Rainier School District No. 307Local Government

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Rainier School District No. 307 September 1, 2020 through August 31, 2021 2021-001 The District had inadequate internal controls for ensuring compliance with federal procurement requirements. CFDA Number and Title: 10.555 ? National School Lunch Program 10.555 ? COVID-19 ? National School Lunch Program 10.559 ? Summer Food Service Program for Children Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 34307 Questioned Cost Amount: $0 Background The District participates in the National School Lunch and Breakfast programs. For the 2020-2021 school year, the District received $34,198 for the National School Lunch Program and $237,737 for the Summer Food Service Program for Children. These programs typically provide funding for free and reduced price meals for students of low-income families, however, during 2020-2021 school year, the District used the funding to provide free meals to all students as allowed under a USDA waiver. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. State and federal requirements allow local entities to bypass normal procurement laws through a process commonly referred to as ?piggybacking.? This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. To comply with piggybacking law, the entity must enter into this interlocal agreement before it purchases services or goods from the other entity?s bid contract. Description of Condition Although the District has controls over procurement, they were ineffective for ensuring compliance with all applicable requirements. The District has an interlocal agreement for food service management; however, this interlocal agreement does not have a clause that allows the District to piggyback off purchases. The District utilized purchased contracts from their food service manager who was the lead agency when purchasing $14,464 of dairy products using these federal funds. We consider this internal control deficiency to be a significant deficiency. The issue was not reported as a finding in the prior audit. Cause of Condition Officials said they were not aware the District is required to have an interlocal agreement in place with other school districts when piggybacking off their bids. Effect of Condition The District spent $14,464 in program funds on a contract that another school district procured, but it did not have an interlocal agreement that allowed for piggybacking with the lead agency. Since the District did not enter into an interlocal agreement with the lead agency that allowed for piggybacking, state law would have required it to competitively procure the purchases. Without effective internal controls that ensure it follows procurement or piggybacking procedures, the District cannot demonstrate it complied with applicable federal procurement requirements and received the best price for the dairy products. However, since the purchase was allowable under the federal program, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure it complies with applicable procurement requirements for purchases of goods and services. District?s Response To correct the finding Tumwater will rewrite the interlocal agreement to include language that will allow Rainier to use Tumwater?s bids for milk and food. The interlocal will be signed each year before the start of school. This will become part of the opening paperwork check list we have. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.