Audit 14719

Assistance Listing, Federal Agency, and Program Name ‑ 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year ‑ 221530, 231530 Pass‑through Entity ‑ Michigan Department of Education Finding Type ‑ Material weakness Repeat Finding ‑ Yes 2022‑003 Criteria ‑ Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity’s written policies) are identified and entered into the records in a timely manner. Short‑term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity’s system of internal controls includes processes to review after‑the‑fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition ‑ The School District tracked employee activities through the use of schedules and semiannual certifications but did not have adequate controls in place to ensure these personnel activity reports/certifications were reviewed timely and accurately. During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Questioned Costs ‑ None Context ‑ Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed throughout the year, to adjust charges to the grant to agree with the actual time expended on Title I activities and there was not always consistent evidence that the timekeeping documentation was reviewed. During the later part of the year ended June 30, 2023, the School District modified its process for reviewing and charging expenditures to the grant. While proper controls were not in place during the first part of the year, upon the School District's retrospective review, it was determined that ultimately there were no instances of disallowed costs charged to the grant. Cause and Effect ‑ Effective controls were not in place to ensure timely and accurate completion of personnel activity reports and approval by key individuals supervising the work performed was not evidenced in the documentation. Recommendation ‑ The School District should reevaluate its process for allocating payroll costs to the Title I program so that it more accurately reflects actual time incurred on the program throughout the year in the District's books and records. Additionally, the School District should implement a review of the completed personnel activity report/certification to ensure timely and accurate completion. Views of Responsible Officials and Corrective Action Plan ‑ Three Rivers Community Schools agrees with the above recommendation. While the proper controls were not in place throughout the year, the School District changed its procedures and controls near year end to allow for a review and reconciliation process to support that the amount charged to Title I based on actual time expended on Title I activities.

Assistance Listing, Federal Agency, and Program Name ‑ 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year ‑ 221530, 231530 Pass‑through Entity ‑ Michigan Department of Education Finding Type ‑ Material weakness Repeat Finding ‑ Yes 2022‑003 Criteria ‑ Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity’s written policies) are identified and entered into the records in a timely manner. Short‑term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity’s system of internal controls includes processes to review after‑the‑fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition ‑ The School District tracked employee activities through the use of schedules and semiannual certifications but did not have adequate controls in place to ensure these personnel activity reports/certifications were reviewed timely and accurately. During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Questioned Costs ‑ None Context ‑ Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed throughout the year, to adjust charges to the grant to agree with the actual time expended on Title I activities and there was not always consistent evidence that the timekeeping documentation was reviewed. During the later part of the year ended June 30, 2023, the School District modified its process for reviewing and charging expenditures to the grant. While proper controls were not in place during the first part of the year, upon the School District's retrospective review, it was determined that ultimately there were no instances of disallowed costs charged to the grant. Cause and Effect ‑ Effective controls were not in place to ensure timely and accurate completion of personnel activity reports and approval by key individuals supervising the work performed was not evidenced in the documentation. Recommendation ‑ The School District should reevaluate its process for allocating payroll costs to the Title I program so that it more accurately reflects actual time incurred on the program throughout the year in the District's books and records. Additionally, the School District should implement a review of the completed personnel activity report/certification to ensure timely and accurate completion. Views of Responsible Officials and Corrective Action Plan ‑ Three Rivers Community Schools agrees with the above recommendation. While the proper controls were not in place throughout the year, the School District changed its procedures and controls near year end to allow for a review and reconciliation process to support that the amount charged to Title I based on actual time expended on Title I activities.

Assistance Listing, Federal Agency, and Program Name ‑ 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year ‑ 221530, 231530 Pass‑through Entity ‑ Michigan Department of Education Finding Type ‑ Material weakness Repeat Finding ‑ Yes 2022‑003 Criteria ‑ Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity’s written policies) are identified and entered into the records in a timely manner. Short‑term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity’s system of internal controls includes processes to review after‑the‑fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition ‑ The School District tracked employee activities through the use of schedules and semiannual certifications but did not have adequate controls in place to ensure these personnel activity reports/certifications were reviewed timely and accurately. During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Questioned Costs ‑ None Context ‑ Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed throughout the year, to adjust charges to the grant to agree with the actual time expended on Title I activities and there was not always consistent evidence that the timekeeping documentation was reviewed. During the later part of the year ended June 30, 2023, the School District modified its process for reviewing and charging expenditures to the grant. While proper controls were not in place during the first part of the year, upon the School District's retrospective review, it was determined that ultimately there were no instances of disallowed costs charged to the grant. Cause and Effect ‑ Effective controls were not in place to ensure timely and accurate completion of personnel activity reports and approval by key individuals supervising the work performed was not evidenced in the documentation. Recommendation ‑ The School District should reevaluate its process for allocating payroll costs to the Title I program so that it more accurately reflects actual time incurred on the program throughout the year in the District's books and records. Additionally, the School District should implement a review of the completed personnel activity report/certification to ensure timely and accurate completion. Views of Responsible Officials and Corrective Action Plan ‑ Three Rivers Community Schools agrees with the above recommendation. While the proper controls were not in place throughout the year, the School District changed its procedures and controls near year end to allow for a review and reconciliation process to support that the amount charged to Title I based on actual time expended on Title I activities.

Assistance Listing, Federal Agency, and Program Name ‑ 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year ‑ 221530, 231530 Pass‑through Entity ‑ Michigan Department of Education Finding Type ‑ Material weakness Repeat Finding ‑ Yes 2022‑003 Criteria ‑ Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity’s written policies) are identified and entered into the records in a timely manner. Short‑term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity’s system of internal controls includes processes to review after‑the‑fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition ‑ The School District tracked employee activities through the use of schedules and semiannual certifications but did not have adequate controls in place to ensure these personnel activity reports/certifications were reviewed timely and accurately. During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Questioned Costs ‑ None Context ‑ Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed throughout the year, to adjust charges to the grant to agree with the actual time expended on Title I activities and there was not always consistent evidence that the timekeeping documentation was reviewed. During the later part of the year ended June 30, 2023, the School District modified its process for reviewing and charging expenditures to the grant. While proper controls were not in place during the first part of the year, upon the School District's retrospective review, it was determined that ultimately there were no instances of disallowed costs charged to the grant. Cause and Effect ‑ Effective controls were not in place to ensure timely and accurate completion of personnel activity reports and approval by key individuals supervising the work performed was not evidenced in the documentation. Recommendation ‑ The School District should reevaluate its process for allocating payroll costs to the Title I program so that it more accurately reflects actual time incurred on the program throughout the year in the District's books and records. Additionally, the School District should implement a review of the completed personnel activity report/certification to ensure timely and accurate completion. Views of Responsible Officials and Corrective Action Plan ‑ Three Rivers Community Schools agrees with the above recommendation. While the proper controls were not in place throughout the year, the School District changed its procedures and controls near year end to allow for a review and reconciliation process to support that the amount charged to Title I based on actual time expended on Title I activities.