Finding Text
Assistance Listing, Federal Agency, and Program Name - 10.553, 10.555, and 10.559, U.S. Department of Agriculture, Child Nutrition Cluster
Federal Award Identification Number and Year - 241960, 240910, 241970, 240900
Pass-through Entity - Michigan Department of Education
Finding Type - Material weakness
Repeat Finding - No
Criteria - The School District is required to account for all revenues and expenditures of its non profit school food service account in accordance with state and federal requirements. In order to ensure that federal reimbursement payments received monthly from the Michigan Department of Education are correctly credited to the school food service account, monthly bank reconciliations should be prepared and reviewed by individuals with requisite skill and experience.
Condition - During the 2024 fiscal year, bank reconciliations and monthly reconciliations of food service revenues and expenditures of the school food service account were not being prepared and reviewed in a timely manner.
Cause and Effect - As there was an unexpected reduction in staff resources in the business office, there were not adequate resources to perform these accounting reconciliations on a timely regular basis during the year. The absence of these timely regular reviews could lead to undiscovered errors in the school food service account and material noncompliance with federal regulations.
Recommendation - When there is a reduction in available staff resources in the business office we recommend that the School District develop a contingency plan to make certain that it has a plan to ensure that all bank and accounting reconciliations for the school food service account are completed timely and accurately during each month end close.
Views of Responsible Officials and Planned Corrective Actions - The School District agrees that its internal control structure should ensure that accounting reconciliations are prepared and reviewed in a timely manner during the year. Although the School District had an intergovernmental Agreement with its Intermediate School District to provide business services, such services could not be rendered due to inability to find staffing. Near the end of the 2024 fiscal year, a Finance Director was directly hired into the business office. Monthly reconciliations of accounting records and closing of monthly books are now being performed and reviewed on a timely basis.