FAC Explorer

Audit 319292

FY End
2022-06-30
Total Expended
$4.71M
Findings
12
Programs
8
Organization: Washington Parks Academy (MI)
Year: 2022 Accepted: 2024-09-11
Auditor: The Clairmount Group Plc

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
496395 2022-001 Material Weakness Yes P
496396 2022-002 Material Weakness - L
496397 2022-003 Material Weakness - L
496398 2022-004 Material Weakness - P
496399 2022-005 Material Weakness - P
496400 2022-006 Material Weakness - B
1072837 2022-001 Material Weakness Yes P
1072838 2022-002 Material Weakness - L
1072839 2022-003 Material Weakness - L
1072840 2022-004 Material Weakness - P
1072841 2022-005 Material Weakness - P
1072842 2022-006 Material Weakness - B

Programs

ALN Program Spent Major Findings
10.555 National School Lunch Program $320,537 - 0
84.010 Title I Grants to Local Educational Agencies $280,986 - 0
84.027 Special Education_grants to States $224,700 - 0
84.425 Education Stabilization Fund $114,436 Yes 0
84.367 Improving Teacher Quality State Grants $38,179 - 0
10.553 School Breakfast Program $35,280 - 0
10.565 Commodity Supplemental Food Program $34,604 - 0
10.649 Pandemic Ebt Administrative Costs $3,063 - 0

Contacts

Name Title Type
HEHLGKT5KQP8 Mary Anne Johnson Auditee
2483302557 Lashanda Thomas Auditor
No contacts on file

Notes to SEFA

Title: NOTE 2 – RESTATED SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Accounting Policies: The accompanying schedule of federal awards (the “Schedule”) includes the federal grant activity of Washington - Parks Academy under programs of the federal government for the year ended June 30, 2022. Expenditures reported on the Schedule are reported on the same basis of accounting as the general purpose financial statements. 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 (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in or used in the preparation of the general purpose financial statements. Because the Schedule presents only a selected portion of the operations of Washington-Parks Academy, it is not intended to, and does not, present the financial position, changes in net assets, or cash flows, if applicable, of Washington-Parks Academy. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: Management has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Subsequent to the issuance of the financial statements and reports required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) for the year ended 6/30/22, the Academy was informed that funds transferred to Lincoln-King Adams-Young in 2022 as a subrecipient of a federal award, 84.425D- Elementary and Secondary School Emergency Relief Fund were not an allowable transfer as Lincoln-King Adams-Young was not ineligible subrecipient. Accordingly, the Academy has presented the amount a reduction in Federal Expenditures of $683,606. Additionally, the reports referred to above, were recalled, the SEFA amended, the Single Audit work updated, and the reports required under the Uniform Guidance have been reissued. The Academy discovered that the Title I, Part A cash requested at the end of Fiscal Year 2022 was overstated by $45,087. The Academy returned the funds to the State during Fiscal Year 2023. The following are the restated fiscal year 2022 account balances.
Title: NOTE 3 – GRANT AUDITOR’S REPORT Accounting Policies: The accompanying schedule of federal awards (the “Schedule”) includes the federal grant activity of Washington - Parks Academy under programs of the federal government for the year ended June 30, 2022. Expenditures reported on the Schedule are reported on the same basis of accounting as the general purpose financial statements. 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 (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in or used in the preparation of the general purpose financial statements. Because the Schedule presents only a selected portion of the operations of Washington-Parks Academy, it is not intended to, and does not, present the financial position, changes in net assets, or cash flows, if applicable, of Washington-Parks Academy. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: Management has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Management has utilized the Cash Management System (CMS) Grant Auditor’s Report to prepare the expenditure schedule for federal awards. There were no exceptions for Entitlement and IDEA Part B cash receipts, which are not included in CMS.
Title: NOTE 4 – NONCASH ASSISTANCE Accounting Policies: The accompanying schedule of federal awards (the “Schedule”) includes the federal grant activity of Washington - Parks Academy under programs of the federal government for the year ended June 30, 2022. Expenditures reported on the Schedule are reported on the same basis of accounting as the general purpose financial statements. 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 (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in or used in the preparation of the general purpose financial statements. Because the Schedule presents only a selected portion of the operations of Washington-Parks Academy, it is not intended to, and does not, present the financial position, changes in net assets, or cash flows, if applicable, of Washington-Parks Academy. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: Management has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The value of the noncash assistance received in the form of food commodities was determined in accordance with the value provided by the State of Michigan.

