Assistance Listing Number, Federal Agency, and Program Name - 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year - 211530, 221530 Pass-through Entity - Michigan Department of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2021-003 Criteria - Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity?s written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity?s system of internal controls includes processes to review after the fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition - During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Ultimately a reconciliation was performed, and approximately $99,000 was overcharged to Title I and subsequently reclassified as a non-grant expenditure. However, the School District requested and received reimbursement for this amount during the year ended June 30, 2022. Questioned Costs - None Identification of How Questioned Costs Were Computed - No questioned costs Context - Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed at the end of the year to adjust charges to the grant to agree with the actual time expended on Title I activities. Due to the timely reconciliation not occurring, the School District requested and received funds in excess of actual costs incurred throughout the year. The School District receives monthly activity reports, or PARS, from the salary employees to describe the activities completed on a daily basis. The salary employees work in buildings that are schoolwide Title I programs, and the School District does not use all of the allocated funds for Title I. It is determined that the activities completed by the salary employees are reasonable and allowable based on buildings being schoolwide Title I programs; therefore, no questioned costs were identified. Cause and Effect - The School District does not have proper controls in place to ensure that the reconciliation is being performed timely to validate the budget estimate used to charge to Title I throughout the year to the actual time expended on Title I activities. This lack of control is caused by the lack of adequate grant oversight and an insufficient control environment. Once the reconciliation was ultimately performed, it was identified that approximately $99,000 was charged to the Title I grant that was in excess of actual allowable costs, this amount was reclassified as a nongrant expenditure prior to the final close of the June 30, 2022 trial balance. The School District received reimbursement of this amount prior to the reclassification of these expenditures. Recommendation - The School District should complete a review and reconciliation process on an annual basis before the end of the grant period to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities. This review and reconciliation should be maintained to support the wages charged to Title I. Views of Responsible Officials and Corrective Action Plan - Three Rivers Community Schools agrees with the above recommendation. The School District will implement procedures to complete a review and reconciliation process to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities.
Assistance Listing Number, Federal Agency, and Program Name - 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year - 211530, 221530 Pass-through Entity - Michigan Department of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2021-003 Criteria - Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity?s written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity?s system of internal controls includes processes to review after the fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition - During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Ultimately a reconciliation was performed, and approximately $99,000 was overcharged to Title I and subsequently reclassified as a non-grant expenditure. However, the School District requested and received reimbursement for this amount during the year ended June 30, 2022. Questioned Costs - None Identification of How Questioned Costs Were Computed - No questioned costs Context - Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed at the end of the year to adjust charges to the grant to agree with the actual time expended on Title I activities. Due to the timely reconciliation not occurring, the School District requested and received funds in excess of actual costs incurred throughout the year. The School District receives monthly activity reports, or PARS, from the salary employees to describe the activities completed on a daily basis. The salary employees work in buildings that are schoolwide Title I programs, and the School District does not use all of the allocated funds for Title I. It is determined that the activities completed by the salary employees are reasonable and allowable based on buildings being schoolwide Title I programs; therefore, no questioned costs were identified. Cause and Effect - The School District does not have proper controls in place to ensure that the reconciliation is being performed timely to validate the budget estimate used to charge to Title I throughout the year to the actual time expended on Title I activities. This lack of control is caused by the lack of adequate grant oversight and an insufficient control environment. Once the reconciliation was ultimately performed, it was identified that approximately $99,000 was charged to the Title I grant that was in excess of actual allowable costs, this amount was reclassified as a nongrant expenditure prior to the final close of the June 30, 2022 trial balance. The School District received reimbursement of this amount prior to the reclassification of these expenditures. Recommendation - The School District should complete a review and reconciliation process on an annual basis before the end of the grant period to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities. This review and reconciliation should be maintained to support the wages charged to Title I. Views of Responsible Officials and Corrective Action Plan - Three Rivers Community Schools agrees with the above recommendation. The School District will implement procedures to complete a review and reconciliation process to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities.
