LEAKE COUNTY SCHOOL DISTRICT

Significant Deficiency in internal control over compliance and non-material noncompliance. Finding 2021-001. Procurement. Covid-19 ? Education Stabilization Fund (ESSER I) CFDA 84.425D Criteria: The school district must have and use documented procurement procedures, consistent with state and local laws and regulations and the standards of 2 CFR Part 200 Subchapter D federal procurement standards. All procurement transactions for the acquisition of property or services required under a federal award must be conducted in a manner providing full and open competition. Condition: We noted two instances where the school district purchased janitorial products to assist in cleaning the school buildings in response to the COVID-19 Pandemic. The amount of the purchase orders exceeded the micro purchase level. There was no evidence in the file to show that the district obtained at least 2 (two) competitive quotes. Cause: The Covid-19 ? Education Stabilization Fund (ESSER I) grant is new to the school district and is being administered across departmental lines. The maintenance director used state contract pricing to purchase the items for cleaning, using only one contract source as a quote. The need for a second quote, although specified in written procurement policies, was not understood. Controls were not in place to ensure compliance in this area. Effect: The procurement transactions were made in a manner that did not provide full and open competition. Controls were not effective to prevent this noncompliance. Questioned Costs: The total amount of the two procurement transactions was $35,442.78. Perspective: Total grant expenditures for the Covid-19 ? Education Stabilization Fund grants under CFDA 84.425D were $939,878.30. The total number of procurement transaction claims in the grant for the year ended June 30, 2021, were 84. Of the 84 claims, 18 claims exceeded the micro purchase level. We tested 17 of the 18 total procurement claims exceeding the micro purchase level for compliance. Repeat Finding: No Recommendation: We recommend that the district strengthen controls in the area to procurement to make sure that all procurement transactions meet both state and federal procurement standards. Views of Responsible Official: See the Corrective Action Plan included in this report.

Finding 2021-002. Procurement. Covid-19 ? Coronavirus Relief Fund CFDA 21.019 Criteria: Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the district contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors/vendors have not been suspended or debarred unless otherwise excluded. This verification can be accomplished by a) checking SAM exclusions; b) collecting a certification from the contractor/vendor; or c) adding a clause or condition to the covered transaction with that contractor/vendor. The district must meet this requirement before entering into the contract or paying the contractor/vendor more than $25,000, and it must maintain documentation to demonstrate compliance. Condition: We noted 6 instances where purchase orders were issued to two separate vendors with no evidence on file to substantiate that the district verified the debarment and suspension status of the vendors. We checked the status of the vendors and found that neither of the two vendors involved had an active debarment or suspension status. Cause: The Covid-19 ? Coronavirus Relief Fund grant is new to the district and being administered across department lines. The normal protocol and requirements for federal spending, which include checking for debarment, were not followed for these purchases. The staff involved did not know that the debarment and suspension status needed to be checked. Effect: Purchase orders were issued to vendors before debarment and suspension status was checked. While we verified that there was no active debarment and suspension status on either vendor, the district could not ensure the vendors paid with federal grant funds were eligible to participate in federal programs. Questioned Costs: Because we were able to subsequently verify that the vendors were not suspended or debarred, we are not questioning costs. Perspective: Total grant expenditures for the Covid-19 ? Coronavirus Relief Fund grants under CFDA 21.019 were $1,271,690.78. The total number of procurement transactions for the year ended June 30, 2021, was 8. The 8 transactions were spread out over 3 vendors. We tested 7 of the 8 procurement transactions. Repeat Finding: No Recommendation: We recommend that the district strengthen internal controls over procurement to ensure compliance with federal requirements, as well as to provide training to staff responsible for the procurement process. Views of Responsible Official: See the Corrective Action Plan included in this report.