Finding Details

Finding 2022-001
Criteria The Academy’s internal control structure should ensure that the accounting data is appropriately calculated, reconciled, and reported in accordance with generally accepted accounting principles. Condition The Academy’s accounts required significant adjustments to the general ledger to properly reflect the appropriate balance after the books and records were presented for audit. Cause/Effect While the accounts were reconciled throughout the year, the reconciliations completed had certain instances where the year-end reconciliation process didn’t match to the general ledger. Recommendation The Academy should institute monthly and yearly closing procedures to ensure that all accounts are reconciled and match the general ledger.
Finding 2022-002
Criteria The Academy should monitor the general ledger appropriately to ensure timely and accurate financial statements. Condition The Academy lacked appropriate overall monitoring of account balances during the year to compile complete and accurate financial reports, which resulted in many auditor-proposed journal entries. Context We noted that the Academy didn’t have a process in place to ensure that financial statements were accurate and complete. Cause/Effect The Academy did not identify the resources necessary to ensure general ledger accounts were monitored and analyzed by appropriate individuals, including taking an overview of fund activity to finalize the accounting records. As a result of the lack of appropriate overall monitoring procedures, there were many auditor-proposed journal entries. Recommendation The Academy should develop an overall monitoring procedure to ensure that all fund activity is complete, accurate, and logical. This includes assigning an appropriate individual to each general ledger account, and several individuals are responsible for the entire general ledger and financial statements to perform monitoring, analytical analysis, and adjustment as needed.
Finding 2022-003
Criteria There should be a process in place to ensure that the Academy complies with laws and regulations. Condition There was an instance identified where the Academy was not in compliance with laws and regulations. State School Aid Act MCL 388.1718 requires that annual audits are submitted by November 1 to the Michigan Department of Education. Cause/Effect There was a change in staff and staff shortages, which led to noncompliance with MCL 388.1718. Recommendation We recommend that the Academy implement a process that identifies specific individuals to identify and monitor applicable compliance requirements throughout the year.
Finding 2022-004
Criteria There should be a process to ensure grant revenue is accurately and timely recorded. Condition The Academy didn’t have a process in place to ensure that grant revenue was reported accurately and timely. Context During our testing, we noted errors in recording various revenue, accounts receivable, and unearned revenue accounts. This included instances where revenues were not properly recorded, and drawdowns for grants were processed beyond the sixty-day requirement, which reduced revenue. Cause/Effect There is no process to ensure that grant revenues are timely and accurately accounted for. Recommendation We recommend that the Academy implement a process that would allow for the accurate recording of grant revenue and timely request of cash drawdowns.
Finding 2022-005
Criteria The building leader and the business office approve invoices. Condition Controls in place were not adequate to ensure that expenditures were approved by the building leader. Context During our testing, we noted multiple invoices that had not been properly approved. Cause/Effect The established internal control procedures related to approving an invoice were overlooked in several instances. The effect of unapproved invoices can cause unauthorized disbursements or budget overruns. Recommendation We recommend that the Academy implement procedures to ensure each invoice has the proper approval before payment.
Finding 2022-006
Michigan Department of Education awarded the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) program to public school academies operating before fiscal year 2022. Under the program, Academies cannot allow the transfer of ESSER funding to academies open after fiscal year 2021. Condition The Academy transferred ESSER funds based on the intergovernmental agreement and approved a consolidated application that identified Lincoln-King Adams-Young Academy as a second-tier subrecipient. However, the State of Michigan deemed the transfer as unallowable incurred expenditures ineligible. The Academy firmly disputes that the transfers were unallowable because of the pre-approvals received by the Academy to be a sub-recipient of a federal award but supports trying to resolve the relevant issues. Questioned Cost Questioned costs included amounts transferred to Lincoln-King Adams-Young Academy, which totaled $683,606 in Fiscal Year 22. Context Subsequent to year-end, we were made aware that the transfers were unallowable. Cause and Effect The Academy relied on the approved consolidated application noting the use of funds for Lincoln-King Adams-Young Academy.
