Mabton School District No. 120Local Government

The District?s internal controls were inadequate for ensuring it complied with procurement requirements. CFDA Number and Title: 10.553 ? School Breakfast Program 10.555 ? National School Lunch Program 10.555 ? COVID-19 ? National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction Pass-through Award/Contract Number: 207WAWA3N1099 Questioned Cost Amount: $0 Background The District participates in the Child Nutrition Program, which includes the School Breakfast Program and National School Lunch Program. These programs provide free or reduced-price meals to low-income students. The District received $558,092 to administer these programs during the 2020-2021 school year. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition 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. District policy conforms to the most restrictive laws for purchases and requires written quotations from three or more qualified sources for purchases of goods and services less than $75,000 and a formal bid process for purchases of $75,000 or more. During the audit period, the District purchased food products from one contractor for less than $75,000, but it did not obtain three written quotes from qualified sources as required. We consider this deficiency in internal controls to be a material weakness that led to a material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The District had turnover among key staff responsible for procuring goods and services, and current employees were not able to determine why former staff did not ensure the District had met procurement requirements for this food purchase. Effect of Condition The District did not comply with federal procurement requirements and its own policy. The District purchased food products from one contractor totaling $57,099 without obtaining three written quotes. Therefore, the District cannot demonstrate it received the best price for the goods it purchased. Recommendation We recommend the District strengthen its internal controls over procuring goods and services to ensure compliance with federal procurement requirements and its own policy. We also recommend the District provide training to staff responsible for the procurement process. District?s Response David Carlile, the new Business Manager, has taken over the responsibility of making sure that the most restrictive of either the government requirements or the Mabton School Board requirements for procurement, particularly when going to bid, are met and compliant. The Mabton School Board Policy and Procedures (6220 and 6220P) have been reviewed by the new Business Manager and Accounts Payable Clerk. These Policy and Procedures are reviewed by the Business Office Personnel responsible for procurement at least twice a year and particularly during the heavy procurement period prior to the new fiscal year. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our 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.