Natchez-Adams School District

Finding 2019-002: Purchase orders {Significant deficiency, State Law finding, Federal Awards finding, Material noncompliance} Criteria: State law requires all schools to use purchase orders, except for goods and services detailed in the school board?s approved purchasing policy. Approval of the purchase order is required before placing an order with a vendor. Condition: During our internal control testing over cash disbursements, as well as the compliance testing in the Child Nutrition Cluster over allowable costs and allowable activities, we noted multiple instances where the purchase order was actually completed after the invoice and the merchandise were received. In the cash disbursements test there were two checks and thirteen invoices with dates prior to the purchase order. In the federal award testing, it was all disbursements tested. Cause: The Child Nutrition bookkeeper appeared to misunderstand the proper order of the steps in the purchasing process. Effect: The purpose of the purchase order is multiple. The purchase order is evidence of approval of a transaction, but it is also a signal to the accounting department that funds are being committed for a purchase of goods and services that may be received in a future accounting period. The internal control of matching the purchase order with the eventual invoice is a step in verifying the information prior to payment. In the case of the federal program, funds could have been expended for unallowable costs or activities or the budget over expended because the purchase order was not completed first to, again, notify accounting that a budget item was being spent. Recommendation: Personnel should be reminded of the importance of each step in the purchasing process. Secondly, consideration should be given that the matching of the purchase order to the invoice and receiving report be performed by someone in accounting and not purchasing. If the approved invoices had been sent to accounting for payment and no one in accounts payable responsible for paying that invoice had a matching purchase order, this misunderstanding of the order of paperwork could have been noticed and corrected sooner. View of Responsible Officials: The Business Manager has already had a discussion with the Child Nutrition bookkeeper about making sure the purchase order is completed prior to the merchandise being received and invoiced. The bookkeeper has been trained on the District?s processes regarding procurement. Moving forward, all food services purchases must be reviewed by and approved by the District Purchasing Agent in the Business Office. The Food Services Director is no longer the purchasing agent for Food Services. Questioned costs: None. All the invoice tested were approved and appropriate to the grant. Criteria: State law requires all schools to use purchase orders, except for good and services detailed in the school board?s approved purchasing policy. Approval of the purchase order is required before placing an order with a vendor. Condition: For all items tested for allowable costs and allowable activities, we noted the purchase order was actually completed after the invoice and the merchandise were received. This is not a repeat finding.

Finding 2019-003 Child Nutrition Cluster CFDA # 10.553, 10.555, 10.559 {State Law finding, Federal Awards finding, Material noncompliance} Criteria: The Nutrition Integrity 2018 Grant was awarded to the District for the purposes of replacing certain kitchen equipment (deep fat fryers) with equipment that would prepare food in a healthier manner for the students. Because the grant related to the purchases of major equipment, guidelines were specified in the text for the procurement process, including that the District had to obtain two quotes from the equipment representative meeting the minimum requirements. It also reminded the grantee that State Law required bids for anything over $50,000. Condition: Two combination steamer ovens were purchased for a total of $108,174 with no quotes or bids obtained. Questioned costs: None. The purchase was approved and was in accordance with all other aspects of the grant award. Cause: The Food Service director has stated that she was under the impression that the purchase was falling under a state grant and that bidding was not necessary. She was not fully aware of the specifications in the grant document. Effect: Non-compliance with the grant requirements with respect to procurement. This is not a repeat finding. Recommendation: All performance responsibilities in grant documents should be specifically reviewed with the person who will be accountable for requirements. Something as simple as a meeting of all persons involved with a grant at the start, prior to any actions taken, could help remediate this kind of situation. View of Responsible Officials: See Corrective Action Plan.