FAC Explorer

Audit 30511

FY End
2022-06-30
Total Expended
$8.00M
Findings
2
Programs
12
Organization: South Redford School District (MI)
Year: 2022 Accepted: 2022-11-15
Auditor: Plante & Moran PLLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
38390 2022-001 Material Weakness - N
614832 2022-001 Material Weakness - N

Programs

ALN Program Spent Major Findings
84.425 Covid-19 - Education Stabilization Fund $2.09M Yes 1
84.010 Title I Grants to Local Educational Agencies $741,711 Yes 0
10.553 School Breakfast Program $357,066 - 0
84.367 Improving Teacher Quality State Grants $143,800 - 0
10.555 National School Lunch Program $54,551 - 0
84.027 Special Education_grants to States $37,450 - 0
84.424 Student Support and Academic Enrichment Program $35,360 - 0
84.173 Special Education_preschool Grants $34,058 - 0
84.173 Covid-19 - Special Education_preschool Grants $20,434 - 0
93.778 Medical Assistance Program $13,582 - 0
84.365 English Language Acquisition State Grants $9,654 - 0
10.649 Covid-19 - Pandemic Ebt Administrative Costs $3,063 - 0

Contacts

Name Title Type
MBHBEGKK3134 Linda Earl Auditee
3135354000 Jeff Higgins Auditor
No contacts on file

Notes to SEFA

Title: Grant Auditor Report Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of South Redford School District (the School District) under programs of the federal government for the year ended June 30, 2022. The information in the 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 (the Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the School District, it is not intended to and does not present the financial position, changes in net position, or cash flows of the School District. Expenditures reported in the Schedule are reported on the same basis of accounting as the basic financial statements. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School District has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Management has utilized the Michigan Department of Education NexSys Grant Auditor Report (GAR) in preparing the schedule of expenditures of federal awards. Differences, if any, between the GAR and the schedule of expenditures of federal awards relate to the timing of payments and the fiscal year to which the payments relate.
Title: Noncash Assistance Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of South Redford School District (the School District) under programs of the federal government for the year ended June 30, 2022. The information in the 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 (the Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the School District, it is not intended to and does not present the financial position, changes in net position, or cash flows of the School District. Expenditures reported in the Schedule are reported on the same basis of accounting as the basic financial statements. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School District has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The value of the noncash assistance received was determined in accordance with the provisions of the Uniform Guidance.

