Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.
Finding 2023-002 – EQUIPMENT
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula)
Condition: The District was unable to locate all Chromebooks selected for testing that were purchased with ESSER II Formula funds. Also, some Chromebooks that were located did not have adequate identification tags.
Criteria: As detailed in 2 CFR 200.313, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.”
Cause: Inadequate inventory and tag procedures.
Effect: Missing equipment potentially not being used for its intended purpose, and property records are not in compliance with 2 CFR 200.313. For equipment that is missing the proper identification tags, the sale or otherwise disposition of the equipment may not be properly recorded.
Context: Of the 53 Chromebooks selected for testing, 3 could not be located and 5 of the identification tags did not include the source of funding for the property.
Recommendation: We recommend that the District review/update inventory procedures to ensure that all equipment purchased with Federal funds is adequately tracked. Also, we recommend that the District review/update equipment tagging procedures to ensure that equipment purchased with Federal funds properly identify the source of funding.
Management’s Resp: We are in agreement with this finding.
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Significant Deficiency in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula)
Condition: Expenditures charged to the grant were not authorized in the grant budget.
Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”.
Cause: Management’s misunderstanding of costs allowed under this grant.
Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated.
Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget.
Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant.
Management’s Resp: Management is in agreement with this recommendation.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Significant Deficiency in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula)
Condition: Expenditures charged to the grant were not authorized in the grant budget.
Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”.
Cause: Management’s misunderstanding of costs allowed under this grant.
Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated.
Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget.
Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant.
Management’s Resp: Management is in agreement with this recommendation.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-004 – SPECIAL TESTS AND PROVISIONS (repeat comment)
Type: Significant Deficiency in Internal Control / Noncompliance
Program: Child Nutrition Cluster (ALN 10.553, 10.555 and 10.559)
Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by approximately $157,881.
Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed 3 months average expenditures of the non-profit food service fund per requirements in 7 CFR Part 210.14(b).
Cause: This condition was caused by the meal claims increasing and having more reimbursements come in than anticipated.
Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to MDE, Office of School Support Services, for prior approval.
Recommendation: We recommend that the District develop a spending plan as required by MDE, and submit the plan at their earliest convenience.
Management’s Resp: We are in agreement with this finding.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.
Finding 2023-002 – EQUIPMENT
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula)
Condition: The District was unable to locate all Chromebooks selected for testing that were purchased with ESSER II Formula funds. Also, some Chromebooks that were located did not have adequate identification tags.
Criteria: As detailed in 2 CFR 200.313, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.”
Cause: Inadequate inventory and tag procedures.
Effect: Missing equipment potentially not being used for its intended purpose, and property records are not in compliance with 2 CFR 200.313. For equipment that is missing the proper identification tags, the sale or otherwise disposition of the equipment may not be properly recorded.
Context: Of the 53 Chromebooks selected for testing, 3 could not be located and 5 of the identification tags did not include the source of funding for the property.
Recommendation: We recommend that the District review/update inventory procedures to ensure that all equipment purchased with Federal funds is adequately tracked. Also, we recommend that the District review/update equipment tagging procedures to ensure that equipment purchased with Federal funds properly identify the source of funding.
Management’s Resp: We are in agreement with this finding.
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Significant Deficiency in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula)
Condition: Expenditures charged to the grant were not authorized in the grant budget.
Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”.
Cause: Management’s misunderstanding of costs allowed under this grant.
Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated.
Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget.
Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant.
Management’s Resp: Management is in agreement with this recommendation.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Significant Deficiency in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula)
Condition: Expenditures charged to the grant were not authorized in the grant budget.
Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”.
Cause: Management’s misunderstanding of costs allowed under this grant.
Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated.
Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget.
Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant.
Management’s Resp: Management is in agreement with this recommendation.