
554 N.W.2d 612 (1996)
218 Mich. App. 665
GRUBB CREEK ACTION COMMITTEE, et al., Plaintiffs-Appellees,
v.
SHIAWASSEE COUNTY DRAIN COMMISSIONER, Gary Bendall, Grubb and Extension Drain, and Bob McAvoy, Leonard Ash and Ray Wirth, Jr., in their capacity as the Board of Determination, Defendant-Appellants.
Docket No. 178001.
Court of Appeals of Michigan.
Submitted May 15, 1996, at Lansing.
Decided September 10, 1996, at 9:10 a.m.
Released for Publication October 25, 1996.
*613 Lynn D. Bowne, Owosso, for plaintiffs.
Hubbard, Fox, Thomas, White & Bengtson, P.C. by Geoffrey H. Seidlein, Lansing, for defendants.
*614 Before: HOEKSTRA, P.J., and MICHAEL J. KELLY and J.M. GRAVES, Jr.,[*] JJ.
PER CURIAM.
Defendants appeal as of right from a declaratory judgment of the Shiawassee Circuit Court that effectuated a prior order that limited to the spot cleaning of a drain the scope of the order of necessity issued by a board of determination under the Drain Code of 1956, M.C.L. § 280.1 et seq.; M.S.A. § 11.1001 et seq. We reverse.
In December 1989, five freeholders filed a petition with the Shiawassee Drain Commission to clean out, relocate, widen, deepen, straighten, tile or extend the Grubb and Extension Drain. In accordance with the provisions of the Drain Code, a board of determination was appointed by the drain commissioner. After consideration of the evidence presented, and after walking the drain, the board approved the petition as worded, finding that the petitioned project was necessary and conducive to the public health, convenience, and welfare to properties and residents in Antrim and Perry townships. In approving the petition, the board recommended that the drain be only spot-cleaned. However, the board recognized that the sole power it had was to find the work either did or did not need to be done and that the drain commissioner would determine how to proceed with the project.
On June 4, 1990, plaintiffs filed a complaint against defendants in the Shiawassee Circuit Court, seeking to set aside the decision by the board of determination. On June 29, 1991, the circuit court issued an order finding that the board of determination's finding of necessity was supported by competent, material, and substantial evidence. However, the court limited the board's finding of necessity to cleaning out the drain in spots. The court noted that the order of necessity approved more than spot cleaning, but reasoned that the board consisted of lay people who did not understand legal jargon. Thus, the court stated that although the order of necessity approved more than spot cleaning, the board of determination had only found that it was necessary to clean out the drain in spots, and so limited the finding of necessity.
Approximately two years after the June 29, 1991, order was entered, plaintiffs sought declaratory relief from the circuit court. Plaintiffs claimed that the proposal submitted by the drain commissioner for work to be performed on the Grubb drain had exceeded the spot cleaning of the drain as had been authorized by the June 29, 1991, order. On March 4, 1994, the court issued an order that limited the drain project to cleaning in spots, as previously ordered. The court also specifically defined what portions of the project as submitted by the drain commissioner would be encompassed, and accordingly could be performed, under spot cleaning.
Defendants argue that the circuit court did not have subject-matter jurisdiction to limit the scope of the work to be performed.[1] We disagree, but find that the circuit court did commit error in its exercise of jurisdiction.
Jurisdiction is the power of a court to act and the authority of a court to hear and determine a case. In re Waite, 188 Mich.App. 189, 196-197, 468 N.W.2d 912 (1991). A court's subject-matter jurisdiction is determined only by reference to the allegations listed in the complaint. Luscombe v. Shedd's Food Products Corp., 212 Mich.App. 537, 541, 539 N.W.2d 210 (1995). If it is apparent from the allegations that the matter alleged is within the class of cases with regard to which the court has the power to act, then subject-matter jurisdiction exists. Id. at 541-542, 539 N.W.2d 210. Any subsequent error in the proceedings amounts to error in the exercise of jurisdiction. Id. at 542, 539 N.W.2d 210. When a court lacks subject-matter jurisdiction, the court's acts *615 and proceedings are of no force and validity. Waite, supra at 197, 468 N.W.2d 912.
