EPHRATA - State auditors found a problem in how the Ephrata School District awarded a bid for its breakfast and lunch program.

The Washington State Auditor's Office conducts audits on governmental entities, 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.

The auditors issued a finding concerning the $504,180 federal grant the district receives to provide free and reduced-price breakfasts and lunches to low-income families. Before the district makes its first payment to a vendor it needs to check whether it's suspended or barred from participating.

The vendor in question was not barred or suspended from taking part in federally funded programs.

"If a vendor certifies in writing that it has not been suspended or debarred, the grantee may rely on that certification," according to the auditor's report. "Alternatively, the grantee may check for suspended or debarred parties by reviewing the federal excluded parties list system issued by the US General Services Administration."

The auditors noted the district did not check whether a dairy products vendor was suspended or debarred before awarding it a $55,236 contract, according to the finding.

"By not ensuring that vendors are eligible to participate in federally-funded programs, the district is at risk for entering into contracts which 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."

District Superintendent Jerry Simon said he didn't know how the problem occurred.

"I don't think it will be something that will ever happen again," he said. "It just comes down to build in our procedures to check. That's the way we're handling it."

The district response stated staff will check vendors' status on the federal government's list. The reports will be kept in a district office file, according to the finding.

"All purchasing departments have been notified that they need to offer evidence that any vendor they are going to do business with have not been suspended or disbarred," according to the district's response. "This evidence will be verified by the district business office."