Audit 376310

2025-001 – Suspension and Debarment Finding Type. Immaterial Noncompliance; Significant Deficiency in Internal Controls over Compliance (Suspension and Debarment). Federal program(s) U.S. Department of Agriculture -  Child Nutrition Cluster (ALN 10.553 and 10.555); Passed through the Michigan Department of Education; All project numbers. Criteria. Under the requirements of 2 CFR Part 180, for covered transactions for procurement and nonprocurement contracts that are expected to equal or exceed $25,000, the grantee must verify that the party being awarded a procurement and nonprocurement contract is not suspended, debarred, or otherwise excluded by checking the list of excluded parties, obtaining certification from the vendor or subrecipient, or including a clause or condition to the covered transaction with that entity. Condition. For the four vendors selected for testing, the District was unable to provide evidence that the vendors were not suspended, debarred, or otherwise excluded at the time they were engaged to provide goods or services. Cause. The District does not have the proper internal controls in place to ensure that the appropriate procedures are being followed for covered transactions in accordance with the requirements of the Uniform Guidance. Effect. As a result of this condition, the District was exposed to an increased risk that disbursements of federal awards could be made to vendors or subrecipients suspended or debarred by the federal government. Questioned Costs. No costs have been questioned as a result of this finding inasmuch as no unallowable costs were identified. Recommendation. We recommend that the District review its written policies and procedures over federal awards with employees responsible for grant compliance to ensure that they are being followed consistently. View of Responsible Officials. The District will implement a process to ensure that, for any covered procurement or nonprocurement transaction, documentation is maintained confirming suspension and debarment verification was completed prior to executing the transaction.

2025-002 – Allowable Costs/Cost Principles – Payroll Charges Finding Type. Immaterial Noncompliance; Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Federal program(s) U.S. Department of Agriculture -  Child Nutrition Cluster (ALN 10.553 and 10.555); Passed through the Michigan Department of Education; All project numbers. Criteria. Uniform Guidance requires the District to support payroll charged to federal cost objectives with adequate documentation that costs are reasonable for the services rendered and conform to the written policy established by the entity. Condition. During our testing of personnel timecards, we noted one instance where the amounts charged to the grant were understated. The wage rate per the employee's personnel file did not agree to the rate used to pay the employee, which resulted in an underpayment to the employee which was subsequently corrected. In another instance, we noted that the District charged payroll expenditures to the food service fund that were related to a different grant. This resulted in an overstatement of costs charged to the child nutrition program. Cause. This condition appears to be the result of an error by the District in the entering of the timecards into the payroll system. Effect. As a result of this condition, the District did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs. None reported. Recommendation. We recommend that the District review the process for accumulating and summarizing time to minimize the likelihood of errors in the process. View of Responsible Officials. While the identified payroll errors were very small, to address these issues, the District will implement updated review procedures to ensure accuracy of wage rates and proper grant allocation. Specifically, payroll staff will verify that employee wage rates used for grant charges agree to the rates documented in personnel files prior to processing payments. Additionally, the District will establish a secondary review process to confirm that payroll expenditures are charged to the correct grant or program before posting. Training will be provided to all payroll and grant management personnel on proper coding and documentation requirements.