An order entered without subject-matter jurisdiction may be challenged collaterally and directly. In re Hatcher, 443 Mich. 426, 439, 505 N.W.2d 834 (1993); Waite, supra at 197, 468 N.W.2d 912.[2] Error in the exercise of jurisdiction may be challenged only on direct appeal. Hatcher, supra at 439, 505 N.W.2d 834. The erroneous exercise of jurisdiction does not void a court's jurisdiction as does the lack of subject-matter jurisdiction. Luscombe, supra at 542, 539 N.W.2d 210. However, error in the exercise of jurisdiction can result in the setting aside of the judgment. Waite, supra at 200, 468 N.W.2d 912.
Pursuant to M.C.L. § 280.191; M.S.A. § 11.1191 and M.C.L. § 280.72a; M.S.A. § 11.1072(1), the board of determination's finding of necessity that an existing drain requires improvements and repairs may be reviewed by a circuit court. Here, plaintiffs filed a complaint in the circuit court seeking review of the board's order of necessity. Thus, the court had subject-matter jurisdiction because the allegations listed in the complaint came within the court's subject-matter jurisdiction.
However, we believe that the circuit court erred in its exercise of jurisdiction. The function of the board of determination is to determine whether a problem exists and whether a certain project is necessary. McGregor v. Coggins Drain Bd. of Determination, 179 Mich.App. 297, 299-300, 445 N.W.2d 196 (1989). The board does not determine what is the best solution to the problem. Id. at 300, 445 N.W.2d 196. If the board finds that the project is necessary, then the drain commissioner is responsible for assessing possible solutions. Id. at 299, 445 N.W.2d 196. In approving the solution to the problem, the commissioner is not restricted to the proposal in the petition or the order of determination. Id. at 300, 445 N.W.2d 196. A circuit court's review of a finding of necessity by a board of determination is limited to determining whether the decision was authorized by law and whether the board's findings of fact were supported by material, substantial, and competent evidence on the whole record. Hitchingham v. Washtenaw Co. Drain Comm'r, 179 Mich.App. 154, 161, 445 N.W.2d 487 (1989).
Here, the circuit court exceeded its scope of review by limiting the board's determination to a finding that the Grubb drain needed only to be cleaned in areas. This resulted in error, because the board had acted within its authority in determining that it was necessary to work on the drain and the determination of what type of work needed to be performed should have been left to the drain commissioner. McGregor, supra at 300, 445 N.W.2d 196. Thus, the circuit court erred in its exercise of jurisdiction when it limited the project to spot cleaning. The circuit court should have reviewed the order of necessity only to determine whether is was authorized by the law and supported by the evidence on the whole record. Hitchingham, supra at 161, 445 N.W.2d 487. Accordingly, the court's judgment is set aside. Waite, supra at 200, 468 N.W.2d 912.
Because of our resolution of this issue, we decline to review the remaining issue raised on appeal.
Reversed.
HOEKSTRA, P.J., concurs in the result only.
NOTES
[*]  Circuit judge, sitting on the Court of Appeals by assignment.
[1]  Plaintiffs argue that this issue is not properly before this Court because defendants did not file a timely appeal from the June 21, 1991, order pursuant to MCR 7.204. We find that defendants' failure to appeal from that order does not prove dispositive because the order was not a final order because it was unclear what, if any, harm defendants would suffer as a result of the order. The March 4, 1994, order clarified the previous order, and defined the harm that defendants suffered as a result of the June 29, 1991, order.
[2]  We disagree with this Court's statement in Welch v. District Court, 215 Mich.App. 253, 257, 545 N.W.2d 15 (1996), that a party may "attack... subject-matter jurisdiction only on direct appeal." Rather, as stated in Edwards v. Meinberg, 334 Mich. 355, 359, 54 N.W.2d 684 (1952): "If there is a true jurisdictional defect, the court has acted without authority, [and] its judgment is a nullity and is always subject to collateral attack."
