Audit 291682

Assistance Listing Number, Federal Agency, and Program Name 21.019, U.S. Treasury, COVID 19 Coronavirus Relief Fund Federal Award Identification Number and Year 21.019 E20204557, 2020; E2020E4558, 2020 Pass through Entity 21.019 Michigan Department of Health and Human Services Finding Type Material weakness Repeat Finding No Criteria The Single Audit Act and Uniform Guidance requires a non federal entity that expends $750,000 or more of federal awards in a fiscal year to have a single or program specific audit. Additionally, 2 CFR §200.510(b) of Uniform Guidance requires an auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended. 2 CFR § 200.502 describes the basis for determining the timing of when Federal awards are deemed expended and therefore reportable on the schedule. Condition Controls in place were not sufficient to ensure the accuracy and completeness of the SEFA. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context During the fiscal year ended May 31, 2021, the Organization expended approximately $1.3 million of federal funding. The initial draft of the SEFA included the following inaccuracies: • ALN 21.019 (CRF) – The expenditures reported on the SEFA were understated by $706,921 The errors noted above have been corrected on the SEFA as of May 31, 2021. Cause and Effect Controls in place did not ensure the SEFA was complete and accurate for the fiscal period under audit. The errors resulted in the understatement of federal expenditures as noted in the context above. Additionally, the understatement of federal expenditures on the SEFA resulted in the incorrect conclusion that federal activity was below $750,000 and therefore a single audit was not needed. Recommendation We recommend the Organization implement a process to ensure that the SEFA is complete and accurate. Views of Responsible Officials and Corrective Action Plan In order to assure the accurate classification of federal grant expenditures, the Federation staff implemented the following controls as part of their accounting review process: 1) The Senior Accountant responsible for grant accounting and the Senior Director of Finance will perform a complete review of all grant agreements, to determine whether the grants are funded with federal or state funds. 2) The quarterly workpapers will include a copy of the signed grant agreement, a current SEFA schedule, and a general ledger that correctly corresponds to the totals included on the included SEFA. 3) The staff will perform a quarterly review of the State of Michigan website (Michigan.gov/MDHHS) to confirm the funding sources of all existing grants.

Assistance Listing Number, Federal Agency, and Program Name 21.019, U.S. Treasury, COVID 19 Coronavirus Relief Fund Federal Award Identification Number and Year 21.019 E20204557, 2020; E2020E4558, 2020 Pass through Entity 21.019 Michigan Department of Health and Human Services Finding Type Material weakness Repeat Finding No Criteria The Single Audit Act and Uniform Guidance requires a non federal entity that expends $750,000 or more of federal awards in a fiscal year to have a single or program specific audit. Additionally, 2 CFR §200.510(b) of Uniform Guidance requires an auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended. 2 CFR § 200.502 describes the basis for determining the timing of when Federal awards are deemed expended and therefore reportable on the schedule. Condition Controls in place were not sufficient to ensure the accuracy and completeness of the SEFA. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context During the fiscal year ended May 31, 2021, the Organization expended approximately $1.3 million of federal funding. The initial draft of the SEFA included the following inaccuracies: • ALN 21.019 (CRF) – The expenditures reported on the SEFA were understated by $706,921 The errors noted above have been corrected on the SEFA as of May 31, 2021. Cause and Effect Controls in place did not ensure the SEFA was complete and accurate for the fiscal period under audit. The errors resulted in the understatement of federal expenditures as noted in the context above. Additionally, the understatement of federal expenditures on the SEFA resulted in the incorrect conclusion that federal activity was below $750,000 and therefore a single audit was not needed. Recommendation We recommend the Organization implement a process to ensure that the SEFA is complete and accurate. Views of Responsible Officials and Corrective Action Plan In order to assure the accurate classification of federal grant expenditures, the Federation staff implemented the following controls as part of their accounting review process: 1) The Senior Accountant responsible for grant accounting and the Senior Director of Finance will perform a complete review of all grant agreements, to determine whether the grants are funded with federal or state funds. 2) The quarterly workpapers will include a copy of the signed grant agreement, a current SEFA schedule, and a general ledger that correctly corresponds to the totals included on the included SEFA. 3) The staff will perform a quarterly review of the State of Michigan website (Michigan.gov/MDHHS) to confirm the funding sources of all existing grants.