Assistance Listing Number, Federal Agency, and Program Name - 84.425D, U.S. Department of Education, COVID 19 ESSER Formula Fund II Federal Award Identification Number and Year - 213712 Pass through Entity - Michigan Department of Education Finding Type - Material weakness Repeat Finding - No Criteria - Approved construction projects must comply with applicable Uniform Guidance requirements, as well as the department?s regulations regarding construction at 34 CFR ? 76.600. As is the case with all remodeling or construction contracts using laborers and mechanics financed by federal education funds, an LEA that uses ESSER or GEER funds for minor remodeling, renovation, repair, or construction contracts over $2,000 must meet all Davis Bacon prevailing wage requirements and include language in the contracts that all contractors or subcontractors must pay wages that are no less than those established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.) (See also FAQ B 6.) Condition - During testing of the grant, we noted that the School District utilized funds from the Education Stabilization Funds (ESF) for minor remodeling and renovations of the school buildings. Per the 2022 Compliance Supplement, recipients and subrecipients that use ESF for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis Bacon prevailing wage requirements. The School District expended approximately $360,000 in ESSER funds that related to repairs and renovations for an indoor air purification system; however, the School District failed to request or receive the certified payroll reports from the contractor until it was identified by the auditor. Once identified, the School District requested and received the certified payroll reports. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No questioned costs Context - We noted $360,000 of repairs and renovations that was charged to the ESSER II grant, which had a total of approximately $1.5 million in expenditures. While the School District met the requirement of having the prevailing wage language included in the contract with the contractor, the School District failed to request and review the certified payroll reports from the contractor until it was identified by the auditor that this had not yet occurred. Cause and Effect - The School District did not have a control in place to identify that they were required to request the certified payroll reports from the contractor. As a result, the review of the payroll reports in order to ensure that prevailing wages were paid to employees of the contractor did not occur until it was identified by the auditor that this review had not yet been completed. Recommendation - We recommend the School District have a process and control in place to ensure that certified payroll reports from the contractors are being received and reviewed by the School District on a timely basis. Views of Responsible Officials and Planned Corrective Actions - The School District will implement procedures to complete a review of contracts to make sure they include the Davis Bacon prevailing wage rate and review certified payroll reports from the contractors.
Assistance Listing Number, Federal Agency, and Program Name - 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year - 211530, 221530 Pass-through Entity - Michigan Department of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2021-003 Criteria - Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity?s written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity?s system of internal controls includes processes to review after the fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition - During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Ultimately a reconciliation was performed, and approximately $99,000 was overcharged to Title I and subsequently reclassified as a non-grant expenditure. However, the School District requested and received reimbursement for this amount during the year ended June 30, 2022. Questioned Costs - None Identification of How Questioned Costs Were Computed - No questioned costs Context - Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed at the end of the year to adjust charges to the grant to agree with the actual time expended on Title I activities. Due to the timely reconciliation not occurring, the School District requested and received funds in excess of actual costs incurred throughout the year. The School District receives monthly activity reports, or PARS, from the salary employees to describe the activities completed on a daily basis. The salary employees work in buildings that are schoolwide Title I programs, and the School District does not use all of the allocated funds for Title I. It is determined that the activities completed by the salary employees are reasonable and allowable based on buildings being schoolwide Title I programs; therefore, no questioned costs were identified. Cause and Effect - The School District does not have proper controls in place to ensure that the reconciliation is being performed timely to validate the budget estimate used to charge to Title I throughout the year to the actual time expended on Title I activities. This lack of control is caused by the lack of adequate grant oversight and an insufficient control environment. Once the reconciliation was ultimately performed, it was identified that approximately $99,000 was charged to the Title I grant that was in excess of actual allowable costs, this amount was reclassified as a nongrant expenditure prior to the final close of the June 30, 2022 trial balance. The School District received reimbursement of this amount prior to the reclassification of these expenditures. Recommendation - The School District should complete a review and reconciliation process on an annual basis before the end of the grant period to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities. This review and reconciliation should be maintained to support the wages charged to Title I. Views of Responsible Officials and Corrective Action Plan - Three Rivers Community Schools agrees with the above recommendation. The School District will implement procedures to complete a review and reconciliation process to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities.