Finding 2022-001
Criteria The Academy’s internal control structure should ensure that the accounting data is appropriately calculated, reconciled, and reported in accordance with generally accepted accounting principles. Condition The Academy’s accounts required significant adjustments to the general ledger to properly reflect the appropriate balance after the books and records were presented for audit. Cause/Effect While the accounts were reconciled throughout the year, the reconciliations completed had certain instances where the year-end reconciliation process didn’t match to the general ledger. Recommendation The Academy should institute monthly and yearly closing procedures to ensure that all accounts are reconciled and match the general ledger.
Finding 2022-002
Criteria The Academy should monitor the general ledger appropriately to ensure timely and accurate financial statements. Condition The Academy lacked appropriate overall monitoring of account balances during the year to compile complete and accurate financial reports, which resulted in many auditor-proposed journal entries. Context We noted that the Academy didn’t have a process in place to ensure that financial statements were accurate and complete. Cause/Effect The Academy did not identify the resources necessary to ensure general ledger accounts were monitored and analyzed by appropriate individuals, including taking an overview of fund activity to finalize the accounting records. As a result of the lack of appropriate overall monitoring procedures, there were many auditor-proposed journal entries. Recommendation The Academy should develop an overall monitoring procedure to ensure that all fund activity is complete, accurate, and logical. This includes assigning an appropriate individual to each general ledger account, and several individuals are responsible for the entire general ledger and financial statements to perform monitoring, analytical analysis, and adjustment as needed.
Finding 2022-003
Criteria There should be a process in place to ensure that the Academy complies with laws and regulations. Condition There was an instance identified where the Academy was not in compliance with laws and regulations. State School Aid Act MCL 388.1718 requires that annual audits are submitted by November 1 to the Michigan Department of Education. Cause/Effect There was a change in staff and staff shortages, which led to noncompliance with MCL 388.1718. Recommendation We recommend that the Academy implement a process that identifies specific individuals to identify and monitor applicable compliance requirements throughout the year.
Finding 2022-004
Criteria There should be a process to ensure grant revenue is accurately and timely recorded. Condition The Academy didn’t have a process in place to ensure that grant revenue was reported accurately and timely. Context During our testing, we noted errors in recording various revenue, accounts receivable, and unearned revenue accounts. This included instances where revenues were not properly recorded, and drawdowns for grants were processed beyond the sixty-day requirement, which reduced revenue. Cause/Effect There is no process to ensure that grant revenues are timely and accurately accounted for. Recommendation We recommend that the Academy implement a process that would allow for the accurate recording of grant revenue and timely request of cash drawdowns.
Finding 2022-005
Criteria The building leader and the business office approve invoices. Condition Controls in place were not adequate to ensure that expenditures were approved by the building leader. Context During our testing, we noted multiple invoices that had not been properly approved. Cause/Effect The established internal control procedures related to approving an invoice were overlooked in several instances. The effect of unapproved invoices can cause unauthorized disbursements or budget overruns. Recommendation We recommend that the Academy implement procedures to ensure each invoice has the proper approval before payment.
Finding 2022-006
Michigan Department of Education awarded the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) program to public school academies operating before fiscal year 2022. Under the program, Academies cannot allow the transfer of ESSER funding to academies open after fiscal year 2021. Condition The Academy transferred ESSER funds based on the intergovernmental agreement and approved a consolidated application that identified Lincoln-King Adams-Young Academy as a second-tier subrecipient. However, the State of Michigan deemed the transfer as unallowable incurred expenditures ineligible. The Academy firmly disputes that the transfers were unallowable because of the pre-approvals received by the Academy to be a sub-recipient of a federal award but supports trying to resolve the relevant issues. Questioned Cost Questioned costs included amounts transferred to Lincoln-King Adams-Young Academy, which totaled $683,606 in Fiscal Year 22. Context Subsequent to year-end, we were made aware that the transfers were unallowable. Cause and Effect The Academy relied on the approved consolidated application noting the use of funds for Lincoln-King Adams-Young Academy.