ROMULUS COMMUNITY SCHOOLS

Finding Type: Material weakness in Internal Controls over Financial Reporting Criteria: Management is responsible for establishing and maintaining effective internal controls in order to safeguard the assets of the District. A key element of internal control is the segregation of incompatible duties within the accounting function. Condition/Finding: During our audit, we noted the following areas in which the District should improve segregation of duties: - The District does not have procedures in place to allow for an independent review of payroll registers when payroll disbursements are made and recorded in the accounting records. - The District currently does not have procedures in place to allow for an independent review of manual journal entries Cause: This condition appears to be the result of the District not adhering to established internal control polices and procedures. Effect: The District is exposed to increased risk that misstatements, whether caused by error or fraud, could occur and not be detected by management on a timely basis. Recommendation: The District should evaluate its processes and procedures to ensure that a sufficient segregation of incompatible duties exists. View of Responsible Officials (Corrective Action): See corrective action plan.

2022-002 - Budgetary Control (repeat) Finding Type: Material weakness in internal controls over financial reporting. Criteria: The State of Michigan requires that school districts adopt budgets for the general fund and all special revenue funds. Expenditures may not be incurred in any of those funds prior to formal authorization through the approval or amendment of the budget. Condition: During our audit we noted that multiple departments and funds had material actual expenditures in excess of the amounts appropriated. Cause: The general fund and special revenue fund budget amendments were not sufficient to cover the actual expenditures. Effect: As a result of this condition, the District has material appropriations in excess of the amounts budgeted. Recommendation: We recommend that the District perform a detailed analysis of actual expenditures for each special revenue fund, at a minimum by department, throughout the year and, as it becomes known that budgeted expenditures are no longer realistic, that the Board take action to amend the budget(s) accordingly. View of Responsible Officials (Corrective Action): See corrective action plan.

2022-003 - Cash Management (repeat) Finding Type: Immaterial Noncompliance, Material Weakness in Internal Control over Compliance 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/Finding: During our audit procedures over the District?s cash management process, we noted that one of the claim requests selected for testing did not agree to the District?s actual meal counts. 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. 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 (Corrective Action): See corrective action plan.