FAC Explorer

Audit 315126

FY End
2023-03-31
Total Expended
$1.07M
Findings
8
Programs
2
Organization: Cottrellville Township (MI)
Year: 2023 Accepted: 2024-07-15
Auditor: Uhy LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
478424 2023-004 Material Weakness - I
478425 2023-005 Material Weakness - P
478426 2023-006 Material Weakness - P
478427 2023-007 Material Weakness - I
1054866 2023-004 Material Weakness - I
1054867 2023-005 Material Weakness - P
1054868 2023-006 Material Weakness - P
1054869 2023-007 Material Weakness - I

Programs

ALN Program Spent Major Findings
66.458 Capitalization Grants for Clean Water State Revolving Funds $980,228 Yes 4
21.027 Coronavirus State and Local Fiscal Recovery Funds $33,067 - 0

Contacts

Name Title Type
XM7BE6VKK2J6 Mary Agnes Simons Auditee
8107652203 Paul Bailey Auditor
No contacts on file

Notes to SEFA

Title: Note 2: Loans Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Cottrellville Township, Michigan (the “Township”), for the year ended March 31, 2023. Expenditures reported on the Schedule are reported on the same basis of accounting, the accrual basis, as the financial statements, although the basis for determining when federal awards are expended is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), wherein certain types of expenditures are not allowable or are limited as to reimbursement. For purposes of charging indirect costs to federal awards, the Township has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Township, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Township. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Funding has been provided for the sanitary sewer system improvements by the United States Environmental Protection Agency and passed through the Michigan Department of Environment, Great Lakes, and Energy Finance Division for the project at and for the year ended March 31, 2023 as follows: See the notes to SEFA for chart/table.
Title: Note 3: Reconciliation of Federal Award Activity per Financial Statements to Expenditures per the SEFA Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Cottrellville Township, Michigan (the “Township”), for the year ended March 31, 2023. Expenditures reported on the Schedule are reported on the same basis of accounting, the accrual basis, as the financial statements, although the basis for determining when federal awards are expended is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), wherein certain types of expenditures are not allowable or are limited as to reimbursement. For purposes of charging indirect costs to federal awards, the Township has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Township, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Township. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The following schedule reconciles federal award activity reported in the financial statements to the expenditures of federal awards reported on the Schedule: See notes to SEFA for chart/table.

