FAC Explorer

Audit 327038

FY End
2024-06-30
Total Expended
$3.24M
Findings
4
Programs
10
Organization: Ecorse Public Schools (MI)
Year: 2024 Accepted: 2024-11-01
Auditor: Yeo & Yeo PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
504485 2024-003 Material Weakness Yes A
504486 2024-004 Material Weakness - A
1080927 2024-003 Material Weakness Yes A
1080928 2024-004 Material Weakness - A

Programs

ALN Program Spent Major Findings
84.010 Title I Grants to Local Educational Agencies $1.28M Yes 2
10.555 National School Lunch Program $537,590 - 0
84.027 Special Education Grants to States $294,945 - 0
10.553 School Breakfast Program $262,337 - 0
84.425 Education Stabilization Fund $209,190 Yes 0
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $135,572 - 0
84.424 Student Support and Academic Enrichment Program $98,067 - 0
10.559 Summer Food Service Program for Children $27,321 - 0
93.778 Medical Assistance Program $8,944 - 0
10.558 Child and Adult Care Food Program $4,711 - 0

Contacts

Name Title Type
DYLVRC3ACAK4 Sarah Khan Auditee
3132944750 Timothy Crosson Jr. Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, where certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Ecorse Public Schools has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the SEFA) includes the federal award activity of Ecorse Public Schools under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Ecorse Public Schools, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Ecorse Public Schools.
Title: Reconciliation to the Financial Statements Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, where certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Ecorse Public Schools has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The School District’s federal revenues per the financial statements agree to the schedule of expenditures of federal awards.
Title: Michigan Department of Education Disclosures Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, where certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Ecorse Public Schools has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The amounts reported on the recipient entitlement balance report agree with the schedule of expenditures of federal awards for U.S.D.A. donated food commodities. The federal amounts reported on the CMS Grant Auditor Report (GAR) are in agreement with the SEFA.
Title: SEFA Adjustments Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, where certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Ecorse Public Schools has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. Adjustments for Special Education Cluster on the SEFA in the amount of $22,852 are cash receipts received in fiscal year June 30, 2024 that were not included in accounts receivable at June 30, 2023.
Title: Subrecipients Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, where certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Ecorse Public Schools has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. No amounts were provided to subrecipients.

