DANVILLE SCHOOL DISTRICTLocal Government

U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553, 10.555, AND 10.582 PASS-THROUGH NUMBER 7503 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Activities Allowed or Unallowed / Allowable Costs/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200, subpart E - Cost Principles, establishes principles for determining the allowable costs incurred by the District under federal awards. Such costs are to be necessary and reasonable for the performance of the federal award. Condition: During our tests of payroll and non-payroll expenditures, we identified $1,603 in unallowable costs paid from the Child Nutrition program. These unallowable costs were comprised of $1,353 that should have been paid from District operating and activity funds, $192 due to payroll overpayments, and $58 due to an overpayment of an invoice. In April 2026, the District paid $1,353 from operating and activity funds to the food service fund to reimburse a portion of the unallowable costs. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $1,603 were paid from the Child Nutrition program. Questioned costs: The amount of questioned costs was $1,603. Context: An examination of 2 Child Nutrition employees with payroll totaling $33,673 from a population of 11 employees with payroll totaling $141,447 and an examination of 11 Child Nutrition non-payroll expenditures totaling $25,622 from a population of 109 checks totaling $432,754. Our samples were not statistically valid. Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit for resolution regarding this matter and implement stronger internal controls over program expenditures Views of responsible officials: The District will implement proper control over program expenditures. Expenditures for other programs will be paid directly from those program funds, if possible.

U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553, 10.555, AND 10.582 PASS-THROUGH NUMBER 7503 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-002. Procurement and Suspension and Debarment Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200.320 and Ark. Code Ann. § 6-21-304 establish 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 $25,700. For purchases of supplies and services exceeding $25,700, solicitation of bids or proposals must be utilized. Condition: The District did not retain documentation for price quotations obtained from at least two qualified vendors for Child Nutrition program commodities purchased from one vendor totaling $14,766. School board approval of vendors for Child Nutrition program purchases exceeding $25,700 was not obtained. Additionally, during our review of Child Nutrition program invoices, we identified food purchases that did not agree to the vendor's bid sheet description or price. Cause: Lack of internal controls and management oversight over the procurement of supplies and services. Effect or potential effect: Failure to retain documentation of price quotations and bid approvals increases the overall risk of noncompliance with federal regulations. Questioned costs: $0 Context: An examination of non-payroll expenditures for 11 checks totaling $25,622 from a population of 109 checks totaling $432,754. Of the 11 checks examined, 3 checks were to vendors that required solicitation of quotes or bids. Our sample was not statistically valid. Identification as a repeat finding: No Recommendation: The District should implement proper controls and monitor Child Nutrition program purchases for compliance with applicable procurement requirements. Views of responsible officials: The District will gather two qualified vendors for purchases of $10,000 to $25,000. The District will have Board approval for purchases exceeding $25,700. In addition, the Food Service Director will exercise care to order items on the bid list, but will not be limited to only items on the bid list as new items become available.

U.S. ENVIRONMENTAL PROTECTION AGENCY CLEAN SCHOOL BUS REBATE PROGRAM - AL NUMBER 66.U01 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-001. Eligibility Criteria or specific requirement: The 2022 Clean School Bus Rebate Program provides the following requirements for the replacement of eligible school buses. The old school buses to be replaced must be a vehicle model year 2010 or older diesel-powered school bus that will be scrapped if selected for replacement; have a gross vehicle weight rating of 10,001 lbs or more; be operational at the time of application submission; and have provided bus service to a public school district for at least 3 days/week on average during the 2021/2022 school year. Condition: The District replaced three school buses funded by the 2022 Clean School Bus Rebate Program (Program). One of the old school buses did not appear to meet all of the eligibility requirements for replacement. Specifically, documentation could not be provided to support that the replaced school bus was operational at the time of the grant application submission or provided bus service to the school district for at least three days/week on average during the 2021/2022 school year, as required by the Program. Cause: Lack of management oversight and understanding of program requirements. Effect or potential effect: One clean school bus replaced an old bus that did not appear to meet the eligibility requirements for replacement. Questioned costs: The amount of questioned costs was $375,000. Context: Three school buses were replaced totaling $1,035,000. Identification as a repeat finding: No Recommendation: The District should contact the U.S. Environmental Protection Agency for guidance regarding this matter and implement controls related to grant requirements. Views of responsible officials: The District has contacted the EPA regarding buses replaced and the new buses purchased in the 2022 Clean School Bus Rebate. As of this date (February 25, 2025), we are still waiting on their instructions for our next actions. The District uploaded all required documentation to the EPA portal in the close out process.

U.S. ENVIRONMENTAL PROTECTION AGENCY CLEAN SCHOOL BUS REBATE PROGRAM - AL NUMBER 66.U01 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-002. Equipment and Real Property Management Criteria or specific requirement: The 2022 Clean School Bus Rebate Program provides the following requirements for scrappage of old buses. The scrappage of the old school buses to be replaced must be completed by (1) crushing the engine or creating a 3" diameter or larger hole in the engine block and (2) cutting or crushing one chassis rail between the axles. Documentation of the scrappage must include photographs of the destroyed engine and chassis rail for each scrapped bus and a letter signed by the representative of the scrap yard or other entity that performed the scrappage that lists the VINs of the buses that were scrapped, affirms the date(s) that the buses were scrapped, details the method of scrappage that aligns with the requirements outlined above, and lists contact information for the entity that performed the scrappage. Condition: All required documentation of the scrappage of the three school buses from the 2022 Clean School Bus Rebate Program (Program) could not be provided. Specifically, photographs of the destroyed engine and chassis rail for each scrapped bus were not retained, as required by the Program. Cause: Lack of management oversight and understanding of program requirements. Effect or potential effect: All required documentation of the scrapped school buses was not available. Context: Three school buses were replaced totaling $1,035,000. Identification as a repeat finding: No Recommendation: The District should contact the U.S. Environmental Protection Agency for guidance regarding this matter and implement controls related to grant requirements. Views of responsible officials: The District had the three buses enrolled in the EPA Program crushed in entirety at Cunningham Metals in Russellville, AR. The motor was only to be drilled if the District was keeping the chassis on site. The receipt from the salvage was uploaded to the EPA portal in the close out process. Pictures taken at the salvage yard and a letter was provided by the salvage yard. As of this date (February 25, 2025), we are waiting on instructions from the EPA for our next actions.