LAKE CITY AREA SCHOOLS

2021-001 ? Considered a significant deficiency Federal Program: Child Nutrition Cluster CFDA#: 10.555 and 10.559 Federal agency: U.S. Department of Agriculture Pass-through entity: Michigan Department of Education Pass-through number: 201960, 201980, 211960, 211980, 200902 Criteria: In order to comply with Michigan Department of Education requirements, the District?s food service fund balance cannot exceed three months of operating expenditures. Condition: The District currently has more than the allowable fund balance in the non-profit 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 2021-2022 school year. The plan must be submitted to the Michigan Department of Education prior to implementation. Excess funds cannot be transferred to the general fund. Questioned Costs: None Cause: The District participated in the Community Eligibility Provision, as well as the unanticipated closure meal reimbursements from causing a larger than normal increase in the food service fund balance. Effect: At June 30, 2021, the District?s food service fund balance was greater than three months of expenditures. Recommendation: The District should implement a budget, as well as the required correction action plan, for the 2021-2022 school year that will adequately reduce the food service fund balance. District?s Response: The District concurs with the facts of this finding and is implementing procedures to prevent this in the future. The District will be utilizing the funds to purchase new food service equipment as part of a renovation of the kitchen in the Middle/High School building.

LAKE CITY AREA SCHOOLS CORRECTIVE ACTION PLAN FOR THE YEAR ENDED JUNE 30, 2021 Lake City Area Schools respectfully submits the following corrective action plan for the year ended June 30, 2021. Auditor: Maner Costerisan 2425 E Grand River Avenue, Suite 1 Lansing, MI 48912 Audit Period: Fiscal Year Ended June 30, 2021 District Contact Person: Tracy Reitz, Business Manager Finding ? Financial Statement audit Finding 2021-001 Food Service Fund Balance Recommendation: The District should implement a budget and corrective action plan that will adequately reduce the food service fund balance for the 2021-2022 school year. Action to be taken: The District concurs with the facts of this finding and is implementing procedures to prevent this in the future. The District will be utilizing the funds to purchase new food service equipment as part of a renovation of the kitchen in the Middle/High School building.

2020-001