Finding Text
Finding 2023-005: Child Nutrition Cluster Federal Reimbursement Receipting Procedures
U.S. Department of Agriculture
Pass-through agency: Michigan Department of Education
Assistance Listing Numbers: 10.553, 10.555, and 10.559
Award numbers: 221970, 231970, 220910, 221960, 231960, 220900 and 230900
Award year ends: June 30, 2023 and September 30, 2023
Specific Requirement: Special Tests and Provisions—Non-Profit School Food Service Accounts
Criteria: 7 CFR sections 210.14(a), 210.14(c), 210.19(a)(2), 215.7(d)(1), 220.2, and 220.7(e)(1)(i) requires a School District to account for all revenues and expenditures of its non-profit school food service in accordance with state and federal requirements. A school food authority must operate its food services on a non-profit basis. All revenue generated by the school food service must be used to operate and improve its food services, and this revenue must be properly and timely credited to the food service account.
Questioned Costs: None.
Condition: Monthly federal reimbursement receipts were not timely credited to the proper food service revenue accounts.
Context: During our detailed testing of monthly federal reimbursement receipts, we noted five of the five monthly receipts tested were properly credited to the corresponding food service revenue accounts. However, the timing of the receipt postings to the general ledger ranged from two to five months after the receipt dates.
Effect: School District’s cash and food service revenues were misstated for extended periods throughout the fiscal year, and errors or the misappropriation of funds could have occurred without timely detection.
Cause: The School District experienced personnel changes and shortages within the accounting function during the year, including a two-month gap between business managers, and an extended medical leave, which caused some food service revenue postings to not be completed timely as there was no available replacement during this time.
Repeat Finding: This is not a repeat finding.
Recommendation: The School District should provide training to accounting department personnel of the requirements for non-profit school food service accounts under Uniform Grant Guidance, and the School District should require payments to be timely receipted and credited to the proper food service accounts.
Views of Responsible Officials: The School District agrees with this finding.