Snoqualmie Valley School District No. 410Local Government

The District did not have adequate internal controls for ensuring compliance with federal activities allowed, allowable costs and eligibility requirements and it did not comply with eligibility requirements. Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $4,724 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program and National School Lunch Program. These programs provide free and reduced-price meals to students from low-income families. In the 2023- 2024 school year, the District received $838,456 in federal funding, including $205,718 in Supply Chain Assistance (SCA) awards, to administer these programs. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Activities Allowed and Allowable Costs Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. All costs that recipients charge to the program must comply with program requirements and be supported by proper documentation that demonstrates costs are allowable. Specifically, for the Supply Chain Assistance funds, the District must use the award exclusively to purchase domestic, unprocessed or minimally processed food products for the school meal programs. Eligibility Direct certification is the process districts use to certify categorically eligible children for free meals without further application. Washington state has an electronic system that matches data from the Department of Social and Health Services with Comprehensive Education Data and Research System data to produce a “direct certification list.” Districts must download the direct certification list at least monthly to ensure they serve free meals to eligible students. Description of Condition Activities Allowed and Allowable Costs The District did not have adequate internal controls to ensure it properly tracked SCA expenditures to demonstrate that the District purchased allowable food products. We consider this deficiency in internal controls to be a significant deficiency. Eligibility The District did not have adequate internal controls to perform direct certification downloads monthly and had no monitoring to ensure the required process is completed. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Activities Allowed and Allowable Costs District staff were aware of the SCA requirements and used the spreadsheet to track SCA expenditures. However, due to staff turnover, the spreadsheet was not adequately completed and did not provide enough detailed information to demonstrate that the District purchased allowable food products. Eligibility District staff were aware of the requirements to determine students’ eligibility each month, but they did not complete the direct certification downloads monthly as required. The Food Services Administrative Assistant is responsible for completing the verification; however, they did not perform seven of the monthly downloads. Effect of Condition and Questioned Costs Activities Allowed and Allowable Costs Because the District did not properly track SCA expenditures, it could not initially support costs totaling $30,379 that it charged to the program. During the audit, the District recreated its cost tracking spreadsheet and provided evidence demonstrating that allowable expenditures exceeded the SCA funding received. Therefore, we are not questioning these costs. Eligibility The District did not have documentation to support that it performed the direct certification downloads for seven of the 11 months tested. Without documentation showing it performed the direct certification downloads, the District cannot demonstrate compliance with the awarding agency’s eligibility requirements. Furthermore, the District risks not providing free meals to eligible students and providing free meals to ineligible students. Using a statistical sample, we found the District did not have documentation supporting the eligibility status for six out of 28 direct certified students tested. The District received $4,724 for meals provided to these students. Based on projection of our sample, we identified an additional $97,000 in estimated overpayments for free and reduced meal costs. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. Recommendation Activities Allowed and Allowable Costs We recommend the District ensure it retains sufficient documentation to demonstrate that costs charged to the federal program are allowable and comply with program requirements. Eligibility We recommend the District establish internal controls to ensure staff perform direct certification downloads monthly, retain documentation of downloads performed and provide adequate oversight of the process to comply with direct certification requirements. District’s Response The District’s Food Services Department is staffed by two administrative employees. The internal control deficiencies identified by the auditor resulted from an unanticipated long-term absence of one employee and the retirement of the other. The District is committed to strengthening internal controls within the department and will implement enhanced training for administrative staff on critical procedures and protocols. These measures are intended to ensure appropriate oversight and continuity of operations during periods of staff absence. 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 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs. Title 7 CFR 210.9(b)(17), Agreement with State Agency, which include maintaining documentation demonstrating appropriate use of SCA funds Office of Superintendent of Public Instruction (OSPI) Bulletin 029-22, Child Nutrition Services, documents requirements for allowable use of Supply Chain Assistance funds.

