Finding Text
SIGNIFICANT DEFICIENCY IN INTERNAL CONTROLS AND NON-COMPLIANCE 2025-003 – UNALLOWABLE COSTS Federal Agency: U.S. Department of Agriculture Program Name: Child Nutrition Cluster Assistance Listing Number(s): 10.582 Pass-through Entity: Michigan Department of Education Grant Number(s): 250950 Criteria: Grant agreements describe both allowable and unallowable costs. It is the responsibility of the School District to have internal controls in place to ensure grant spending is properly monitored and expenses are allowable. Condition: The School District used grant funds to purchase frozen fruits and vegetables, which is unallowable under the Fresh Fruits and Vegetables Program grant agreement. Cause: The Fresh Fruits and Vegetables Program grant was new to the School District in the current year. The School District’s staff did not fully retain all the allowed and unallowed expenses under the grant when provided with the grant guidelines. Effect: The School District is not in compliance with the grant agreement. Questioned Costs: $2,178.68 Identification of How Questioned Costs were Computed: At the request of the Michigan Department of Education, the School District reviewed all invoices related to the Fresh Fruits and Vegetables Program for the grant year and determined the total unallowed costs were $2,178.68. Perspective: Two months of expenses were selected for testing from the Fresh Fruits and Vegetables Program. It was noted on the selected invoices that $1,080.07 of frozen foods were purchased. This is approximately a 44% error rate within the sample selection, which extrapolated out to the total population tested equates to approximately $3,180.32. However, the client reviewed all invoices and determined the total unallowed costs to be $2,178.68. Repeat Finding: No. Recommendation: Procedures should be put in place to ensure staff is aware of all the allowable and unallowable expenses under each grant. Food service staff should complete additional training, especially when a new grant is obtained. Views of Responsible Officials: Management agrees with the finding and has taken corrective action.