FAC Explorer

Audit 1084

FY End
2023-06-30
Total Expended
$1.62M
Findings
4
Programs
10
Organization: Onaway Area Community Schools (MI)
Year: 2023 Accepted: 2023-10-24
Auditor: Stephenson & Company PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
550 2023-002 - - A
551 2023-003 - - A
576992 2023-002 - - A
576993 2023-003 - - A

Programs

ALN Program Spent Major Findings
84.425 Education Stabilization Fund $829,564 Yes 0
84.010 Title I Grants to Local Educational Agencies $165,925 - 0
10.553 School Breakfast Program $105,568 - 0
84.358 Rural Education $54,727 - 0
84.367 Improving Teacher Quality State Grants $33,153 - 0
93.575 Child Care and Development Block Grant $27,650 - 0
10.555 National School Lunch Program $24,104 - 0
84.424 Student Support and Academic Enrichment Program $14,657 - 0
10.559 Summer Food Service Program for Children $1,868 - 0
10.649 Pandemic Ebt Administrative Costs $628 - 0

Contacts

Name Title Type
HC5YZ9E3M9U8 Danielle Chapman Auditee
9897338612 Cynthia R. Scott Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule of Federal Expenditures are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance. Where in certain types of expenditures are not allowable or are limited as a reimbursement. Cash received is recorded on a cash basis. Revenues are recognized when qualifying expenditures have been incurred and all grant requirements have been met. Expenditures on this schedule reconcile with amounts reported in the financial statements and the financial reports submitted to the Michigan Department of Education. Management has utilized the MDE NexSys Grant Auditors Report (GAR) in preparing the Schedule of Expenditures of Federal Awards. The amounts reported on the Recipient Entitlement Balance Report, or PAL Report, agree with this schedule for USDA donated food commodities and are reported in the Cash Receipts column. Expenditures include spoilage or pilferage. De Minimis Rate Used: N Rate Explanation: Onaway Area Community Schools did not elect to use a flat de minimis rate of 10% of modified total direct costs for their indirect cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Onaway Area Community Schools under programs of the federal government for the year ended June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Onaway Area Community Schools, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Onaway Area Community Schools.
Title: Reconciliation to the Michigan Department of Education (MDE) NexSys Grant Section Auditors Report (GAR) Accounting Policies: Expenditures reported on the Schedule of Federal Expenditures are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance. Where in certain types of expenditures are not allowable or are limited as a reimbursement. Cash received is recorded on a cash basis. Revenues are recognized when qualifying expenditures have been incurred and all grant requirements have been met. Expenditures on this schedule reconcile with amounts reported in the financial statements and the financial reports submitted to the Michigan Department of Education. Management has utilized the MDE NexSys Grant Auditors Report (GAR) in preparing the Schedule of Expenditures of Federal Awards. The amounts reported on the Recipient Entitlement Balance Report, or PAL Report, agree with this schedule for USDA donated food commodities and are reported in the Cash Receipts column. Expenditures include spoilage or pilferage. De Minimis Rate Used: N Rate Explanation: Onaway Area Community Schools did not elect to use a flat de minimis rate of 10% of modified total direct costs for their indirect cost rate. Total Current Year Receipts per the MDE NexSys Grant Section Auditors Report 1,537,933 Addition of receipts not passed through the Michigan Department of Education and not included in the NexSys System: Food Distribution for National Lunch Program: 55030 Entitlement Commodities 26,084 55030 Bonus Commodities 1921 Smal, Rual, School Achievement Grant S358A203648 2020 18,130 S358A211634 2021 18236 S358A221555 2022 18,361 Less an adjustment to a prior year deferral that was taken back through NexSys System in the current year COVID-19 - ARP Child Care Relief Funds: Child Care Sustainability Grant - Spring 2022 (1,500) Total Current Year Receipts on the Schedule of Expenditures of Federal Awards 1,619,165.
Title: Reconciliation to Financial Statements Accounting Policies: Expenditures reported on the Schedule of Federal Expenditures are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance. Where in certain types of expenditures are not allowable or are limited as a reimbursement. Cash received is recorded on a cash basis. Revenues are recognized when qualifying expenditures have been incurred and all grant requirements have been met. Expenditures on this schedule reconcile with amounts reported in the financial statements and the financial reports submitted to the Michigan Department of Education. Management has utilized the MDE NexSys Grant Auditors Report (GAR) in preparing the Schedule of Expenditures of Federal Awards. The amounts reported on the Recipient Entitlement Balance Report, or PAL Report, agree with this schedule for USDA donated food commodities and are reported in the Cash Receipts column. Expenditures include spoilage or pilferage. De Minimis Rate Used: N Rate Explanation: Onaway Area Community Schools did not elect to use a flat de minimis rate of 10% of modified total direct costs for their indirect cost rate. General Fund 1,295,154 Special Revenue Funds: Food Service Fund 368,029 Federal Revenue Presented in the Financial Statements 1,663,183 Accounts receivable for the year ended June 30, 2022 received more than 60 days after year-end and recognized as federal revenue in fiscal year June 30, 2023 financial statements: 213722 2122 ESSER II Summer Programming K-8 (18,700) 213752 2122 ESSER II Before & After School Program (25,000) Federal Revenue on the Schedule of Expenditures of Federal Awards 1,619,483.

