Finding Text
Finding 2024-001: Internal Controls Over the Federal Expenditure Report
Type of Finding: Control
U.S. Department of Education
Pass-through Entity: Michigan Department of Education
Assistance Listing Number: 84.425D
Award Numbers: COVID-19 213712-2021, COVID-19 213782-2223
Award Year End: September 30, 2023
Specific Requirement: (L.) Reporting
Criteria: Section 200.303 of the Cost Principles of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-federal entity to establish and maintain effective internal control over the federal award that provides a reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the specified guidance that requires proper segregation of duties by dividing key responsibilities among different people to reduce the risk of error or fraud. This should include separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets. No one individual should control all key aspects of a transaction or event. In addition, this guidance also requires transactions and internal controls to be clearly documented, and the records should be properly maintained and readily available for examination.
Questioned Costs: None.
Condition: During our detailed testing of the area of reporting, we noted that the reports were missing review and approval by an appropriate individual with adequate skills, knowledge, and experience.
Context: The only report filed during the year was not reviewed and approved by an appropriate individual. The sample was not a statistically valid sample, and the matter appears to be a systemic condition.
Effect: Failure to properly review reports before they are submitted could result in inaccurate information being transmitted, resulting in a compliance finding.
Cause: The School District was unaware of the requirement to have a documented review and approval over the area of reporting.
Repeat Finding: This is not a repeat finding.
Recommendation: The School District should establish procedures to require the documented review and approval of all reports by an individual with adequate skills, knowledge, and experience prior to submission.
Views of Responsible Officials: The School District agrees with this finding.