Finding Details

Finding 2024-003
Finding 2024-003, 2023-002: Allowable Activities – Chart of Accounts and Budget Monitoring Program Name: Title I Grants to Local Educational Agencies – Assistance Listing 84.010 Awarding Agency: U.S. Department of Education, passed through Michigan Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: $27,350 Context / Criteria: Transactions need to be recorded based on the Michigan School Accounting Manual. The manual has the appropriate account classification with regard to account code dimensions (fund, function, and object code). Condition: During our review of revenue and expenditures, we noted transactions are not being recorded to the appropriate revenue and expense accounts based on the Michigan School Accounting Manual for fund, function, and object code. These inconsistencies could have affected the filing of Federal Expenditure Reports and caused budget-to-actual differences that could have been undetected by management. Additionally, cash receipts for notes payable were posted in General Fund but the related proceeds were posted in Debt Service Fund for debt unrelated to tax levies. Cause / Effect: The School District did not have adequate controls in place to ensure transactions were being recorded to the proper accounts based on fund, function, and object code. The lack of consistency caused unnecessary variations between the accounting records and supporting documentation. Inconsistent or improper use of the State Chart of Accounts could also cause errors or misstatements when comparing to approved budgets and filing final expenditure reports. The School District did not have adequate controls in place to ensure transactions were being recorded to the proper accounts based on fund, function, and object code. During our audit of Title I, Grants to Local Educational Agencies, we noted expenditures for purchased services charged to social work services (function 216) in the amount of $27,350 with no corresponding budgeted expenditures for this function. We noted instructional staff (function 227) had a budgeted expenditure amount of $42,574 but no expenditure was charged to this function. The lack of consistency caused unnecessary variations between the accounting records and supporting documentation. Inconsistent or improper use of the State Chart of Accounts could also cause errors or misstatements when comparing to approved budgets and filing final expenditure reports. Recommendation: We recommend the School District review the Michigan School Accounting Manual and follow the guidelines for recording transactions with appropriate account classifications. Views of Responsible Officials and Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.
Finding 2024-004
Finding 2024-004: Allowable Activities – Allocable Fringe Benefits Program Name: Title I Grants to Local Educational Agencies – Assistance Listing 84.010 Awarding Agency: U.S. Department of Education, passed through Michigan Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: $74,789 Context / Criteria: The School District determines salary and hourly rates based on contractual agreements and other approved rates and charges these expenses to grants in accordance with approved grant agreements. The School District should allocate related fringe benefits such as retirement, payroll taxes and health benefits in a manner consistent with the pattern of benefits attributable to the individuals of employees whose salaries are chargeable to the Federal awards in accordance with 2CFR200.431. Condition: During our payroll testing we noted the School District’s average retirement rate across the School District was 29.05%. However, the rate charged to Title I Grants to Local Educational Agencies was 40.84%, resulting in an estimated overcharge of $74,789. We did not note any major budget overages for Title I Grants to Local Educational Agencies at June 30, 2024, however, the grant period for Title I Grants to Local Educational Agencies ends September 30 each year and budget overages could exist that have not yet been identified based on spending through June 30, 2024. Cause / Effect: The School District did not maintain sufficient procedures to ensure charges for fringe benefits were consistent with fringe benefits for the School District as a whole. The School District may have overcharged Title I Grants to Local Educational Agencies based on the retirement rate used for June 30, 2024. Additionally, the School District did not maintain sufficient procedures to ensure expenses charged to the grant were allowable based on the approved budget which may have allowed the School District to detect the retirement expense difference before it was charged to the Federal award. Recommendation: We recommend the School District maintain a method to allocate Federal awards consistent with the School District as a whole. Additionally, the School District should review all expenditures and compare them to budget to detect any overcharges or undercharges to Federal awards. The School District should ensure the budget used for this comparison agrees to the approved grant budget. Views of Responsible Officials and Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.
Finding 2024-003
Finding 2024-003, 2023-002: Allowable Activities – Chart of Accounts and Budget Monitoring Program Name: Title I Grants to Local Educational Agencies – Assistance Listing 84.010 Awarding Agency: U.S. Department of Education, passed through Michigan Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: $27,350 Context / Criteria: Transactions need to be recorded based on the Michigan School Accounting Manual. The manual has the appropriate account classification with regard to account code dimensions (fund, function, and object code). Condition: During our review of revenue and expenditures, we noted transactions are not being recorded to the appropriate revenue and expense accounts based on the Michigan School Accounting Manual for fund, function, and object code. These inconsistencies could have affected the filing of Federal Expenditure Reports and caused budget-to-actual differences that could have been undetected by management. Additionally, cash receipts for notes payable were posted in General Fund but the related proceeds were posted in Debt Service Fund for debt unrelated to tax levies. Cause / Effect: The School District did not have adequate controls in place to ensure transactions were being recorded to the proper accounts based on fund, function, and object code. The lack of consistency caused unnecessary variations between the accounting records and supporting documentation. Inconsistent or improper use of the State Chart of Accounts could also cause errors or misstatements when comparing to approved budgets and filing final expenditure reports. The School District did not have adequate controls in place to ensure transactions were being recorded to the proper accounts based on fund, function, and object code. During our audit of Title I, Grants to Local Educational Agencies, we noted expenditures for purchased services charged to social work services (function 216) in the amount of $27,350 with no corresponding budgeted expenditures for this function. We noted instructional staff (function 227) had a budgeted expenditure amount of $42,574 but no expenditure was charged to this function. The lack of consistency caused unnecessary variations between the accounting records and supporting documentation. Inconsistent or improper use of the State Chart of Accounts could also cause errors or misstatements when comparing to approved budgets and filing final expenditure reports. Recommendation: We recommend the School District review the Michigan School Accounting Manual and follow the guidelines for recording transactions with appropriate account classifications. Views of Responsible Officials and Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.
Finding 2024-004
Finding 2024-004: Allowable Activities – Allocable Fringe Benefits Program Name: Title I Grants to Local Educational Agencies – Assistance Listing 84.010 Awarding Agency: U.S. Department of Education, passed through Michigan Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: $74,789 Context / Criteria: The School District determines salary and hourly rates based on contractual agreements and other approved rates and charges these expenses to grants in accordance with approved grant agreements. The School District should allocate related fringe benefits such as retirement, payroll taxes and health benefits in a manner consistent with the pattern of benefits attributable to the individuals of employees whose salaries are chargeable to the Federal awards in accordance with 2CFR200.431. Condition: During our payroll testing we noted the School District’s average retirement rate across the School District was 29.05%. However, the rate charged to Title I Grants to Local Educational Agencies was 40.84%, resulting in an estimated overcharge of $74,789. We did not note any major budget overages for Title I Grants to Local Educational Agencies at June 30, 2024, however, the grant period for Title I Grants to Local Educational Agencies ends September 30 each year and budget overages could exist that have not yet been identified based on spending through June 30, 2024. Cause / Effect: The School District did not maintain sufficient procedures to ensure charges for fringe benefits were consistent with fringe benefits for the School District as a whole. The School District may have overcharged Title I Grants to Local Educational Agencies based on the retirement rate used for June 30, 2024. Additionally, the School District did not maintain sufficient procedures to ensure expenses charged to the grant were allowable based on the approved budget which may have allowed the School District to detect the retirement expense difference before it was charged to the Federal award. Recommendation: We recommend the School District maintain a method to allocate Federal awards consistent with the School District as a whole. Additionally, the School District should review all expenditures and compare them to budget to detect any overcharges or undercharges to Federal awards. The School District should ensure the budget used for this comparison agrees to the approved grant budget. Views of Responsible Officials and Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.