2023-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education – Grants to States 84.027 COVID-19 Special Education – Grants to States 84.173 Special Education – Preschool Grants 84.173 COVID-19 Special Education – Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 84.027A 0307771, 84.173A 0367163, GT-00628, 84.027X 0312299, 84.173X 0371269 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of each eligible student. During fiscal year 2023, the District spent $1,874,916 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District’s policy conforms to federal requirements for personal services, which requires price or rate quotations from a reasonable number (for example, more than one) of qualified sources for services costing between $10,000 and $250,000. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition During our audit, we found the District did not follow its policy for documenting and obtaining price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from six personal service contractors and charged $246,484 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition When soliciting quotes, the District requested quotes from three vendors and received responses from vendors stating they lacked available staffing to perform the requested services. The District misinterpreted the requirement and considered the responses as valid quotes. Additionally, the District did not attempt to obtain quotes from other sources to ensure it has obtained more than one quote for each personal service. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. Recommendation We recommend the District: • Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy • Follow its procurement policy and federal regulations when procuring personal services and purchases with federal funds District’s Response The District notes that in the instances of noncompliance, the vendor responses affirming no available staffing (incorrectly counted as a quote) could have been used as evidence of one of the four allowable circumstances of noncompetitive procurement: after solicitation of a number of sources, competition is determined inadequate. As such, the likely outcome of the procurement would have been the same, although the process to get to that conclusion needs to be corrected. The District will make that correction going forward. When vendors respond to quote solicitations with no available staffing, the District will change internal practices and either continue to solicit additional quotes from additional vendors who do have available staffing or will evaluate the procurement using the noncompetitive procurement guidelines outlined in the Uniform Guidance. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 – Methods of procurement to be followed, describes each allowable procurement method.

2022-001 The District did not have adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Assistance Listing Number and Title: 84.027 Special Education ? Grants to States 84.173 Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0307545, 0338518, 0366911 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-002 Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2022, the District spent $1,207,390 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. 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 During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional services contractors and charged $189,261 to the award for these services without obtaining price or rate quotations from a reasonable number of qualified sources, as federal regulations and District policy require. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. Cause of Condition After completion of the 2021 audit in May 2022, the District?s finance staff provided training about the requirements to the Special Education program staff. However, staff responsible for procuring the professional services did not fully understand federal procurement requirements and District policy and did not obtain quotes as required. Effect of Condition Without obtaining a reasonable number of quotes, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are fully familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds District?s Response The District will continue to provide annual and ongoing training of Student Services staff responsible for procuring goods and services to ensure they are fully familiar with requirements and District policy. It is our expectation that staff follow these procurement policies and procedures with fidelity. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.

2022-002 The District did not have internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 ? Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: COVID-19, 84.425U-0712250 COVID-19, 84.425D-0120461 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Background The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $1,250,418 in federal funding under its ESF awards. This included $1,241,091 in the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), and $9,327 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) subprogram (84.425U). Federal regulations require award 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. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition The District hired one contractor to replace and upgrade the HVAC system at one of its schools to improve air quality. During the 2021-2022 school year, the District paid $354,454 from its ESSER II award to the contractor for work that laborers performed on the project. Our audit found the District did not have adequate internal controls for ensuring compliance with prevailing wage rate requirements. Specifically, the District did not collect and review all weekly certified payroll reports from the contractor and subcontractor to confirm they paid laborers proper prevailing wages. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition District employees said they reviewed the Department of Labor and Industries website to confirm the contractor and subcontractor submitted weekly certified payroll reports. However, they did not know they needed to collect and review the reports each week to confirm the contractor and subcontractor paid laborers proper prevailing wages. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with the federal wage rate requirements. Further, the District could be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District was required to collect a total of 25 weekly certified payroll reports, but did not collect any of them. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District develop internal controls to ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response State law does not require collection and review of certified payroll records for public works contracts. For most public works projects, the district requires contractors to submit weekly certified payroll to the State Department of Labor & Industries. As an additional control to ensure compliance, the District withholds a portion of the contract value as retainage until all certified payroll and other required documentation is submitted to and confirmed by the State Department Labor and Industries. Given the State procedures in place, the risk that federally funded laborers are not paid similar to local workers for similar projects is extremely low. To meet Federal procurement requirements, having the district also collect certified payroll records seems redundant and may not further reduce the risk that laborers might not be getting paid prevailing wages. However, the district has implemented a process of monitoring weekly payroll reports from contractors and subcontractors on federally-funded public works projects. The district rarely uses federal funds for public works contracts. 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 29 CFR, Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

