Higher Ground AcademyLocal Government

Federal Program: ALN 84.425 Education Stabilization Fund (ESF) Condition: The Academy does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining allowable costs, procurement procedures, and cash management. Criteria: 2 CFR § 200.302(b) requires the Academy to have written procedures related to managing cash from federal award, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the Academy to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The Academy’s policies and procedures have not been formally drafted and updated in written form to the extent sufficient to meet the requirements above. Effect: The failure to have written policies and procedures resulted in the Academy’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the Academy review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the Academy adopt written policies and procedures pertaining to cash management, determining the allowability of costs, and procurement procedures for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

Federal Program: ALN 10.553/10.555/10.559 Child Nutrition Cluster Condition: The Academy failed to prepare and retain documentation to fully support the number of meals that were served and reported to the State, for which federal funding was received. Meal submissions were reviewed for four months during the audit, noting that two of these months contained discrepancies between the number of meals claimed in comparison to the number of meals served per internal records. The discrepancies, when netted together, indicated that more meals had been served than claims and reported to the State. Criteria: The Academy is required to accurately monitor, record, and report the numbers of meals that were served and how many of these were free or reduced. Cause: The Academy does not have sufficient procedures in place to verify that the number of meals claimed can be fully reconciled to the number of meals served per the internal point-of-sale records. Effect: The failure to retain sufficient records for meals served resulted in a lack of documentation to support the number and types of meals served that were reported to the State. Questioned Costs: None identified. Recommendation: We recommend that the Academy evaluate current procedures for accurately monitoring, recording, and reporting the number of meals served, including how many of these were free or reduced, and ensure proper documentation is retained supporting all reports submitted to the State. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND REPORTABLE NONCOMPLIANCE ? U.S. DEPARTMENT OF EDUCATION ? PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COVID-19 ? EDUCATION STABILIZATION FUND, FEDERAL ALN 84.425 2022-001 Internal Control Over Compliance With Equipment and Real Property Management and Reportable Noncompliance Criteria ? 2 CFR ? 200.313 (c)(1) and (d)(1) requires that Higher Ground Academy (the Academy) obtain approval from the federal funding agency or pass-through agency prior to the purchase of equipment with federal funding. The Academy must also maintain property records adequate to identify and track equipment purchased with federal funding, including the federal award under which the equipment was purchased. Condition ? During our audit, we noted the Academy did not have sufficient controls in place within the Education Stabilization Fund federal program to assure compliance with federal equipment and real property management requirements, resulting in reportable noncompliance. Questioned Costs ? None. Context ? The Academy did not obtain approval from the federal funding awarding agency or pass-through agency prior to purchasing equipment with a total value of $56,205 using federal funds. The Academy?s property records also did not contain all information required by the Uniform Guidance to adequately identify and track this equipment. Repeat Finding ? This is a current year finding. Cause ? This condition was due to a misunderstanding of the individual item value, at which federally funded equipment purchases were required to be preapproved and tracked. Effect ? Noncompliance with the equipment and real property management could be viewed as a violation of the award agreement and result in loss of funds. Recommendation ? We recommend that the Academy review its internal control procedures to ensure future compliance with the federal compliance requirements specific to equipment and real property management for the Education Stabilization Fund federal program. View of Responsible Official and Planned Corrective Actions ? The Academy agrees with the finding. The Academy intends to revise its internal capitalization threshold to align with the federal threshold, and to review its other control procedures relating to equipment and real property management requirements to ensure compliance for future federal awards expenditures. The Academy has separately issued a Corrective Action Plan related to this finding.

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