Finding 2025-001
material weaknessquestioned costs
- Program
- CHILD NUTRITION CLUSTER (10.553, 10.555, 10.559)
- Compliance requirement
- Procurement and suspension and debarment
- Questioned costs
- $519,736 (known)
- FAC record
- FY2025 audit on fac.gov
Finding text from the filing
Finding 2025-001 Material Weakness in Internal Control over Compliance and Other Matters, and Material Noncompliance Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number(s): 10.553, 10.555, 10.559 Compliance Requirement: Procurement Award Period: 2024-2025 Criteria or Specific Requirement: 2 CFR 200.320 requires that procurement meet specified conditions, and a proper procurement method used, when a recipient of grant funds expends over a certain dollar amount. When the amount expended is at or above the Simplified Acquisition Threshold of $250,000, approved procurement methods include sealed bid, competitive proposal, or non-competitive proposal (sole source). An independent estimate and a cost/price analysis must be completed to support the procurement. Condition: A procurement transaction was executed with Southwest Equipment Inc., DBA, through the Buy Board cooperative purchasing program. The total purchase amount exceeded the simplified acquisition threshold of $250,000. It was noted that no independent cost estimate or cost-priced analysis was conducted prior to the procurement for federally funded transactions, and the vendor was not properly procured under an approved method. Cause: The processes and controls in place relating to procurement did not properly address the requirements for thresholds set by 2 CFR 200.320. Effect: Although the expense was allowable, federal funds were expended without the appropriate procurement requirements being met. Internal controls over compliance failed, resulting in an instance of material noncompliance. Questioned Cost: $519,736 Effect: The District will have to correct the reporting and allowance of expenditures related to the incorrect procurement. Repeat Finding: The finding is not a repeat finding. Recommendation: The District should reevaluate the existing process and related control to ensure that the proper procurement methods and conditions are met in accordance with 2 CFR 200.320. View of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.