Ypsilanti Community SchoolsLocal Government

Program Name and Awarding Agency: Education Stabilization Fund –84.425V, 84.425W, 84.425U, U.S. Department of Education, passed through Michigan Department of Education Literacy Excellence Accelerates Performance – 84.215G, U.S. Department of Education Supporting Educator Excellence and Knowledge – 84.374A, U.S. Department of Education Magnet Schools Assistance ARC (Academically Rigorous Choices) – 84.165A, U.S. Department of Education Head Start Cluster – 93.600, U.S. Department of Health and Human Services, passed through Washtenaw Intermediate School District Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: None Context / Criteria: The Michigan School Accounting Manual (Bulletin 1022) serves as a mandatory guide to the uniform classification and recording of accounting transactions for Michigan public school districts. Furthermore, the School District shall not incur an expenditure against an appropriation account in excess of the amount authorized by the Board of Education. The School District is also responsible for comparing budget to actual expenses by function for programs. The School District should also import its original and final budgets into the accounting system to monitor spending and reduce errors in posting expenditures to the chart of accounts. Condition: The School District incurred material budget overages in multiple budgeted functions as adopted by the Board of Education and disclosed in the June 30, 2025 financial statements. Additionally, total actual expenditures of $91,760,599 exceed total budgeted expenditures of $75,840,532 by $15,920,067 in the General Fund. No adopted budget was provided for the Student and School Activities Fund. The final budget also was not imported into the School District’s accounting software. Cause / Effect: The budget was not properly monitored allowing the budget overages to exist. The School District has not established appropriate controls to ensure that the budget is monitored during the year and has overspent the Board-approved budget by a material amount. Additionally, the lack of budgets imported in the accounting software combined with the numerous federal and restricted state grants the School District receives increases the risk of the wrong account codes being used for expenditures which could have a material effect on reporting of Federal and restricted state grants. Recommendation: We recommend that the School District establish policies and procedures to ensure the budget is properly maintained and monitored throughout the year. An amended budget should be adopted throughout the year, as needed, to reflect changes in spending needs. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Program Name: Literacy Excellence Accelerates Performance – 84.215G Magnet Schools Assistance ARC – 84.165 Awarding Agency: U.S. Department of Education Finding Type: Significant Deficiency on Internal Controls over Compliance and Noncompliance Questioned Cost Amount: None Context / Criteria: The School District should maintain internal controls to retain documentation that is available to support the expenditures that were paid prior to the request for reimbursement based on Uniform Guidance. The internal controls should provide reasonable assurance that the expenditures are accurate, allowable, and properly allocated as to grant and period. Condition: We noted one reimbursement request for the Literacy Excellence Accelerates Performance program and one for the Magnet Schools Assistance ARC program where supporting documentation did not match the amounts requested for reimbursement. Cause / Effect: The School District has not established appropriate controls for all cash reimbursement requests to have a report retained that reflects the supporting expenditures. The School District may undercharge or overcharge the grant as a result. Recommendation: We recommend that the School District implement a process to ensure the School District is following and complying with 2 CFR 200.305(b)(3). Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Program Name: Literacy Excellence Accelerates Performance – 84.215G Awarding Agency: U.S. Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: Our testing identified known questioned costs of $103,970. We extrapolated the error rate to the total population, based on our sample, which calculates extrapolated questioned costs of $103,970. Context / Criteria: The School District should maintain internal controls to document disbursements and salaries and wages that accurately reflect the expenditures incurred and work performed based on Uniform Guidance. The internal controls should provide reasonable assurance that the charges are accurate, allowable, and properly allocated as to account and period. Condition: The School District’s documentation for disbursements indicated the use of incorrect account and object codes, as well as a lack of supporting documentation for certain transactions. Specifically, 4 out of the 40 disbursements tested were charged to the general ledger as disbursements instead of payroll transactions, and support could not be provided for 4 out of the 40 disbursements tested. Cause / Effect: The School District is not appropriately labeling expenditures for posting and/or not appropriately reviewing expenditures compared to budget to prevent and identify errors. Additionally, the School District is not reviewing expenditures to supporting documentation to prevent and identify errors. The lack of review for charges being posted to these accounts could result in the School District over or under-charging certain function or object codes compare to approved budgets. Recommendation: We recommend management implement procedures to ensure all expenditures are being allocated to the correct program, account and object code. A comparison of actual expenditures to budget may help identify and prevent misstatements to account for function, program and object codes. