Audit 376434

Assistance Listing Number, Federal Agency, and Program Name - 84.010, Michigan Department of Education, Title I Regional Assistance Grant Federal Award Identification Number and Year - 2025 Pass through Entity Kalamazoo Regional Educational Service Agency Finding Type- Significant deficiency and material noncompliance with laws and regulations Repeat Finding - No Criteria - Pursuant to federal regulations governing Title I Grants to Local Educational Agencies of the Elementary and Secondary Education Act (ESEA), the School District is required to ensure grant funds are spent only for allowable costs incurred in eligible school buildings. Condition - The School District charged an expenditure to the grant that was incurred in a school building that was not an eligible school building under the award. Questioned Costs- $2,952 If Questioned Costs Are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - Questioned costs of $2,952 resulted from the School District charging an expenditure to the grant that was incurred in a school building that was not an eligible school building under the award. Context - Of the 12 non payroll transactions selected for testing that were charged to this grant, 1 transaction was incurred by a school building that was not an eligible school building under the award. Cause and Effect - The School District was not aware expenditures charged to the Title 1 Regional Assistance Grant were only to be incurred by school buildings that were eligible for Title 1 services within the School District's annual Consolidated Application. Upon discovery, the client conducted a comprehensive review of all Title I expenditures by building and confirmed that this was the only expenditure charged to an ineligible building. Recommendation - We recommend that the School District enhance its internal controls to ensure expenditures are charged only to eligible school buildings. Specifically, the School District should implement a verification step during the grant budgeting and expenditure review process to confirm building eligibility prior to charging costs to the Title I grant. Views of Responsible Officials and Corrective Action Plan - The associate accountant will ensure the assistant superintendent’s signature is on all invoices charged to federal grants, including the Title 1 Regional Assistance Grant. The finance director will ensure this during the invoice approval process. The finance director and assistant superintendent meet monthly to discuss federal grants, which includes the Title 1 Regional Assistance Grant. Part of this meeting is to discuss known expenditures for federal grants so far this year to ensure they are properly coded and expended. The finance director will run a general ledger analysis every two months to compare posted grant expenditures to approved grant budgets. Expenditures in question will be discussed at monthly meetings. Any determined to be incorrect will be moved to nongrant accounts via journal entry, most likely prepared by the finance director and approved by the associate accountant.