Finding Text
Finding 2023-004: Allowable Activities - Journal Entries and Expenditure Documentation
Program Name: Title I Grants to Local Educational Agencies – Assistance Listing 84.010 & Education Stabilization Fund – Assistance Listing 84.425C, 84.425D, 84.425U
Awarding Agency: U.S. Department of Education, passed through Michigan Department of Education
Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance
Questioned Cost Amount: Unknown
Context / Criteria: Journal entries should be supported by all other elements required by Uniform Guidance and the School District’s internal controls such as invoices, purchase orders, and approvals. Additionally, the journal entry should be in
accordance with the requirements of the award such as, be for non-duplicative costs, appropriate for the account used and be necessary and allowable.
Condition: During our disbursement testing we noted 13 journal entries for Education Stabilization Fund and 6 journal entries for Title I that lacked specific invoices with the above-mentioned documentation. Sufficient reconciliations and/or
invoices were not provided.
Cause / Effect: The School District posted certain expenditures based on budget or up-to-allowable budget. Additionally,
expenditures were posted to funding sources and moved by journal entry to another funding source. The School District should maintain sufficient documentation (including invoices) and approvals for each journal entry to ensure the underlying costs are appropriately supported, approved by management and in accordance with the awards. This will also reduce the likelihood the same invoices are not used to support journal entries for two different funding sources which could cause the School District to request reimbursement for unsupported expenditures.
Recommendation: We recommend management review each purchase to ensure it is supported by proper documentation and is properly approved prior to payment.
Views of Responsible Officials and Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.