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Finding 2024-002, 2023-002 – Material Weakness and Material Noncompliance – Budget Violations Program Name and Awarding Agency: Child Nutrition Cluster – 10.553, 10.555, 10.559, 10.582, U.S. Department of Agriculture, passed through Michigan Department of Education Child and Adult Care Food Program –10.558, U.S. Department of Agriculture, passed through Michigan Department of Education Education Stabilization Fund – 84.425D, 84.425V, 84.425W, 84.425U, U.S. Department of Education, passed through Michigan Department of Education Head Start Cluster – 93.600, U.S. Department of Health and Human Services, passed through Washtenaw Intermediate School District Literacy Excellence Accelerates Performance – 84.215G, U.S. Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: None Context / Criteria: The Michigan School Accounting Manual (Bulletin 1022) serves as a mandatory guide to the uniform classification and recording of accounting transactions for Michigan public school districts. Furthermore, the School shall not incur an expenditure against an appropriation account in excess of the amount authorized by the Board of Education. The School District is also responsible for comparing budget to actual expenses by function for programs. The School District should also import its original and final budgets into the accounting system to monitor spending and reduce errors in posting expenditures to the chart of accounts. Condition: The School District incurred material budget overages in multiple budgeted functions as adopted by the Board of Directors and disclosed in the June 30, 2024 financial statements. Additionally, total actual expenditures of $86,841,934 exceed total budgeted expenditures of $84,488,126 by $2,353,808 in the General Fund. The total actual expenditures of $3,648,070 exceed total budgeted expenditures of $2,792,958 by $855,112 in the Food Service Fund. No adopted budget was provided for the Student and School Activities Fund. The final budget also was not imported into the School District’s accounting software. We also found function and object codes used for disbursements and expenditures were inaccurate or not in accordance with approved budgets. Although the School District adopted an amended budget during the year, the amended budget did not change from the original budget. Cause / Effect: The budget was not properly monitored allowing the budget overages to exist. The School District has not established appropriate controls to ensure that the budget is monitored during the year and has overspent the Board-approved budget by a material amount. Additionally, the lack of budgets imported in the accounting software combined with the numerous federal and restricted state grants the School District receives increases the risk of the wrong account codes being used for expenditures which could have a material effect on reporting of Federal and restricted state grants. Recommendation: We recommend that the School District establish policies and procedures to ensure the budget is properly maintained and monitored throughout the year. An amended budget should be adopted throughout the year, as needed, to reflect changes in spending needs. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Finding 2024-004, 2023-004 – Material Weakness and Material Noncompliance – Eligibility – Reimbursement Requests Program Name: Child Nutrition Cluster – 10.553, 10.555, 10.559, 10.582 Child and Adult Care Food Program – 10.558 Awarding Agency: U.S. Department of Agriculture, passed through Michigan Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: $134,482 for Child Nutrition Cluster $157,046 for Child and Adult Care Food Program Context / Criteria: The School District should request reimbursement for the actual number of meals served and should maintain support for the number of meals served for each reimbursement request. Condition: The School District’s support for the number of meals served did not agree to the meals requested on the reimbursement requests. Cause / Effect: The School District maintained paper records, but those meals served could not be reconciled or agreed to the reimbursement requests for 6 of our sample of 40 claims for Child Nutrition Cluster and 22 of our sample of 40 claims for Child and Adult Care Food Program. The lack of reconciliation or other records to explain the differences could have resulted in the School District over or under requesting reimbursement from Michigan Department of Education. Recommendation: We recommend management implement procedures to ensure meals served data is retained and communicated to the individual requesting reimbursement for meals served. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Finding 2024-005 – Material Weakness and Material Noncompliance – Allowable Activities – Documentation of Payroll Distribution Program Name: Head Start Cluster – 93.600 Awarding Agency: U.S. Department of Health and Human Services, passed through Washtenaw Intermediate School District Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: $234,972 Context / Criteria: The School District should maintain internal controls to document salaries and wages that accurately reflect the work performed based on 2CF200.430(g). The internal controls should provide reasonable assurance that the charges are accurate, allowable and properly allocated as to account and period. Condition: The School District provided direct certifications as support for salaries and wages charged to the Head Start Cluster. The amounts charged to the Head Start Cluster did not agree with the direct certifications provided: there were 9 payroll charges that were not supported by a direct certification and 3 payroll charges where the provided direct certification percentage did not recalculate to the amount charged to the Head Start Cluster. Additionally, all direct certifications provided were signed June 7, 2024. Cause / Effect: Management has not developed or implemented a control to sufficiently accumulate and document the time spent on the Head Start Cluster. The lack of timely and accurate direct certifications could cause inaccuracies in financial reporting and overcharging of the Head Start Cluster. Employees could have potentially been charged to the Head Start Cluster that did not work on the grant and/or an inaccurate amount of their time could have been charged to the grant. Recommendation: We recommend management implement procedures to ensure direct certifications are completed in a timely manner for all employees working on the Head Start Cluster. