Grand Coulee Dam School District No. 301

Description of Condition During fiscal year 2020, the District received $303,957 in funding from the U.S. Department of Agriculture for the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. This funding provides eligible low-income students with free or reduced-price meals. Federal regulations require recipients to establish and follow internal controls for ensuring compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Documentation must be kept to support the procurement history. District policy conforms to the most restrictive laws for purchases, requiring written quotations from three or more qualified sources for purchases of goods and services between $3,500 and $75,000. When the District procured its milk vendor for the 2020 fiscal year, it did not comply with its own policy by soliciting quotes. Instead, the District contracted with a vendor that historically has offered the lowest quote. We consider this to be a significant deficiency in internal controls. The issue was not reported as a finding in the previous audit. Cause of Condition The District has only received quotes from one milk vendor for the past several years, despite trying to obtain quotes from other sources. As a result, the District chose to contract with its previous milk vendor for the 2020 fiscal year. The District did not follow its own policy requiring it obtain written quotes from three or more qualified sources. Effect of Condition The District did not solicit quotes for one contract totaling $23,258. Without attempting to obtain quotes from at least three qualified sources, the District cannot guarantee it received the best price or value for its purchases. Additionally, the District cannot demonstrate compliance with its own policy and federal procurement regulations. Because the costs are allowable under the Child Nutrition Programs, we are not questioning them. Recommendation We recommend the District strengthen its internal controls over procurement to ensure compliance with federal requirements and its own policy, and maintain documentation supporting the procurement history. District?s Response The Grand Coulee Dam School District recognizes and agrees that the district did not comply with state laws regarding procurement procedures. Being a remote school district, we recognized there is only one local milk distributer who could meet our need of multiple distributions per week. During the Fall 2020 we went through a Federal Procurement review which identified the lack of following procurement procedures. Specifically, contracting with the current distributor was lacking the bidding process. In the spring of 2021, we corrected our process and solicited bids for the distribution of milk for FY 2021/22. 1) Per RCW 28A.335.190, Request for bids was advertised in the district?s regular solicitation distribution. 2) Direct solicitations were sent to the current distributor and the current food service management company with the intent of securing at least two bids. 3) Bids were reviewed and awarded per the solicitation specifications and per RCW 28A.335.190. As expected we received only one bid from the current distributors. We will follow the State procurement process on future milk solicitations. Auditor?s Remarks We appreciate the District?s commitment to resolving the issues noted and will follow up on corrective action during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.

CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER UNIFORM GUIDANCE Grand Coulee Dam School District No. 301 September 1, 2019 through August 31, 2020 This schedule presents the corrective action planned by the District for findings reported in this report in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Finding ref number: 2020-001 Finding caption: The District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Name, address, and telephone of District contact person: Susie Marchand, Business Manager 110 Stevens Street Coulee Dam, WA 99116 (509) 633-2143 Corrective action the auditee plans to take in response to the finding: Spring of 2021, bids for the distribution of milk will be solicited for FY 2021/22 school year. 1) Per RCW 28A.335.190, Request for bids will be advertised in the district?s regular solicitation distribution (Star and Tribune newspapers). 2) Direct solicitations will be sent to the urrent distributor and the current food service management company with the intent of securing at least two bids. 3) Bids will be reviewed and awarded per the solicitation specifications and per RCW 28A.335.190 Anticipated Date to complete the corrective action: Spring 2021