2021-001 The District did not have internal controls for ensuring compliance with federal time-and-effort documentation and Davis-Bacon Act (prevailing wage rate) requirements.Background The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. During fiscal year 2021, the District spent $586,444 in federal funding under its ESF awards. This included $180,860 from the Elementary and Secondary School Emergency Relief (ESSER) Fund subprogram award funded by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (ESSER I), and $405,584 from the ESSER subprogram award funded by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act (ESSER II). Federal regulations require award 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. Time-and-Effort Documentation Federal regulations and the Office of Superintendent of Public Instruction (OSPI) require the District to have adequate time-and-effort documentation to support all payroll costs charged to the ESSER I award. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or monthly personnel activity reports, such as a detailed timesheet. Prevailing Wage Rate Requirements The Davis-Bacon Act requires contractors and subcontractors that work on construction contracts in excess of $2,000 financed with federal financial assistance to pay laborers and mechanics prevailing wages?the wage rates the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. Prevailing wage rate requirements specify that the contract between the District and the prime contractor include specific language to ensure contractors and subcontractors are paid at prevailing wage rates. Additionally, the District is required to collect weekly certified payroll reports from contractors and subcontractors, which include copies of their payroll and signed ?Statement of Compliance.? Description of Condition Time-and-Effort Documentation The CARES Act allowed the District to claim lost revenue in its child nutrition program against the ESSER I award for the 2020-2021 school year. When moving costs from one federal program to another, the District must ensure it has time-and-effort documentation to support the costs. Our audit found the District did not have internal controls for ensuring it had adequate time-and-effort documentation to support all payroll costs charged to the ESSER program. Specifically, the District did not obtain semiannual certifications or monthly personnel activity reports for the 32 employees whose payroll costs were charged to the ESSER I award. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Prevailing Wage Rate Requirements The District hired one contractor to replace and upgrade the HVAC system at one of its schools to improve air quality. During the 2020-2021 school year, the District paid $394,695 from its ESSER II award to the contractor for work laborers performed on the project. Our audit found the District did not have adequate internal controls for ensuring compliance with prevailing wage rate requirements. Specifically, the District did not collect and review all weekly certified payroll reports from the contractor to confirm it had paid laborers proper prevailing wages. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Both issues were not reported as a finding in the prior audit. Cause of Condition Time-and Effort Documentation Staff did not know the District was required to have time-and-effort documentation to support payroll costs claimed under the ESSER I award. While the District did have a method to track allowable payroll costs charged to the grant, it did not obtain the required time-and-effort documentation to show compliance with grant requirements. Prevailing Wage Rate Requirements The contractor submitted weekly certified payroll reports to the Department of Labor and Industries (L&I). District employees reviewed the L&I website to confirm the contractor had submitted weekly certified payroll reports, but they did not know they needed to review the reports to ensure that the contractor complied with federal prevailing wage requirements. Effect of Condition The District?s noncompliance with grant requirements can jeopardize future federal funding, and it can be grounds for returning federal funds to the grantor, if requested. Time-and-Effort Documentation By not keeping proper time-and-effort records, the District cannot demonstrate compliance with OSPI?s documentation requirements to support payroll costs charged to the federal program. Further, it cannot assure federal grantors that payroll costs for $132,028 included in lost revenues charged to the ESSER I subaward were accurate or valid. During the audit, the District subsequently provided alternative documentation that demonstrated the payroll costs charged to the program were allowable; therefore, we are not questioning costs. Prevailing Wage Rate Requirements For this project, the District was required to collect a total of 38 weekly certified payroll reports, but did not collect any of them. In response to audit inquiry, the District was able to subsequently collect all weekly certified payrolls. Without adequate internal controls that ensure staff collect all weekly certified payroll reports, the District cannot demonstrate compliance with Davis-Bacon Act requirements. Further, the District could be liable for paying any additional wages if the contractor did not pay prevailing wage rates to laborers working on the contract. Recommendation We recommend the District design and follow controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. Furthermore, we recommend the District develop internal controls to ensure compliance with federal wage rate requirements. This should include implementing an effective monitoring processes to ensure the District collects and reviews all certified weekly payroll reports from contractors and subcontractors. District?s Response ESSER funds claimed for food services was for lost revenues due to school closures, and the district followed OSPI guidance on claiming those funds. As ESSER 1 funds have been fully claimed, this issue is resolved going forward. State law does not require collection and review of certified payroll records for public works contracts. The district rarely uses federal funds for public works contracts, and so this difference in protocols was missed. The district will implement a monitoring process of weekly payroll reports from contractors and subcontractors on federally-funded public works projects. 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. Office of Superintendent of Public Instruction Addendum to Bulletin 048-17, established requirements for documenting time and effort. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