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Finding 2024-006 – Material Weakness and Noncompliance – Allowable Activities – Documentation of Payroll and Disbursement Classification Program Name: Literacy Excellence Accelerates Performance – 84.215G Awarding Agency: U.S. Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Noncompliance Questioned Cost Amount: $54,107 Context / Criteria: The School District should maintain internal controls to document disbursements and salaries and wages that accurately reflect the expenditures incurred and work performed based on Uniform Guidance. The internal controls should provide reasonable assurance that the charges are accurate, allowable, and properly allocated as to account and period. Condition: The School District’s support for the payroll and disbursements indicated that the incorrect account and object code was used. The School District expensed 4 of the sample of 40 for disbursement testing and 3 of the sample of 20 for payroll testing to the incorrect accounts. Additionally, it was noted the School District potentially overcharged the Retirement and FICA expenses compared to the School District’s school-wide rates. Cause / Effect: The School District is not appropriately labeling expenditures for posting and/or not appropriately reviewing expenditures compared to budget to prevent and identify errors. The lack of review for charges being posted to these accounts could result in the School District over or under-charging certain function or object codes compare to approved budgets. Recommendation: We recommend management implement procedures to ensure all expenditures are being allocated to the correct program, account and object code. A comparison of actual expenditures to budget may help identify and prevent misstatements to account for function, program and object codes. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.

Finding 2023-004 – Eligibility – Reimbursement Requests Program Name: Child Nutrition Cluster – Assistance Listing 10.553, 10.555, 10.559 & 10.582 Awarding Agency: U.S. Department of Agriculture, passed through Michigan Department of Education Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: Unknown Context / Criteria: The School District should request reimbursement for the actual number of meals served and should maintain support for the number of meals served for each reimbursement request. Condition: The School District’s support for the number of meals served did not agree to the meals requested on the reimbursement requests. Cause / Effect: The School District maintained records from a point-of-sale system, but those meals served could not be reconciled or agreed to the reimbursement requests for our sample of 3 claims. The lack of reconciliation or other records to explain the differences could have resulted in the School District over or under requesting reimbursement from Michigan Department of Education. Recommendation: We recommend management implement procedures to ensure meals served data is retained and communicated to the individual requesting reimbursement for meals served. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying Corrective Action Plan.

2019-007 ? Cash Management Finding Type. Material Noncompliance; Material Weakness in Internal Controls over Compliance. Federal program(s): U.S. Department of Agriculture: Child Nutrition Cluster (CFDA# 10.553, 10.555, and 10.559); Passed through MDE; All project numbers Criteria. The District is responsible for ensuring that the amount of cash requested as reimbursement is for the actual number of meals served and claimed. Condition. During our audit procedures over the District's cash management process, it was noted that two of the three claim requests selected for testing did not agree to the District's actual meal counts, one by a material amount. Cause. This condition is the result of management not recognizing the importance of establishing such controls. Effect. As a result of this condition, the District does not have proper controls in place over its procedures for submission of claim requests. In the material instance noted above, the District under requested approximately $114,000 in revenue. It should also be noted, that the food service fund originally ended the fiscal year in a deficit requiring the need for a transfer from the general fund. Questioned Costs. No costs have been questioned as a result of this finding inasmuch as no unallowable costs were identified. Recommendation. We recommend that the District establish procedures to ensure that the number of meals being submitted for reimbursement agrees to the actual meal counts. View of Responsible Officials. The District will establish a procedure to monitor and track each reimbursement submitted agrees with the meal count, to avoid potential loss of revenue in the future. The District will consider a procedure of having the accountant position approve reimbursement claims before submitting it. Responsible Officials. Business Manager Estimated Completion Date. June 30, 2020

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