Finding Details

Finding 2023-002
Condition and Criteria: The Michigan Department of Education (MDE) Audit Manual requires that the accounting information submitted to the MDE, which would include the Financial Information Database (FID) and Final Expenditure Report (FER), be accurate and true representations of the expenditures for each project, by funding source code. During the audit, we found multiple areas where incorrect funding source codes were used for various expenditures. While we noted no material overages in amounts charged to grants after completion of the FERs, we did note discrepancies between the ending trial balances and the FERs. In addition, we found that those charges included in the District's trial balance were not always compared back to the approved grant applications. Effect: The District had multiple adjusting journal entries that had to be recorded after year end to correctly report the various grant activities, which identified errors in what was reported in year end FER's, resulting in small overages in what was claimed. Cause: Expenditures by grant code are not consistently matched against the amounts being claimed or against the approved grant applications, as well as against the Final Expenditure Reports when submitted. Context: During the audit, we found multiple areas where incorrect funding source codes were used for various expenditures, which in turn caused errors between ending balances and the FERs that were submitted. In addition, we found that those charges included in the District's trial balance were not always compared back to the approved grant applications. Questioned Costs: $1,730 - ESSER II Summer Programing; $1,099 - ESSER II - Before and After School Programs; $2,885 - GEER II Teamer & Support Staff Payments. Auditors' Recommendation: We recommend that management continue verifying the accuracy of the coding of each transaction, documenting such coding on each invoice, and that management then compare the trial balance to the individual grant draws, each time a draw is made, prior to completing the trial balance for the audit, and prior to completing the annual FER. In addition, we recommend that when coding the transactions, management compare each transaction to the applicable approved grant application. Views of Responsible Officials and Planned Corrective Actions: The District understands the issue and will begin comparing each transaction to the approved grant application and to ensure proper coding and allowability in all areas.
Finding 2023-003
Condition and Criteria: The Michigan Department of Education’s Auditing Manual requires that all monies are not requested until after the expenses have been incurred as well as after actual disbursement of those funds. At year end, the District drew down more funds than were actually disbursed, including accruals and encumbrances in the final draw. Effect: The District received more grant dollars from the Michigan Department of Education than they had disbursed. Cause: The District did not realize the requirement to not draw down the funds until physically disbursed. Context: At year end, the District drew down more funds than were actually disbursed, including accruals and encumbrances in the final draw. However, the encumbrances drawn were subsequently reduced back out of the District's expenditures, with additional expenditures that were not previously coded to the correct funding source code, being added back to each grant, resulting in no remaining questioned costs. In addition, the accruals were subsequently disbursed, resulting in no excess funds being drawn as of the date of the audit report. Questioned Costs: None. Auditors' Recommendation: We recommend that the District ensure that only disbursed funds are included in their draws at year end, at that the final draw, including accrued payroll, not be drawn until after the last pay in August each year. Views of Responsible Officials and Planned Corrective Actions: The District understands the issue and will make sure to only draw disbursed funds moving forward.
Finding 2023-002
Condition and Criteria: The Michigan Department of Education (MDE) Audit Manual requires that the accounting information submitted to the MDE, which would include the Financial Information Database (FID) and Final Expenditure Report (FER), be accurate and true representations of the expenditures for each project, by funding source code. During the audit, we found multiple areas where incorrect funding source codes were used for various expenditures. While we noted no material overages in amounts charged to grants after completion of the FERs, we did note discrepancies between the ending trial balances and the FERs. In addition, we found that those charges included in the District's trial balance were not always compared back to the approved grant applications. Effect: The District had multiple adjusting journal entries that had to be recorded after year end to correctly report the various grant activities, which identified errors in what was reported in year end FER's, resulting in small overages in what was claimed. Cause: Expenditures by grant code are not consistently matched against the amounts being claimed or against the approved grant applications, as well as against the Final Expenditure Reports when submitted. Context: During the audit, we found multiple areas where incorrect funding source codes were used for various expenditures, which in turn caused errors between ending balances and the FERs that were submitted. In addition, we found that those charges included in the District's trial balance were not always compared back to the approved grant applications. Questioned Costs: $1,730 - ESSER II Summer Programing; $1,099 - ESSER II - Before and After School Programs; $2,885 - GEER II Teamer & Support Staff Payments. Auditors' Recommendation: We recommend that management continue verifying the accuracy of the coding of each transaction, documenting such coding on each invoice, and that management then compare the trial balance to the individual grant draws, each time a draw is made, prior to completing the trial balance for the audit, and prior to completing the annual FER. In addition, we recommend that when coding the transactions, management compare each transaction to the applicable approved grant application. Views of Responsible Officials and Planned Corrective Actions: The District understands the issue and will begin comparing each transaction to the approved grant application and to ensure proper coding and allowability in all areas.
Finding 2023-003
Condition and Criteria: The Michigan Department of Education’s Auditing Manual requires that all monies are not requested until after the expenses have been incurred as well as after actual disbursement of those funds. At year end, the District drew down more funds than were actually disbursed, including accruals and encumbrances in the final draw. Effect: The District received more grant dollars from the Michigan Department of Education than they had disbursed. Cause: The District did not realize the requirement to not draw down the funds until physically disbursed. Context: At year end, the District drew down more funds than were actually disbursed, including accruals and encumbrances in the final draw. However, the encumbrances drawn were subsequently reduced back out of the District's expenditures, with additional expenditures that were not previously coded to the correct funding source code, being added back to each grant, resulting in no remaining questioned costs. In addition, the accruals were subsequently disbursed, resulting in no excess funds being drawn as of the date of the audit report. Questioned Costs: None. Auditors' Recommendation: We recommend that the District ensure that only disbursed funds are included in their draws at year end, at that the final draw, including accrued payroll, not be drawn until after the last pay in August each year. Views of Responsible Officials and Planned Corrective Actions: The District understands the issue and will make sure to only draw disbursed funds moving forward.