Old Redford Academy

REPEAT FINDING 2019-003 Finding Type ? Noncompliance with laws and regulations ? Program Income Criteria ? In accordance with 7 CFR 210.19(a)(2), the Academy?s Nonprofit School Food Service Account?s (?NSFSA?) fund balance, or net cash resources, must not exceed three months? average expenditures. Condition ? The Academy?s NSFSA?s fund balance exceeded the allowable three months? average expenditures balance as of June 30, 2020. The Academy had approximately 7.09 months of expenditures as fund balance as of June 30, 2020. The Academy will be required to submit a Plan of Action and obtain Michigan Department of Education?s (?MDE?) prior approval to improve the food quality or take other action designed to improve the program in accordance with 7 CFR 210.19(a)(2). Questioned Costs ? None Cause ? Unknown Effect ? The Academy is not in compliance with U.S. Department of Agriculture regulations. Recommendation ? The Academy should submit a Plan of Action and obtain MDE?s prior approval to improve the food quality or take other action designed to improve the program in accordance with 7 CFR 210.19(a)(2). Auditee Response ? The Academy agrees with the finding and is implementing procedures in order to prevent this noncompliance. Furthermore, the Academy has a carry-over extension related to its previous Excess Fund Balance Plan of Action from the 2018-2019 school year from MDE. The extension allows for the excess funds to be spent during the 2020-2021 school year, and no later than June 30, 2021.

Michigan Department of Education PO Box 30008 Lansing, Michigan 48909 Old Redford Academy submits the following corrective action plan: Finding 2020-001: The Academy did not submit its annual comprehensive financial data consistent with its financial statements to the Center by December 1, 2020. Corrective Action 2020-001: The Academy?s conversion to a new accounting software during the year and subsequent issues with the conversion were the primary reasons for the delay in the timely completion of the audit. The conversion is now complete and all technical issues have been resolved. The CFO will ensure that changes in accounting technology/software will be properly managed by all required departments and ensure that systems run concurrently until all issues and/or glitches are resolved. Finding 2020-002: Fund balance is in excess of three months? average expenditures for the food service program. Corrective Action 2020-002: The CFO and Food Service Director will review fund balance not less than quarterly to verify that fund balance does not exceed the federal requirement of not more than three months? average expenditures. If a spend down is necessary, the Food Service Director will obtain the necessary approvals from MDE to move forward with the spend down plan. Additionally, the Academy received a carry-over extension that allows for the excess funds to be spent no later than June 30, 2021. Educationally Yours, Board of Directors, Old Redford Academy Elementary School / 17195 Redford St. / Detroit, MI 48219 / 313.532.7510 Middle School / 22122 W. McNichols Rd. / Detroit, MI 48219 / 313.412.2137 High School / 8001 W. Outer Dr. / Detroit, MI 48235 / 313.543.3080 Central Office / 22122 W. McNichols Rd./ Detroit, MI 48219 / 313.412.2137 www.oradistrict.org

2019-003

Program Information: All federal grants. Criteria: The Michigan Department of Education (MDE) requires that the school chart of accounts be followed in all instances, including grant expenditures. In addition, grant expenditures and revenue are to be tracked separately in the chart of accounts based on grant codes. Condition: We noted the grant codes were not consistently used during the current year for federal expenditures. Federal grant expenditures were in accounts that were not in accordance with the MDE chart of accounts. Questioned Costs: None Cause/Effect: Management is properly tracking federal expenditures for each of the grants, but those expenditures were not always recorded in the account number associated with the applicable grant. Trial balances by grant code did not agree to amounts requested for the federal grants. Numerous reclassification entries were needed to move expenditures to the proper accounts at year end. These reclassification were done months after the end of the fiscal year. Recommendation: We noted that management was aware of which expenditures had been requested and it appears that all expenses requested were related to the applicable grants. However, we recommend that management properly charge federal expenditures throughout the fiscal year to accounts with the proper grant code. This will ensure that federal cash requests are easily supported and in accordance with the MDE chart of accounts. It will also eliminate the need for reclassification entries at year end. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan from management.

Finding 2019-002, 2018-002: Grant codes were not consistently used during the current year for federal expenditures. Federal expenditures were in accounts that were not in accordance with the MDE chart of accounts. Corrective Action 2019-002, 2018-002: According to the Michigan Public School Accounting Manual, the general ledger account coding structure is 26 characters long and divided into 8 sections. The grant code section of the mandated general ledger coding structure is section 6. According to MDE?s 2018 Spring workshop slide #63 states (attachment A) ?Information requested (general ledgers, etc.) must provide the state account codes (Function and Object codes) and not account codes used in other accounting systems.? Thus, MDE?s requirement for account level coding is only through the object level which is section 4 of the mandated account coding structure. The federal expenditures recorded in the Academy?s general ledger are in accordance with MDE?s requirements.

2018-002

2019-003 ? Material Weakness and Material Noncompliance ? Program Income Program Information: Child Nutrition Cluster. U.S. Department of Agriculture, passed through Michigan Department of Education, CFDA #10.553, 10.555, and 10.559. Criteria: The Academy must limit its fund balance to an amount that does not exceed three months? average expenditures for its non-profit school food service per requirements in 7 CFR 210.14 (b). Condition: Fund balance is in excess of three months? average expenditures. Questioned Costs: None Cause/Effect: The Academy?s food service program fund balance was in excess of required levels by approximately $266,000. Recommendation: We recommend the Academy review its food service fund balance through the year to verify that they are no in excess of three months expenditures. The Academy should also obtain an approved spend down plan with the State. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan from management.

Finding 2019-003 Fund balance is in excess of three months? average expenditures for the food service program. Corrective Action 2019-003 The CFO and Food Service Director will review fund balance not less than quarterly to verify that fund balance does not exceed the federal requirement of not more than three months? average expenditures. If a spend down is necessary, the Food Service Director will obtain the necessary approvals from MDE to move forward with the spend down plan.

GSA_MIGRATION

GSA_MIGRATION