be reviewed by the proper authority to ensure the entity has been researched prior to entering into the covered transaction. Management’s response Refer to Corrective Action Plan attached.

Program: CFDA 84.282 ? Charter Schools Sponsor Award Number: 0089-21-1044 Sponsor Agency: New York State Education Department Criteria: Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing executive orders and 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Citation: 2 CFR 200.213 Condition: ICS has a formal policy in place to evaluate contracts with vendors that are considered covered under 2 CFR 180.200 to ensure that the recipients of federal funding was not suspended or debarred, however, this policy was not followed, and documentation to support management?s determination was not maintained for all applicable vendors. Cause: ICS did not follow the suspension and debarment policies in place. Effect: There is a risk that vendors who are suspended or debarred will receive federal funds through payment on their contract with ICS. Questioned Costs: None. There were no instances of non-compliance noted. Context: Management did not have formal documentation for 7 of 32 applicable vendors regarding whether procedures were performed to determine if the vendors selected have been suspended or debarred. Repeat Finding: Yes Recommendation: We recommend that management follows their written procedures and maintain supporting documentation for evaluating vendors to ensure they have not been suspended or debarred. Views of Responsible Officials: See Corrective Action Plan attached.

Program: CFDA 84.282 ? Charter Schools Sponsor Award Number: 0089-21-1044 Sponsor Agency: New York State Education Department Criteria: Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing executive orders and 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Citation: 2 CFR 200.213 Condition: The School has a formal policy in place to evaluate contracts with vendors that are considered covered under 2 CFR 180.200 to ensure that the recipients of federal funding was not suspended or debarred, however, this policy was not followed, and documentation to support management?s determination was not maintained. Cause: The School did not follow the suspension and debarment policies in place, which are in line with the requirements under Uniform Guidance. Effect: There is a risk that vendors who are suspended or debarred will receive federal funds through payment on their contract with the School. Questioned Costs: None. There were no instances of non-compliance noted. Context: Management did not have formal documentation regarding whether procedures were performed to determine if the vendors selected have been suspended or debarred. Repeat Finding: No Recommendation: We recommend that management follows the School?s procedures and maintain supporting documentation for evaluating vendors to ensure they have not been suspended or debarred. Views of Responsible Officials: See Corrective Action Plan attached.

2019-005 ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: CFDA 84.282 ? Charter Schools Sponsor Award Number: 0089-18-0151; 0089-19-0151; and 0089-19-9104 Sponsor Agency: New York State Education Department Criteria: For costs to be allowable, they must be adequately documented. In addition, the non-federal entity must establish and maintain effective internal controls to provide reasonable assurance that they can manage federal awards. Citation: 2 CFR 200.306(b), 200.403(g) and 200.303(a) Condition: Expenses of the population of ?dissemination workshops? did not have adequate documentation to support the expense charged against the grant. Cause: The School did not maintain sufficient documentation for expenses relating to the dissemination workshops. Effect: There is a risk that expenses that are not allowable can be charged to a federal award. Questioned Costs: The value of these items totaled $22,200. This was the entire population therefore no extrapolation was required. Context: There were 44 dissemination workshops during the year, all of which lacked proper documentation. Repeat Finding: No Recommendation: We recommend that adequate documentation to support all expenses is maintained. Views of Responsible Officials: See Corrective Action Plan attached.

2019-006 ? Equipment and Real Property Management Program: CFDA 84.282 ? Charter Schools Sponsor Award Number: 0089-18-0151; 0089-19-0151; and 0089-19-9104 Sponsor Agency: New York State Education Department Criteria: Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (i) 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; (ii) A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years. (iii) 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. (iv) Adequate maintenance procedures must be developed to keep the property in good condition. (v) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Citation: 2 CFR 215.313(d) Condition: The School did not maintain detailed equipment records that contained the criteria outlined in the regulation and did not perform a physical inventory of equipment. In addition, there was lack of controls to prevent loss, damage or theft as certain items could not be located at the time of the audit. Cause: The School did not establish a formal system to track the equipment and real property purchases. Effect: There is a risk that equipment or real property purchases can be charged to a federal award and be misappropriated without anyone knowing as part of the normal course of business. Questioned Costs: The extrapolated value of items unavailable for observation totaled $116,943. Context: During an on-site visit to review the equipment, we selected 10 items representing equipment purchases of $29, 523. We did not see packing slips and/or could not find physical assets of 7 items representing $22,216. As noted above, a complete physical inventory by asset was not performed. Repeat Finding: No Recommendation: We recommend that management maintain property records as outlined in the criteria above and to conduct a physical inventory of all equipment purchased. This inventory should be reconciled to the listing of purchases provided to the granting agency. Views of Responsible Officials: See Corrective Action Plan attached.

2019-007 ? Procurement Program: CFDA 84.282 ? Charter Schools Sponsor Award Number: 0089-18-0151; 0089-19-0151; and 0089-19-9104 Sponsor Agency: New York State Education Department Criteria: The final regulations of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (?UG?) made substantial changes to the cost principles related to procurement effective for the June 30, 2019 year. Under the UG, there are several new methods that must be followed: ? Micro purchases, which apply to goods and services less than $10,000, do not require competitive quotes but does require attempts at equitable distribution to avoid all purchases from the same vendor. ? Small purchases, which apply to goods and services directly charged to federal awards that are more than $10,000 but below the Simplified Acquisition Threshold ($250,000), require multiple rate quotes from qualified sources. ? Sealed bids when services are above the $250,000 level and which are most applicable for construction. ? Competitive proposals to be used when sealed bids are not practical. There are 5 standards that an organization must comply with regardless of which procurement method is used: ? Written procedures, ? Expenses must be necessary and reasonable, ? Subject to open competition, ? Code of conduct and conflict of interest policies must be adhered to, and ? Contain proper documentation including the detail of the purchase transaction, support of the procurement method used and the basis of the award and price. Citation: 2 CFR 200.320 Condition: The School?s procurement policy did not contain the criteria outlined in the regulation. Cause: The School did not update the procurement policy to be in line with the new requirements under Uniform Guidance. Effect: There is a risk that purchases will be made that do not contain the proper bids or be documented in a manner that is consistent with federal guidelines. Questioned Costs: None. Context: Management did not have formal documentation regarding the procurement procedures followed and decisions made for purchases above the micro purchase limit. In addition, the policy did not contain all the criteria for procurement thresholds above the micro purchase level. Repeat Finding: No Recommendation: We recommend that management make changes to the current policy to be consistent with the federal requirements. Views of Responsible Officials: See Corrective Action Plan attached.

2019-008 ? Suspension and Debarment Program: CFDA 84.282 ? Charter Schools Sponsor Award Number: 0089-18-0151; 0089-19-0151; and 0089-19-9104 Sponsor Agency: New York State Education Department Criteria: Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing executive orders and 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Citation: 2 CFR 200.213 Condition: The School did not have a formal policy in place to evaluate contracts with vendors that are considered covered under 2 CFR 180.200 to ensure that the recipients of federal funding was not suspended or debarred. Cause: The School did not update their policies to be in line with the new requirements under Uniform Guidance. Effect: There is a risk that vendors who are suspended or debarred will receive federal funds through payment on their contract with the School. Questioned Costs: None. There were no instances of non-compliance noted. Context: Management did not have formal documentation regarding whether procedures were performed to determine if the vendors selected have been suspended or debarred. Repeat Finding: No Recommendation: We recommend that management create a formal policy that includes procedures for evaluating vendors to ensure they have not been suspended or debarred. Views of Responsible Officials: See Corrective Action Plan attached.

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