Finding 2740 (2023-001)

Significant Deficiency
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2023-11-30
Audit: 4709
Organization: Reed City Area Public Schools (MI)
Auditor: Uhy LLP

AI Summary

  • Core Issue: The District reported expenditures over budget by more than 10% due to incorrect line-item reporting on the final expenditure report.
  • Impacted Requirements: Compliance with OMB guidelines requiring accurate reporting of budget deviations and prior approvals for revisions.
  • Recommended Follow-Up: Ensure that appropriate personnel review the final expenditure report before submission to prevent future inaccuracies.

Finding Text

US Department of Education Program Title: Education Stabilization Fund CFDA Number(s): 84.425C, 84.425D, 84.425U, 84.425W Federal Award Number: 201201-2122, 213712-2021, 213742-2122,213713-2122 & 2223 (COVID-19) Federal Award Year: July 1, 2022 to June 30, 2023 Pass-Through Entity: Passed-Through Michigan Department of Education Type of Compliance: Significant Deficiency (Activities Allowed/Unallowed and Allowable Costs) Criteria: The OMB requires that recipients of federal funds report deviations from the approved budget and request approvals from Federal awarding agencies for any revisions [2 CFR Part 200.308(b)]. Condition: The District submitted a final expenditure report to the State where certain line-item expenditures were reported in such a way that caused the report to appear over budget by greater than 10%. Cause: This condition was the result of the lack of oversight by appropriate personnel to review the final expenditure report before it was submitted to the State. Effect: As a result of this condition, the District did not fully comply with the budgeting requirement of expenditures being within 10% of the approved budget due to reporting expenditures in the wrong areas on the final expenditure report. Questioned Costs: None Perspective Information: The incident at hand appears to be an isolated instance as the business manager position has been turned over 3 times in the past 3 years. The District’s general ledger had expenditures that were properly spent in accordance with the approved budget and correctly classified in the general ledger, however, the District simply reported the wrong numbers on the Final Expenditure Report for certain Activities and Objects, but the correct amounts were spent in accordance with the approved budget. All of final expenditure report submissions after the incident did not have this same problem and were reported accurately. Recommendation: We recommend the District have appropriate personnel review the final expenditure report before final submission to the State. Views of Responsible Officials: There is a new business manager responsible for any future final expenditure report submissions. They will closely monitor this situation going forward to avoid this from happening in the future.

Corrective Action Plan

This finding is caused by Human error in transcribing amounts from the general ledger to the proper Activities and Objects on the Final Expenditure Report. The completion date for the corrective action plan is immediate. The person responsible for the corrective action is Tina Mills, the Business Manager. The plan for monitoring adherence is the business manager will double check reports before submitting them to the State of Michigan.

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 2741 2023-001
    Significant Deficiency
  • 2742 2023-001
    Significant Deficiency
  • 2743 2023-001
    Significant Deficiency
  • 579182 2023-001
    Significant Deficiency
  • 579183 2023-001
    Significant Deficiency
  • 579184 2023-001
    Significant Deficiency
  • 579185 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $418,247
10.553 School Breakfast Program $276,907
84.367 Improving Teacher Quality State Grants $61,315
10.555 National School Lunch Program $47,055
84.424 Student Support and Academic Enrichment Program $33,004
10.559 Summer Food Service Program for Children $21,801
93.778 Medical Assistance Program $7,364
84.425 Education Stabilization Fund $3,125
10.665 Schools and Roads - Grants to States $1,058
10.649 Pandemic Ebt Administrative Costs $628