Finding Details

Finding 2022-001
ALN, Federal Agency, and Program Name - 84.425U, U.S. Department of Education, COVID-19 ESSER III Funds - Formula Federal Award Identification Number and Year - 213713, 21 22 Pass-through Entity - Michigan Department of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Approved construction projects must comply with applicable Uniform Guidance requirements, as well as the department?s regulations regarding construction at 34 CFR ? 76.600. As is the case with all remodeling or construction contracts using laborers and mechanics financed by federal education funds, an LEA that uses ESSER or GEER funds for minor remodeling, renovation, repair, or construction contracts over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the contracts that all contractors or subcontractors must pay wages that are no less than those established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.) (See also FAQ B-6.) Condition - During testing of the grant, we noted the School District utilized funds from the Education Stabilization Funds (ESF) for minor remodeling and renovations of the school buildings. Per the 2022 Compliance Supplement, recipients and subrecipients that use ESF for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics, must meet Davis-Bacon prevailing wage requirements. The School District expended approximately $300,000 in ESSER funds that related to repairs and renovations; however, the prevailing wage requirement was not included in any of the related contracts' language, nor did the School District receive or review the certified payroll reports from any of the contractors. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No questioned costs Context - We noted $300,000 of repairs and renovation contracts were charged to the ESSER III grant, which had a total of approximately $2.1 million in expenditures. The contracts related to the renovation and repair contracts did not include prevailing wage language, nor did the School District receive or review the certified payroll reports from any of the contractors. Cause and Effect - Excluding the prevailing wage rate language in contracts could cause contractors using federal dollars to not pay appropriate wages to their employees. The School District not receiving or reviewing the certified payroll reports from contractors could lead to nondetection of contractors not paying their employees at prevailing wage rates or in accordance with contract provisions. Recommendation - We recommend the School District ensure contracts with vendors that are performing repairs, construction, renovations, etc. include the prevailing wage rate language in the contract and that the School District have a process and control in place to ensure that certified payroll reports from the contractors are being received and reviewed by the School District. Views of Responsible Officials and Corrective Action Plan - As it pertains to the use of any federal funds for construction projects in South Redford School District (SRSD), when said funds will be used to compensate for labor for any construction project, the School District will stipulate in all RFPs Davis-Bacon requirements for prevailing wages as it relates to the use of laborers and mechanics for all projects over $2,000. All responses to RFPs must meet the following criteria: 1. Acknowledge the Davis-Bacon prevailing wage requirement 2. All bid pricing must reflect prevailing wage requirements. 3. Bid recipients must have a process in place for reporting their compliance to the prevailing wage requirement and submit documentation along with all invoices, be it directly to SRSD or to the construction management firm, who will then include said documentation with their backup and invoices to SRSD. Verbal communications have been made to all stakeholders, including the superintendent, owner representative (who oversees all construction projects for the School District), construction management team, assistant superintendent of operations, and all finance team members. A written copy of the corrective action will be delivered to each of the stakeholders listed above. Further, the director of finance will review all RFPs to ensure prevailing wage requirements are met.
Finding 2022-001
ALN, Federal Agency, and Program Name - 84.425U, U.S. Department of Education, COVID-19 ESSER III Funds - Formula Federal Award Identification Number and Year - 213713, 21 22 Pass-through Entity - Michigan Department of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Approved construction projects must comply with applicable Uniform Guidance requirements, as well as the department?s regulations regarding construction at 34 CFR ? 76.600. As is the case with all remodeling or construction contracts using laborers and mechanics financed by federal education funds, an LEA that uses ESSER or GEER funds for minor remodeling, renovation, repair, or construction contracts over $2,000 must meet all Davis-Bacon prevailing wage requirements and include language in the contracts that all contractors or subcontractors must pay wages that are no less than those established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.) (See also FAQ B-6.) Condition - During testing of the grant, we noted the School District utilized funds from the Education Stabilization Funds (ESF) for minor remodeling and renovations of the school buildings. Per the 2022 Compliance Supplement, recipients and subrecipients that use ESF for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics, must meet Davis-Bacon prevailing wage requirements. The School District expended approximately $300,000 in ESSER funds that related to repairs and renovations; however, the prevailing wage requirement was not included in any of the related contracts' language, nor did the School District receive or review the certified payroll reports from any of the contractors. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No questioned costs Context - We noted $300,000 of repairs and renovation contracts were charged to the ESSER III grant, which had a total of approximately $2.1 million in expenditures. The contracts related to the renovation and repair contracts did not include prevailing wage language, nor did the School District receive or review the certified payroll reports from any of the contractors. Cause and Effect - Excluding the prevailing wage rate language in contracts could cause contractors using federal dollars to not pay appropriate wages to their employees. The School District not receiving or reviewing the certified payroll reports from contractors could lead to nondetection of contractors not paying their employees at prevailing wage rates or in accordance with contract provisions. Recommendation - We recommend the School District ensure contracts with vendors that are performing repairs, construction, renovations, etc. include the prevailing wage rate language in the contract and that the School District have a process and control in place to ensure that certified payroll reports from the contractors are being received and reviewed by the School District. Views of Responsible Officials and Corrective Action Plan - As it pertains to the use of any federal funds for construction projects in South Redford School District (SRSD), when said funds will be used to compensate for labor for any construction project, the School District will stipulate in all RFPs Davis-Bacon requirements for prevailing wages as it relates to the use of laborers and mechanics for all projects over $2,000. All responses to RFPs must meet the following criteria: 1. Acknowledge the Davis-Bacon prevailing wage requirement 2. All bid pricing must reflect prevailing wage requirements. 3. Bid recipients must have a process in place for reporting their compliance to the prevailing wage requirement and submit documentation along with all invoices, be it directly to SRSD or to the construction management firm, who will then include said documentation with their backup and invoices to SRSD. Verbal communications have been made to all stakeholders, including the superintendent, owner representative (who oversees all construction projects for the School District), construction management team, assistant superintendent of operations, and all finance team members. A written copy of the corrective action will be delivered to each of the stakeholders listed above. Further, the director of finance will review all RFPs to ensure prevailing wage requirements are met.