OTHELLO - State auditors found the Othello School District didn't check whether six vendors were allowed to participate in federal programs.

The district spent $2.4 million in federal grants during the 2010 fiscal year, according to the state auditor's office. The money was given to the district as part of the American Recovery and Reinvestment Act. The money was for extra educational services for children behind in school and the special education programs.

Dwight Remick, the district's executive director of finance and operations, explained the district used the funds to purchase books and didn't document whether Scholastic was on the list of suspended or debarred companies.

The district usually uses state funds, which don't have the same requirements, Remick said, so the district's staff forgot to check.

"They really started to enforce the requirement in food services," he said. "We just do it automatically there. We never thought about checking on textbooks ... There is no history of it happening prior to this." 

The federal government requires agencies to check if vendors receiving more than $25,000 in federal funds aren't prevented from doing business with the federal government, according to the finding. The district needed to either check with the US General Services Administration or have the contractor certify its status in writing prior to paying the vendor.

State auditors found district officials didn't check on six vendors before paying them $363,694, according to the finding. None of the vendors were suspended or debarred.

"By not ensuring that vendors are eligible to participate in federally funded programs, the district is at risk for entering into contracts that would result in repayment of unallowable costs," according to the finding. "In addition, noncompliance with federal requirements jeopardizes the district's ability to receive future federal grant funding."

The Washington State Auditor's Office issued the finding as part of its audit of the district. The office regularly examines the records of governmental agencies examining financial reports, accountability and compliance with state laws, according to the report. The auditors examined the district's records from September 2009 to August 2010.