Finding Details

Finding 2023-004
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency, Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section (EGLE) Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.318 (a), the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. In addition, per 2 CFR 200.318 (i), the non-Federal entity must maintain records sufficient to detail the history of procurement. Condition: The Township did not utilize federal procurement requirements cited above for the engineering services for the State Clean Water Revolving Fund project. Identification of How Likely Questioned Costs Were Computed: The questioned costs were determined from actual engineering design and construction cost billed (federal portion) during the June 18, 2022 through March 31, 2023 period as summarized from the request for disbursement of funds submitted to EGLE. Known Questioned Costs: $295,854 Context: We tested the procurement of four contracts, 100% of the contracts, and identified one contract that did not follow federal procurement requirements. Cause/Effect: A number of years ago the Township bid engineering services and selected an engineer firm however there were issues with that firm therefore the Township replaced the original engineer with a local engineering firm that they have utilized on other Township projects. Therefore, they did not belief they need to bid engineering services for this project. The Township did not utilize federal procurement requirements to ensure fair and open competition and reasonable cost for engineering services for the State Clean Water Revolving Fund project. Recommendation: We recommend the Township follow federal procurement as required in 2 CFR 200.319 (d) for all contracts reimbursed with federal funds. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-005
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319 (d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Township did not have written procedures for cash management, allowable cost or conflict of interest. In addition, the Township procurement policy did not include all necessary items specified in the Uniform Guidance. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Township was not aware that they were required to have written policies and procedures for the items noted above and was using the grant agreement requirements for guidelines. The Township's controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Township adopt written policies and procedures over cash management, allowable costs, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outline in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-006
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds. Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal controls and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.510 (b), the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined with section 200.502. Condition: The Township did not identify that they were subject to an audit under the Uniform Guidance (U.G.) and a schedule of expenditures of federal awards (SEFA) was not prepared by management. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: In fiscal year 2023, the Township had $1,072,983 in expenditures under three federal awards to report on the SEFA. The Capitalization Grants of Clean Water Revolving Funds was determined to have $980,228 in federal expenditures subject to audit under the U.G. Cause/Effect: The Township's controls were not adequate to ensure that they identify the requirement to have an audit under the Uniform Guidance and the preparation of an accurate and complete SEFA. As a result, management may fail to identify that an audit under the Uniform Guidance is required and that all federal dollars are included. Recommendation: We recommend the Township review federal, state, and local grants to determine if they are federally funded and, if federally funded, utilize the account number outlined in the State of Michigan chart of accounts to track federal funding. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-007
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: A nonfederal entity must have adequate procedures in place to verify that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CRF section 180.300; 48 CFR section 52.209-6). Condition: During procurement testing of the Capitalization Grants for Clean Water Revolving Funds, we noted that the Township did not have documentation that sam.gov was reviewed to ensure the contractors were not suspended or debarred. The only consideration of debarment or suspension appears to be requirement to have contractors provide a signed certification to the effect of not being debarred or suspended from participation in federally funded projects. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None. Subsequently, the sam.gov was reviewed to ensure that the contractors were not suspended or debarred. Context: None of the four contractors utilized for the Capitalization Grants for Clean Water Revolving Funds project were evaluated. Cause/Effect: The lead engineer left the employment of the engineering company, and they believe that he would have tested for suspension or debarment at the time of initiating the contracts, however no documentation could be located. The Township did not have controls in place to comply with suspension and debarment evaluation requirements. Recommendation: We recommend the Township implement adequate controls to ensure verification of debarment, suspension, or exclusion takes place before entering into covered transactions. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-004
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency, Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section (EGLE) Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.318 (a), the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. In addition, per 2 CFR 200.318 (i), the non-Federal entity must maintain records sufficient to detail the history of procurement. Condition: The Township did not utilize federal procurement requirements cited above for the engineering services for the State Clean Water Revolving Fund project. Identification of How Likely Questioned Costs Were Computed: The questioned costs were determined from actual engineering design and construction cost billed (federal portion) during the June 18, 2022 through March 31, 2023 period as summarized from the request for disbursement of funds submitted to EGLE. Known Questioned Costs: $295,854 Context: We tested the procurement of four contracts, 100% of the contracts, and identified one contract that did not follow federal procurement requirements. Cause/Effect: A number of years ago the Township bid engineering services and selected an engineer firm however there were issues with that firm therefore the Township replaced the original engineer with a local engineering firm that they have utilized on other Township projects. Therefore, they did not belief they need to bid engineering services for this project. The Township did not utilize federal procurement requirements to ensure fair and open competition and reasonable cost for engineering services for the State Clean Water Revolving Fund project. Recommendation: We recommend the Township follow federal procurement as required in 2 CFR 200.319 (d) for all contracts reimbursed with federal funds. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-005
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319 (d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Township did not have written procedures for cash management, allowable cost or conflict of interest. In addition, the Township procurement policy did not include all necessary items specified in the Uniform Guidance. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Township was not aware that they were required to have written policies and procedures for the items noted above and was using the grant agreement requirements for guidelines. The Township's controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Township adopt written policies and procedures over cash management, allowable costs, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outline in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-006
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds. Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal controls and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.510 (b), the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined with section 200.502. Condition: The Township did not identify that they were subject to an audit under the Uniform Guidance (U.G.) and a schedule of expenditures of federal awards (SEFA) was not prepared by management. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: In fiscal year 2023, the Township had $1,072,983 in expenditures under three federal awards to report on the SEFA. The Capitalization Grants of Clean Water Revolving Funds was determined to have $980,228 in federal expenditures subject to audit under the U.G. Cause/Effect: The Township's controls were not adequate to ensure that they identify the requirement to have an audit under the Uniform Guidance and the preparation of an accurate and complete SEFA. As a result, management may fail to identify that an audit under the Uniform Guidance is required and that all federal dollars are included. Recommendation: We recommend the Township review federal, state, and local grants to determine if they are federally funded and, if federally funded, utilize the account number outlined in the State of Michigan chart of accounts to track federal funding. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2023-007
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: A nonfederal entity must have adequate procedures in place to verify that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CRF section 180.300; 48 CFR section 52.209-6). Condition: During procurement testing of the Capitalization Grants for Clean Water Revolving Funds, we noted that the Township did not have documentation that sam.gov was reviewed to ensure the contractors were not suspended or debarred. The only consideration of debarment or suspension appears to be requirement to have contractors provide a signed certification to the effect of not being debarred or suspended from participation in federally funded projects. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None. Subsequently, the sam.gov was reviewed to ensure that the contractors were not suspended or debarred. Context: None of the four contractors utilized for the Capitalization Grants for Clean Water Revolving Funds project were evaluated. Cause/Effect: The lead engineer left the employment of the engineering company, and they believe that he would have tested for suspension or debarment at the time of initiating the contracts, however no documentation could be located. The Township did not have controls in place to comply with suspension and debarment evaluation requirements. Recommendation: We recommend the Township implement adequate controls to ensure verification of debarment, suspension, or exclusion takes place before entering into covered transactions. View of responsible officials and planned corrective action plan: See attached corrective action plan.