Alabama Institute for Deaf and BlindHigher Education

Reference Number: 2025-004 Compliance Requirement: Procurement and Suspension/Debarment Type of Finding: Internal Control and Compliance Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance AL Number(s) and Title(s): 84.027 – Special Education Cluster Federal Awarding Agency: U.S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: A250254 Questioned Costs: $264,966.68 The Institute failed to comply with Federal procurement standards and the Code of Alabama 1975. The U. S. Code of Federal Regulations Title 2, Part 200.318(a), of the Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states “the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations.” Part 200.318(i), states “The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction.” Section 200.320 describes the methods of procurement to be followed. This guidance includes procedures for small purchases. Small purchases are purchases higher than the micro-purchase threshold but not exceeding the simplified acquisition threshold. During the 2025 fiscal year, the thresholds were $10,000 and $250,000, respectively. When small purchase procedures are used, price or rate quotations should be obtained from an adequate number of sources. Article 5 of the Code of Alabama 1975, Section 41-4-124(b), states that all educational or eleemosynary institutions are subject to the article except as it relates to the purchase of professional services and the oversight and authority of the Chief Procurement Officer. It further states that those entities should maintain procurement offices and personnel and adopt rules as may be necessary to comply with the article. The Institute’s procurement policy references the Code of Alabama 1975, Section 41-16-50, which no longer applies to the Institute due to passage of Act 2021-296, now codified at Code of Alabama 1975, Section 41-4-110, et seq. Since the Institute has not updated their procurement policies and procedures to comply with current State law and regulations, the Institute did not have adequate policies and procedures in place to ensure compliance with the U.S. Code of Federal Regulations Title 2, Part 200.318 and 200.320. Additionally, the Institute’s procurement policy states the bid threshold is $15,000.00. Therefore, small purchase procedures can only be used for purchases between the micro-purchase threshold ($10,000) and the threshold set by the Institute ($15,000). Furthermore, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). The Institute failed to adopt rules as necessary to comply with Code of Alabama 1975, Section 41-4-124(b). Due to a lack of properly designed and implemented procurement policies and procedures, the Institute awarded three contracts during the fiscal year without obtaining price or rate quotations from an adequate number of sources. These purchases totaled $188,631.68. The Institute also purchased $76,335.00 in visual aid equipment without bidding the award in accordance with Institute policies. As a result, the Institute did not comply with Uniform Guidance procurement requirements or the Code of Alabama 1975 for these purchases. It was also noted that the Institute failed to verify that vendors were not suspended or debarred before entering into a covered transaction. As a result, procurements could be improperly entered into with vendors that are suspended or debarred. Recommendation The Institute should implement policies and procedures to ensure compliance with the Uniform Guidance and the Code of Alabama 1975 requirements related to procurement transactions and to ensure proper suspension and debarment verifications are performed and that documentation of the suspension and debarment status is retained. Views of Responsible Officials of the Auditee Management agrees that the Institute' s procurement policy was not updated for the passage of Act 2021-296 and will take corrective actions.

Reference Number: 2022-006 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Internal Control Internal Control Impact: Significant Deficiency Compliance Impact: None AL Number(s) and Title(s): 84.425C ? COVID-19 ? Governor?s Emergency Education Relief (GEER) Fund Federal Awarding Agency: U.S. Department of Education Federal Award Number: None Pass-through Entity: Alabama State Department of Education Pass-through Award Number: None Questioned Costs: None The Institute did not design and implement internal controls to ensure that employees paid with Federal funds were paid at the rate contained in the approved budget. Title 2 of the Code of Federal Regulations, Section 200.303, requires that a non-Federal entity 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. Effective internal controls would include controls that ensure compliance with approved budget amounts. The Institute?s budget for the GEER program included approved hourly wages for employees who would be conducting a summer camp. Three employees from a population of seventeen were selected for review, and it was determined that the pay rates paid to the summer camp employees were not in accordance with the approved budget. All three employees held other positions at the Institute, and due to a lack of properly designed and implemented internal controls, these employees were paid at the rate of pay for the other position. As a result, all three employees were overpaid for the duties performed under the summer camp position. Recommendation: The Institute should design and implement internal controls to ensure that employees paid with Federal funds are paid in accordance with approved budgets.

Title 34 of the Code of Federal Regulations (CFR) Section 303.225 states, (a) Each application must provide satisfactory assurance that the Federal funds made available under section 643 of the Act to the State: (1) Will not be commingled with State Funds; and (2) Will be used so as to supplement the level of State and locals funds expended for infants and toddlers with disabilities and their families and in no case to supplant those State and local funds. (b) To meet the requirement in paragraph (a) of this section, the total amount of State and local funds budgeted for expenditures in the current fiscal year for early intervention services for children eligible under this part and their families must be at least equal to the total amount of State and local funds actually expended for early intervention services for these children and their families in the most recent preceding fiscal year for which the information is available. Allowance may be made for - (1) A decrease in the number of infants and toddlers who are eligible to receive early intervention services under this part; and (2) Unusually large amounts of funds expended for such long-term purposes as the acquisition of equipment and the construction of facilities. The pass-through entity requires the Institute to report maintenance of effort quarterly. The form used by the Institute to report maintenance of effort was not updated to reflect the State expenditures expended for early intervention for the audit period as required. Instead, the amount reported was the same as the prior year budgeted amount. This caused the amount to be certified at fiscal year-end to be understated $1,653,365.04. According to the Senior Accountant, the instructions she followed to complete the form did not mention the State expenditures should be changed. Recommendation The Institute should ensure compliance with pass-through entity requirements and 34 CFR 303.225 by implementing controls that include having maintenance of effort reports reviewed by management prior to submission.