Finding Text
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to
Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance
Listing Number 84.425D, Award Number 213712
Criteria: Management is responsible for complying with the specific compliance requirements set forth by the
Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan
Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that
costs be charged appropriately according to budget and that costs be necessary and reasonable for the
performance of the grant.
Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I,
Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not
within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however,
it was not material to the grant. These grants were not overspent in total, nor would the grant
expenditures tested have been considered unallowable if they had been within budget.
Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to
detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved
grant budget by function.
Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged
to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within
the incorrect function compared to the approved budget and was subsequently reclassified to the correct
function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by
function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a
grant expenditure that was not approved within the budget and was subsequently reclassified to the
General Fund.
Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in
regard to reviewing MDE approved budgeted amounts to actual expenditures.
Views of Responsible
Officials: Management agrees with the finding.
Corrective Action Plan: See attached corrective action plan.