2021-002 The District had inadequate internal controls for ensuring compliance with procurement requirements for the Special Education program. Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2021, the District spent $1,232,796 in federal funds through its Special Education program. When using federal funds to purchase goods and services, governments must apply the more restrictive of federal, state or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. Governments must also keep documentation supporting the procurement method they used. The District?s policy conforms to federal requirements for professional services, which requires price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. 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 During our audit, we found the District did not follow its policy for documenting price or rate quotations from a reasonable number of qualified sources for services costing between $10,000 and $250,000. Specifically, the District procured special education services from seven professional service contractors at a total cost of $184,444, without obtaining any price or rate quotations, as federal regulations and District policy require. The District also did not document the procurement method it used for two of the seven contracts at a total cost of $27,513. We consider this deficiency in internal controls to be material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit as finding number 2020-001. Cause of Condition Due to the timing and completion of the fiscal year 2020 audit on August 19, 2021, the District was not able to implement corrective action measures needed to resolve the fiscal year 2020 deficiencies in time for the procurement actions that occurred in fiscal year 2021. Effect of Condition Without maintaining documentation to support the procurement methods it used, the District cannot demonstrate it received the best price for the services it purchased. Additionally, the District cannot demonstrate that it complied with federal regulations for procuring goods and services. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District: ? Dedicate the necessary time and resources to ensuring all staff responsible for procuring goods and services are familiar with federal procurement requirements and District policy ? Follow its procurement policy for professional services and purchases made with federal funds, and keep documentation supporting the procurement methods it used. District?s Response As these procurements were made prior to the completion of the 2020 audit, internal controls and other process improvements made as a result of the prior year audit had not been implemented. The District has improved procurement controls in the special education department and will continue to provide training to staff to improve compliance with federal procurement requirements. 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 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Section 320 ? Methods of procurement to be followed, describes each allowable procurement method.

2020-001 The District lacked adequate internal controls for ensuring compliance with procurement requirements for the Special Education program. "See Schedule of Findings and Questioned Costs for chart/table" Background The objective of the Special Education program is to ensure students with disabilities receive a free and appropriate public education. The program has specifically designed instruction addressing the unique needs of an eligible student. During fiscal year 2020, the District spent $1,268,144 in federal funds through its Special Education program. Recipients must follow the more restrictive of federal, state or local requirements when using federal funds to purchase goods and services. The District?s procurement policy conforms to the most restrictive laws and requires the following: ? Purchases of goods between $10,000 and $75,000 must be procured using price or rate quotations from three or more qualified sources ? Procurement of services between $10,000 and $250,000 must be procured using price or rate quotations from a reasonable number of qualified sources Further, the District may use noncompetitive procurement when one of the following four circumstances applies: ? The item is only available from a single source ? The public exigency or emergency for the requirements will not permit a delay resulting from competitive solicitation ? The awarding agency authorizes noncompetitive procurement in response to a written request from the district ? After solicitation of a number sources, competition is determined inadequate The District must keep documentation supporting the applicable circumstance for noncompetitive procurement. State law also requires the governing body to record its waiver of competitive bidding requirements. Federal regulations require recipients establish and follow internal controls for ensuring compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The District did not follow its policy for documenting its rationale for using noncompetitive procurement for two professional service contracts, including its conclusion that the same or similar service was unavailable from other contractors. Further, the District did not formally waive procurement requirements, as state law requires. Additionally, the District purchased curriculum materials, but did not follow its policy for requiring it obtain price or rate quotations. We consider this internal control deficiency to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the previous audit. Cause of Condition The District did not comply with procurement requirements because: ? Staff did not believe the professional service contract for one contractor was subject to federal procurement requirements. Staff considered the contractor sole source, since the District used it in previous years. As a result, the District did not keep adequate documentation demonstrating the contractor was sole source before procuring professional services. Additionally, the School Board did not formally waive the bid process for fiscal year 2020, but did waive the process for subsequent contracts with this contractor. However, it was too late for the District to make any changes to the contract for fiscal year 2020. ? District staff procured the second professional service contractor to avoid litigation, and to meet a student?s immediate needs at the parents? request. The District was not aware this was not an unallowable reason for declaring a contractor sole source, and was not aware it could have requested an approval from OSPI for noncompetitive procurement. ? District staff was not aware the total cost for ordered curriculum materials did not include shipping costs. When the District received the final invoice, it exceeded $10,000 with shipping costs. The District should have used price or rate quotations to procure the curriculum materials. Effect of Condition and Questioned Costs The District did not comply with procurement requirements. The District did not follow policy when it procured professional services from two contractors and goods from one contractor ? totaling $180,361 ? without adequate documentation supporting its sole source determinations or obtaining quotes. Therefore, the District cannot demonstrate it received the best price for the services or goods it purchased. These transactions are allowable under the federal program; therefore, we are not questioning costs. Recommendation We recommend the District follow its procurement policy for professional services and purchases made with federal funds, and keep documentation supporting the circumstances requiring noncompetitive procuring. Further, we recommend the District formally waive procurement requirements, as state law requires. District?s Response The District concurs with the Auditor?s Recommendations and the District will provide additional staff training regarding these federal procurement requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this issue 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. 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 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR 200, Uniform Guidance, section 319, Competition, establishes the requirement that all procurement transactions with Federal funds be conducted in a manner providing full and open competition consistent with standards of this section. Title 2 CFR Part 200, Uniform Guidance, section 320 Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non federal entities. RCW 39.04.280, Competitive bidding requirements ? Exemptions