Assistance Listing Number, Federal Agency, and Program Name - 84.010A, U.S. Department of Education, Title I, Part A Federal Award Identification Number and Year - 211530, 221530 Pass-through Entity - Michigan Department of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2021-003 Criteria - Under the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200.430, allowable direct costs chargeable to federal awards include compensation of employees for the time devoted and identified specifically to the performance of those awards. When an employee spends time among specific activities or cost objectives, the School District should maintain support for the distribution of time. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed. (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity?s written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. (C) The nonfederal entity?s system of internal controls includes processes to review after the fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Under the federal payment principles contained in Title 2 U.S. Code of Federal Regulations Part 200.305, nonfederal entities are generally required to draw federal payments on a reimbursement basis. Condition - During payroll expenditure testing of salaried employees, it was identified that, for employees who spend time in multiple cost objectives, appropriate controls were not in place to perform a timely reconciliation between the time charged to Title I based on budget estimates and the actual time expended on Title I activities. Ultimately a reconciliation was performed, and approximately $99,000 was overcharged to Title I and subsequently reclassified as a non-grant expenditure. However, the School District requested and received reimbursement for this amount during the year ended June 30, 2022. Questioned Costs - None Identification of How Questioned Costs Were Computed - No questioned costs Context - Title I payroll costs include those incurred by both hourly and salary employees. During our testing, we noted that timekeeping documentation for the hourly paid employees satisfied the requirement to track their activities to the charges to Title I. However, for the total population of salary employees charged to Title I, a timely reconciliation was not completed at the end of the year to adjust charges to the grant to agree with the actual time expended on Title I activities. Due to the timely reconciliation not occurring, the School District requested and received funds in excess of actual costs incurred throughout the year. The School District receives monthly activity reports, or PARS, from the salary employees to describe the activities completed on a daily basis. The salary employees work in buildings that are schoolwide Title I programs, and the School District does not use all of the allocated funds for Title I. It is determined that the activities completed by the salary employees are reasonable and allowable based on buildings being schoolwide Title I programs; therefore, no questioned costs were identified. Cause and Effect - The School District does not have proper controls in place to ensure that the reconciliation is being performed timely to validate the budget estimate used to charge to Title I throughout the year to the actual time expended on Title I activities. This lack of control is caused by the lack of adequate grant oversight and an insufficient control environment. Once the reconciliation was ultimately performed, it was identified that approximately $99,000 was charged to the Title I grant that was in excess of actual allowable costs, this amount was reclassified as a nongrant expenditure prior to the final close of the June 30, 2022 trial balance. The School District received reimbursement of this amount prior to the reclassification of these expenditures. Recommendation - The School District should complete a review and reconciliation process on an annual basis before the end of the grant period to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities. This review and reconciliation should be maintained to support the wages charged to Title I. Views of Responsible Officials and Corrective Action Plan - Three Rivers Community Schools agrees with the above recommendation. The School District will implement procedures to complete a review and reconciliation process to support that the amount charged to Title I based on budget estimates is reasonable when compared to actual time expended on Title I activities.
Assistance Listing Number, Federal Agency, and Program Name - 84.425D, U.S. Department of Education, COVID 19 ESSER Formula Fund II Federal Award Identification Number and Year - 213712 Pass through Entity - Michigan Department of Education Finding Type - Material weakness Repeat Finding - No Criteria - Approved construction projects must comply with applicable Uniform Guidance requirements, as well as the department?s regulations regarding construction at 34 CFR ? 76.600. As is the case with all remodeling or construction contracts using laborers and mechanics financed by federal education funds, an LEA that uses ESSER or GEER funds for minor remodeling, renovation, repair, or construction contracts over $2,000 must meet all Davis Bacon prevailing wage requirements and include language in the contracts that all contractors or subcontractors must pay wages that are no less than those established for the locality of the project (prevailing wage rates). (See 20 U.S.C. 1232b Labor Standards.) (See also FAQ B 6.) Condition - During testing of the grant, we noted that the School District utilized funds from the Education Stabilization Funds (ESF) for minor remodeling and renovations of the school buildings. Per the 2022 Compliance Supplement, recipients and subrecipients that use ESF for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis Bacon prevailing wage requirements. The School District expended approximately $360,000 in ESSER funds that related to repairs and renovations for an indoor air purification system; however, the School District failed to request or receive the certified payroll reports from the contractor until it was identified by the auditor. Once identified, the School District requested and received the certified payroll reports. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No questioned costs Context - We noted $360,000 of repairs and renovations that was charged to the ESSER II grant, which had a total of approximately $1.5 million in expenditures. While the School District met the requirement of having the prevailing wage language included in the contract with the contractor, the School District failed to request and review the certified payroll reports from the contractor until it was identified by the auditor that this had not yet occurred. Cause and Effect - The School District did not have a control in place to identify that they were required to request the certified payroll reports from the contractor. As a result, the review of the payroll reports in order to ensure that prevailing wages were paid to employees of the contractor did not occur until it was identified by the auditor that this review had not yet been completed. Recommendation - We recommend the School District have a process and control in place to ensure that certified payroll reports from the contractors are being received and reviewed by the School District on a timely basis. Views of Responsible Officials and Planned Corrective Actions - The School District will implement procedures to complete a review of contracts to make sure they include the Davis Bacon prevailing wage rate and review certified payroll reports from the contractors.