Page 31 - The EDGE Spring 2022

When It Comes to Due Diligence, Just Do It

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In addition, the USFR emphasizes that school of due diligence required for each procuring entity
districts are responsible for “ensuring that with which they participate. For audit purposes,
purchases, whether done independently or through districts should retain documentation of the due
a cooperative purchasing agreement, are done in diligence performed and its results.
accordance with School District Procurement Rules.
However, the appropriate amount and complexity An added benefit of due diligence is increased
of due diligence a district performs will vary based confidence in the buying entity’s decision to use
on the procuring entity with which the district is someone else’s contract.
participating."
Performing due diligence places the buying entity
It was pointed out that Arizona Revised Statutes or school district in a better position to react to any
§15-213(F) requires school districts and school challenge that results from the use of a cooperative
purchasing cooperatives, in connection with any contract.
audit conducted by a certified public accountant,
to have a systematic review of purchasing practices. Districts were advised to use their judgment in
The Auditor General’s Our Office has prescribed determining the appropriate amount and complexity
guidelines for performing these reviews as part of of due diligence required. In addition, the time
the USFR Compliance Questionnaire – for school for performing the due diligence must also be
districts— and the Procurement Compliance determined by the school district.
Questionnaire for cooperatives. A cooperative
or lead district that has had such a review within “But, it may be better answered by asking, When
the past year may not warrant the same amount or do you NOT perform the due diligence?” Munch
complexity of due diligence as an entity that has not said. “A best practice is not to wait until your audit
undergone such a review. for performing the due diligence.”

Further, an entity that had no findings as a result Of course, for audit purposes, districts should retain
of its review may need little or no additional due documentation of the due diligence performed and
diligence beyond obtaining the results of the review. its results. Districts should develop a system for
However, an entity that had significant findings documenting and tracking the use of cooperative
would require a greater amount and complexity contracts.
of due diligence. Districts should also consider
any other information available on the entity's “For multi-term contracts, districts should verify
procurement practices. that the contract has been renewed at least annually,”
Munch said.
Also, it is not necessary for districts to perform
due diligence for every contract procured through
cooperative purchasing. It may be adequate to
perform due diligence on a sample of contracts Panelists may be reached using the emails below:
procured by a particular cooperative or lead district Nancy Colbaugh: Nancy@mesc.org
if that sample provides reasonable assurance that Bill Munch: bmunch@vsit.org
the entity’s procurement practices comply with the Gary Barkman: gabarkman@mpsaz.org
School District Procurement Rules. Nancy Burns: nburns@equalisgroup.org
Claudia Leon: cleon@1gpa.org
School districts must use their judgment in Rob Fiorilli: Rob.Fiorilli@omniapartners.com
determining the appropriate amount and complexity

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