IZARD COUNTY CONSOLIDATED SCHOOL DISTRICT

U. S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - CFDA NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 3306 AUDIT PERIOD - YEAR ENDED JUNE 30, 2020 Procurement and Suspension and Debarment Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200.320 establishes the methods of procurement to be followed by a non-federal entity when purchasing supplies or services with federal awards. Price or rate quotations must be obtained from an adequate number of qualified sources for purchases greater than $10,000 and up to $250,000. For purchases of supplies and services exceeding $250,000, solicitation of bids or proposals must be utilized; however, Ark. Code Ann. ? 6-21-304 requires solicitation of bids on the purchase of commodities with an estimated purchase price equal to or exceeding $20,910. Condition: A Procurement Review for the District was completed by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) in September 2020. The review noted that the District was participating in a purchasing group. The purchasing group awarded the food contract to a food service vendor. The Memorandum of Understanding (MOU) signed with the purchasing group allows the District to spend 20% of its total expenditures for food items outside of the contract with other vendors. Items not purchased through the purchasing group must be solicited according to the appropriate purchasing thresholds. The District spent $99,397 with vendors outside the purchasing group and $149,205 with the main vendor contract for a total dollar amount of $248,602. The maximum the District could have spent outside the main vendor contract would have been $49,720. The District spent more than the 20% allowed by the MOU. Additionally, the District spent more than $20,910 for food and paper product items purchased outside the main vendor contract but did not solicit bids as required by Ark. Code Ann. ? 6-21-304. Cause: Lack of internal controls and management oversight over the procurement of supplies and services. Effect or potential effect: The District spent more than the 20% allowed by the purchasing group MOU and expended Child Nutrition program funds without soliciting bids as required by Ark. Code Ann. ? 6-21-304. Context: Results of a Procurement Review by the DESE, CNU and examination of expenditures paid from the Child Nutrition program for food and paper products totaling $248,602. Recommendation: The District should contact DESE, CNU for guidance, implement controls, and monitor child nutrition purchases for compliance with applicable procurement requirements. Views of responsible officials: The District Child Nutrition Director has contacted applicable agencies to ensure compliance with applicable procurement requirements in the future.

MATERIAL WEAKNESS - Procurement Review by DESE. Contact Person - Fred Walker The District Child Nutrition Director has contacted applicable agencies to ensure compliance with applicable procurement requirements in the future. The Child Nutrition Director will follow all procurement guidelines. 2020-001 SEGREGATION OF DUTIES Contact Person - Fred Walker The District will adopt sound accounting policies and establish and maintain internal control that will initiate, authorize, record, process, and report transactions consistent with management's assertions embodied in the financial statements to safeguard District assets.2020-002