The District did not have adequate controls to ensure compliance with federal procurement requirements. "See Schedule of Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2019, the District spent $1,290,908 in Special Education grant funds. The objective of the program is to ensure students with disabilities receive a free and appropriate public education. The Special Education program has specifically designed instruction that addresses the unique needs of an eligible student. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own written procurement procedures, which must reflect applicable state, local, and federal laws. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state, or local procurement methods when using federal funds. In addition, federal grant regulations require recipients to maintain written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, or administration of contracts procured with federal funds. The District?s written procurement and conflict of interest policies include applicable state and local regulations. However, these policies did not conform to or include federal procurement and standards of conduct requirements outlined in federal regulations before procurement transactions occurred, as required. We consider these control deficiencies to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition The District did not know of the requirement to update written procurement and standards of conduct procedures and policies to conform to federal regulations until we issued an audit recommendation in May 2019. Further, the procurement transactions occurred prior to May 2019. The District updated its written policies in November 2019 to conform to federal regulations. Effect of Condition Without updated policies, the District is at greater risk of not complying with the most restrictive of federal, state, or local procurement methods and standards of conduct requirements when procuring contractors paid with federal funds. Although the District did not update its policies, it complied with federal requirements to solicit professional service providers for the Special Education program. Recommendation We recommend the District understand and comply with federal requirements and communicate its updated federal procurement and standards of conduct policies to District staff and ensure employees follow the policies. District?s Response The district concurs with the auditor that the policy in question was not updated until November 2019. However, the district does not concur that this results in a material weakness. The audit report clearly states that, ?while the district did not update its policies, it did comply with federal procurement requirements?. The auditors acknowledge that this finding relates only to the lack of formal policy being updated prior to the end of the current fiscal year end (August 2019). The auditors tested and reviewed current year program procurements with no errors, issues, or violations of procurement procedures noted. Given the fact that fiscal year procurements were audited without errors, the District disagrees that the lack of updated policy creates a greater risk of not complying with the most restrictive of federal, state or local procurement methods and standards. The auditors testing provides additional reasonable assurance that procurements for the year followed current federal guidelines. Further, since those policies have been adopted as of November 2019, the risk of future non-compliance as a result of the lack of an updated policy has also been mitigated. Auditor?s Remarks We appreciate the District?s commitment to resolve this issue 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. 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 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Section 318, General procurement standards, establishes requirements for written procedures.

GSA_MIGRATION