Walla Walla School District No. 140Local Government

Walla Walla School District No. 140 September 1, 2023 through August 31, 2024 2024-001 The District did not have adequate internal controls to ensure compliance with federal procurement requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.559 Summer Food Service Program for Children Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: NA Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2023-001 Background The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. These programs provide funding for free and reduced-price meals for students of low-income families. For the 2023-2024 school year, the District received $2,807,195 total 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. When using federal funds to purchase goods or services, governments must apply the most restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bid process, depending on the estimated purchase cost. Under District policy, purchases between $10,000 and $75,000 must be procured using price or rate quotations from three or more qualified sources and any purchase more than $75,000 requires formal bidding or proposals. 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 requirements under state law, the entity must enter into this interlocal agreement or cooperative before it purchases services or goods from the other entity’s bid contract. If the District uses such an agreement, federal regulations require it to confirm the awarding agency followed all procurement laws and regulations applicable to the District before it purchases goods or services from the other entity’s contract. Description of Condition The District did not have a process to ensure it complied with procurement requirements when purchasing food products. The District piggybacked onto another school district’s contract for dairy purchases. However, the District did not confirm that the procurement methods the awarding agency followed met its own procurement requirements before purchasing. Additionally, the District did not have a process in place to ensure it obtained at least three quotes for equipment maintenance services, as required by District policy. We consider this internal control deficiency to be a significant deficiency. Cause of Condition District staff responsible for procuring nutrition services’ food products did not fully understand federal procurement requirements and the District’s procurement policy. District staff did not know they were required to obtain procurement documentation, when they piggybacked on the awarding agency’s contract, to verify the process complied with the District’s federal procurement requirements. Also, they did not know how many quotes the District’s procurement policy required for purchases. Effect of Condition The District piggybacked on one contract without reviewing the bid documentation and spent $155,200 of federal funds to purchase dairy products. In addition, the District spent $14,970 in program funds for equipment maintenance services and did not obtain at least three quotes, as required. Without effective internal controls, the District cannot demonstrate it complied with federal procurement requirements and District policy, allowed for full and open competition, and received the best price for the food products and services it purchased. Recommendation We recommend the District strengthen internal controls to ensure it complies with applicable federal procurement requirements and District policy for purchases of goods and services. District’s Response As a result of this finding for federal procurement requirements the District has reviewed the procurement requirements with the food service director and staff. In addition, the district has reviewed current spending with vendors within food services to determine procurement requirements for the 25-26 fiscal year. This review will be done on an annual basis. In the future the district will review and document the requirements of the awarding agency to ensure they align with our own requirements based on local spending patterns. The district did implement these changes for 2024-2025 Fiscal Year. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action 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. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. 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. 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.

Walla Walla School District No. 140 September 1, 2022 through August 31, 2023 2023-001       The District did not have adequate internal controls to ensure compliance with federal procurement requirements. Assistance Listing Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.559 Summer Food Service Program for Children Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: NA   Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A       Background The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. These programs provide funding for free and reduced-price meals for students of low-income families.  For the 2022–23 school year, the District received a total of $2,395,191 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. When using federal funds to purchase goods or services, governments must apply the most restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bid process, depending on the estimated purchase cost. Under District policy, purchases between $10,000 and $75,000 must be procured using price or rate quotations from three or more qualified sources and any purchase above $75,000 requires formal bidding or proposals. 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 requirements under state law, the entity must enter into this interlocal agreement or cooperative before it purchases services or goods from the other entity’s bid contract. If the District uses such an agreement, federal regulations require it to confirm that the awarding agency followed all procurement laws and regulations applicable to the District before it purchases goods or services from the other entity’s contract. Description of Condition The District did not have a process to ensure it complied with procurement requirements when purchasing food products. The District piggybacked onto another school district’s contract for dairy purchases. However, the District did not confirm that the procurement methods the awarding agency followed met its own procurement requirements before purchasing. Additionally, the District did not have a process in place to ensure it obtained at least three quotes for produce purchases, as required by  District policy. We consider this internal control deficiency to be a significant deficiency. Cause of Condition District staff responsible for procuring nutrition services’ food products did not fully understand federal procurement requirements and the District’s procurement policy. District staff did not know they were required to obtain procurement documentation when they piggybacked on the awarding agency’s contract to verify they complied with federal procurement requirements. Also, they were unaware of the number of quotes the District’s procurement policy required for purchases. Effect of Condition The District piggybacked on one contract without reviewing the bid documentation and spent $170,348 of federal funds to purchase dairy products. In addition, the District spent $21,662 in program funds to purchase produce and did not obtain at least three quotes, as required. Without effective internal controls, the District cannot demonstrate it complied with piggybacking requirements or District policy, allowed for full and open competition, and received the best price for the food products purchased. Recommendation We recommend the District strengthen internal controls to ensure it complies with applicable federal procurement requirements and District policy for purchases of goods and services. District’s Response As of result of finding for federal procurement requirements the District has reviewed the procurement requirements with the food service director and staff. In addition, the district has reviewed current spending with vendors within food services to determine procurement requirements for 24-25 fiscal year. This review will be done on an annual basis. In the future the district will review and document the requirements of the awarding agency to ensure they align with our own requirements based on local spending patterns. The district did not have adequate time to implement this for the 23-24 fiscal year. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action 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. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and maintaining records sufficient to detail the history of procurement. 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. 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.

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