Somerton Elementary School District No. 11

Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $142,860 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.  Additionally,  2  CFR  §200.439  requires  capital  expenditures for  special  purpose  equipment  with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment List. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The  District  purchased  two  walk‐in  freezers  for  $71,430  each,  without  submitting  a  Capital  Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE  Pre‐Approved  Capital  Equipment  List.  The  sample  was  not  intended  to  be,  and  was  not,  a  statistically valid sample. Recommendation Management  should  review  all  transactions  to  ensure  that  program  costs  are  allowable  and  in  adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.