Alpena Public Schools

2024-001 – Significant Deficiency in Internal Control over Major Federal Program and Noncompliance – Budget Allocation. Career and Technical Education – Basic Grants to the States, ALN # 84.048 and #84.048A, Award Numbers 233480 231400, 233480 231405, 233480 231410 and 243520 24124; and American Rescue Plan Act, Homeless Children and Youth II (COVID-19), ALN # 84.425W, Award Number 211012 2122 Federal Agency: U.S. Department of Education 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. Title 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 function and object codes misallocated in comparison to the grant budget approved by MDE. Neither grant misallocations were material to the grants. 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 were not recorded accurately with the grant budget by either function or object codes. Questioned Costs – None. The grants were not overspent in total, nor would the grant expenditure tests have been considered unallowable if they had been correctly allocated with the budget. Career and Technical Education had five instances. American Rescue Plan Act, Homeless Children and Youth II had one instance which was adjusted and corrected. Recommendation – We recommend the School District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. View of Responsible Officials – The School District agrees with our finding and recommendation. Planned Corrective Actions – See corrective action plan, annexed.

2024-002 – Significant Deficiency in Internal Control over Major Federal Program and Noncompliance – Documentation of Employee Time and Effort. Career and Technical Education – Basic Grants to the States, ALN # 84.048 and 84.048A, Award Numbers 233480 231400, 233480 231405, 233480 231410 and 243520 24124 Federal Agency: U.S. Department of Education Criteria – Title 2 CFR 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. It is the School District’s procedure to utilize semi-annual certifications for all employees paid through federal funds. Condition- The School District did not sufficiently document its employees’ actual time spent on federal programs by completing semi-annual certifications or recording their time accurately on their timesheets. Except for the administration, the employees were hired as full-time employees specifically for the Career and Technical Education grant, and although their time was accurately calculated and posted to the grant in their payroll system, the timesheets were not accurate, and the semi-annual certifications were not completed. Incorrect timesheets were noted for six of the twenty-five employees tested and missing semi-annual certification were missing for twenty-five of the twenty-five employees tested. Questioned Costs – None, the employees time was accurately calculated and recorded to the grant in the payroll system. Cause and Effect – The School District’s Career and Technical Education Program Director fell ill during the school year. The Associate Superintendent for Business and Operations stepped up to run the program in addition to her regular duties. The School District did not follow the Board Policy regarding “Time and Effort Reporting”. It appears staffing issues led to a lack of internal controls to identify and correct these errors and ensure complete compliance. Recommendation – We recommend the School District directs personnel to oversee the compliance of the Career and Technical Education grants and can verify employees are completing the “Time and Effort” reporting as required by the grant and the School Districts policy of same – annual certification for all employees paid through federal grants. View of Responsible Officials – The School District agrees with our finding and recommendation. Planned Corrective Actions – See corrective action plan, annexed.

2021-002 ? Coronavirus Relief Funds (COVID-19) ? Allowable Costs/Cost Principles CFDA No. ? 21.019 Grant No. ? N/A - 2019-2020 Federal Agency ? U.S. Department of Treasury Finding Type ? Significant Deficiency in Internal Control over Financial Reporting and Noncompliance Criteria ? Pursuant to OMB 2 CFR 200.430(j) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must also support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, or a Federal award(s) and non-Federal award(s). Condition ? The School District had over and under charged the grant based on the supporting time sheets. Questioned Costs ? None, as all amounts were corrected. Repeat Finding ? No Context ? Wages and benefits charged to the Coronavirus Relief Fund grants, for eleven of the twenty-five employees selected for testing, were either over or under charged. Cause and Effect ? This error appears to have been a systemic misunderstanding of what hours on the timesheets should be charged to the grant. This misunderstanding of eligible payroll expenses under the grant and lack of internal controls to catch the potential errors were exacerbated by all the various changes in procedures and processes as the School District attempted to contend with the challenges brough on by the COVID-19 Pandemic. These conditions resulted in several amounts being either over or under charged to the grant, which could result in questioned costs. Recommendation ? We recommend that the School District reinforce its internal controls over payroll and implement procedures to ensure that the amounts charged to the grants agree to the supporting documentation. This doesn?t have to be a review in its entirety but spot checking a reasonable sample of payroll documentation to ensure that the amounts being charged agrees to the documentation, and the correct methodology is used and reasonable. Views of Responsible Officials and Planned Corrective Actions - The School District agrees with our recommendation and will implement a new procedure to spot check a reasonable amount of employee?s supporting payroll documentation to ensure that the documentation agrees to the amounts manually entered into payroll, and that the correct amounts are being charged to the grant. In addition, a correcting entry was provided to reclassify wages and benefits to the correct programs.