Finding Text
Finding 2024-002, 2023-002 – Material Weakness and Material Noncompliance – Budget Violations
Program Name and Awarding Agency:
Child Nutrition Cluster – 10.553, 10.555, 10.559, 10.582, U.S. Department of Agriculture, passed through
Michigan Department of Education
Child and Adult Care Food Program –10.558, U.S. Department of Agriculture, passed through Michigan
Department of Education
Education Stabilization Fund – 84.425D, 84.425V, 84.425W, 84.425U, U.S. Department of Education, passed
through Michigan Department of Education
Head Start Cluster – 93.600, U.S. Department of Health and Human Services, passed through Washtenaw
Intermediate School District
Literacy Excellence Accelerates Performance – 84.215G, U.S. Department of Education
Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance
Questioned Cost Amount: None
Context / Criteria: The Michigan School Accounting Manual (Bulletin 1022) serves as a mandatory guide to the uniform
classification and recording of accounting transactions for Michigan public school districts. Furthermore, the
School shall not incur an expenditure against an appropriation account in excess of the amount authorized by
the Board of Education. The School District is also responsible for comparing budget to actual expenses by
function for programs. The School District should also import its original and final budgets into the accounting
system to monitor spending and reduce errors in posting expenditures to the chart of accounts.
Condition: The School District incurred material budget overages in multiple budgeted functions as adopted by the Board
of Directors and disclosed in the June 30, 2024 financial statements. Additionally, total actual expenditures of
$86,841,934 exceed total budgeted expenditures of $84,488,126 by $2,353,808 in the General Fund. The total
actual expenditures of $3,648,070 exceed total budgeted expenditures of $2,792,958 by $855,112 in the Food
Service Fund. No adopted budget was provided for the Student and School Activities Fund. The final budget
also was not imported into the School District’s accounting software. We also found function and object codes
used for disbursements and expenditures were inaccurate or not in accordance with approved budgets. Although
the School District adopted an amended budget during the year, the amended budget did not change from the
original budget.
Cause / Effect: The budget was not properly monitored allowing the budget overages to exist. The School District has not
established appropriate controls to ensure that the budget is monitored during the year and has overspent the
Board-approved budget by a material amount. Additionally, the lack of budgets imported in the accounting
software combined with the numerous federal and restricted state grants the School District receives increases
the risk of the wrong account codes being used for expenditures which could have a material effect on reporting
of Federal and restricted state grants.
Recommendation: We recommend that the School District establish policies and procedures to ensure the budget is properly
maintained and monitored throughout the year. An amended budget should be adopted throughout the year, as
needed, to reflect changes in spending needs.
Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.