Finding 627802 (2022-001)

Findings--Financial Statement Audit Finding 2022-001 Considered a significant deficiency (repeat finding) Criteria: The District?s fund balance in the food service fund is required to be less than three months of food service expenditures. Condition: Saranac Community Schools currently has more than the allowable fund balance in the nonprofit food service fund. As a result, the District will be required to develop a spending plan to reduce the balance to an acceptable level during the 2022-2023 school year. The plan must be submitted to the Michigan Department of Education prior to implementation. Excess fund balance cannot be transferred to the general fund. Effect: At June 30, 2022 the District?s food service fund balance was greater than three months of expenditures. Cause: An increase in federal revenues from meal reimbursements caused a significant increase in fund balance. The District did not complete the planned equipment replacement and purchases. Recommendation: The District should monitor revenues more closely and adjust food service program to match revenues. Management should complete the planned expenditures needed to maintain acceptable fund balance. A spend-down plan should be developed and followed to reduce fund balance below acceptable levels. District?s response: The District concurs with the facts of this finding and is implementing procedures to prevent this in the future.