Finding 4022 (2023-003)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2023-12-13

Audit: 6347

Organization: Shepherd Public School District (MI)

Auditor: Roslund Prestage & Company PC

AI Summary

Core Issue: The District has a fund balance in the food service fund that exceeds three months’ operating expenses by $270,525.
Impacted Requirements: USDA regulations mandate that net cash resources must not exceed three months’ average expenditures.
Recommended Follow-Up: The District should create and submit a spending plan to reduce the excess balance, as required by the Michigan Department of Education.

Finding Text

2023-003 – EXCESS FUND BALANCE IN FOOD SERVICE FUND (repeat finding) Type: Material Weakness in Internal Control / Noncompliance – Special Tests and Provisions Program: Child Nutrition Cluster (ALN 10.553 and 10.555) Condition: As of year-end the District had a fund balance in the non-profit food service fund in excess of three months’ operating expenses by $270,525. Criteria: The USDA requires that the District limit its net cash resources to an amount that does not exceed a 3 month average of expenditures in the non-profit food service fund per requirements in 7 CFR Part 210.14(b). Cause: This condition was caused by an increase in meals claimed for reimbursement, which resulted in more reimbursement revenue than anticipated. Effect: The District will be required to develop a spending plan for reducing the balance to an acceptable level during the following school year. The plan must be submitted to the Michigan Department of Education (MDE), Office of School Support Services for prior approval. Recommendation: We recommend that the District develop a spending plan as required by MDE and submit the plan at their earliest convenience. Management’s Resp: We are in agreement with this finding. The district is now working on a spend down plan to enhance the Food Service Program.

Corrective Action Plan

Finding Number 2023-003 — Excess in Food Service Fund — Repeat Finding - Material Weakness in Internal Control/Noncompliance — Special Tests and Provisions Condition: As of year-end, June 30, 2023, the district had a fund balance in the food service fund in excess of three months operating expenses by approximately $ 268,411. Responsible Person: Carl Seiter, Director of Business Services Implementation Date: June 30, 2024 Corrective Action: The district has filed a spend down plan with the State of Michigan. This plan includes increasing labor costs for the operation of a kitchen at Winn Elementary School. Additionally, the district will purchase much needed new equipment. Sincerely Carl Seiter Director of Business Services Shepherd Public Schools

Other Findings in this Audit

4023 2023-003

Material Weakness Repeat
4024 2023-003

Material Weakness Repeat
4025 2023-003

Material Weakness Repeat
4026 2023-004

Significant Deficiency
4027 2023-006

Significant Deficiency
4028 2023-005

Significant Deficiency
4029 2023-006

Significant Deficiency
580464 2023-003

Material Weakness Repeat
580465 2023-003

Material Weakness Repeat
580466 2023-003

Material Weakness Repeat
580467 2023-003

Material Weakness Repeat
580468 2023-004

Significant Deficiency
580469 2023-006

Significant Deficiency
580470 2023-005

Significant Deficiency
580471 2023-006

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
84.425	Education Stabilization Fund	$431,967
93.243	Substance Abuse and Mental Health Services_projects of Regional and National Significance	$379,121
84.010	Title I Grants to Local Educational Agencies	$257,786
10.553	School Breakfast Program	$126,934
93.778	Medical Assistance Program	$41,381
84.424	Student Support and Academic Enrichment Program	$15,474
84.367	Improving Teacher Quality State Grants	$4,475
10.555	National School Lunch Program	$3,557
10.649	Pandemic Ebt Administrative Costs	$628