Audit 399959

Program information: Child Nutrition Cluster, U.S. Department of Agriculture passed through the Michigan Department of Education, 10.553, 10.555, 10.559, 10.582 Criteria: Title 2 of the Code of Federal Regulations (CFR) Part 200.305 requires non‑Federal entities to request reimbursement for allowable expenditures in a timely manner and to maintain effective controls to ensure federal grant funds are properly claimed and received. Additionally, program regulations require participating school food authorities to submit monthly claims for reimbursement for meals served under the National School Lunch Program and School Breakfast Program in accordance with deadlines established by the Michigan Department of Education. Condition: The School did not submit meal reimbursement requests for the months of March 2025 and April 2025 through the Child Nutrition Cluster Federal Awards Program in a timely manner. As a result, allowable meal service expenditures incurred during those months were not requested for reimbursement from the USDA through the Michigan Department of Education, resulting in lost revenue of approximately $250,000 for March, and unavailable revenue being recorded for the April request for approximately $315,000. Questioned costs: None Cause and effect: Management did not have adequate internal controls in place to ensure monthly meal reimbursement claims were prepared, reviewed, and submitted in a timely manner. The lack of controls resulted from significant turnover in the districts business office. The School failed to claim federal reimbursement for allowable child nutrition expenditures for two reporting periods, resulting in the loss of available revenue. Recommendation: We recommend that management establish and implement formal internal controls to ensure all child nutrition cluster reimbursement requests are prepared and submitted timely. Controls should include documented monthly procedures, assignment of responsibility, supervisory review of claims prior to submission, and periodic monitoring to confirm that all eligible reimbursements have been requested. Views of responsible officials: Management agrees with the finding. Corrective action plan: See attached corrective action plan.

Program information: Title I Grants to Local Educational Agencies, Title I Part I Imp Basic Programs. U.S. Department of Education, Passed through Michigan Department of Education, AL #84.010. Criteria: The School District has a responsibility to implement proper controls over the payroll processes related to the grant. Condition: For the Title I grant, we noted the following: - 10 out of 40 payroll transactions, for which the district could not provide personnel activity reports (PAR’s) to support the time charged to the title I grant. - 1 out of 40 payroll transactions for which the district paid the employee the incorrect rate. Questioned costs: None Cause and effect: This was caused due to significant turnover in the grants and payroll department, resulting in a lack of controls being followed. Recommendation: We recommend that the district reviews payroll processes with all employees and supervisors to ensure that all required documentation is being completed and maintained. Additionally, we recommend that the district obtains semi-annual certifications for all employees directly charged to the grant. Views of responsible officials: Management agrees with the finding. Corrective action plan: See attached corrective action plan.