FAC Explorer

Audit 33097

FY End
2022-06-30
Total Expended
$3.90M
Findings
4
Programs
2
Organization: City of Cheboygan (MI)
Year: 2022 Accepted: 2023-03-28
Auditor: Gabridge & CO

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
30355 2022-001 Material Weakness - L
30356 2022-002 - - P
606797 2022-001 Material Weakness - L
606798 2022-002 - - P

Programs

ALN Program Spent Major Findings
66.458 Capitalization Grants for Clean Water State Revolving Funds $3.81M Yes 2
21.027 Coronavirus State and Local Fiscal Recovery Funds $84,138 - 0

Contacts

Name Title Type
VB27M3U1LZU3 Casey Clear Auditee
2316279931 Joe Verlin Auditor
No contacts on file

Notes to SEFA

Title: Note 3 - Reconciliation th the Financial Statements Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, which is described in Note 1 to the City's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable and have been identified in the Schedule. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the City has not elected to use the 10% de minimis cost rate as permitted by ?200.414 of the Uniform Guidance. See page 85 of the .pdf for a reconciliation of federal awards reported in the financial statements to the federal expenditures reported in the Schedule.
Title: Note 4 - Balances of Loans Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, which is described in Note 1 to the City's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable and have been identified in the Schedule. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the City has not elected to use the 10% de minimis cost rate as permitted by ?200.414 of the Uniform Guidance. See page 86 of the .pdf for a reconciliation of the federal bonds payable.
Title: Note 1 - Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, which is described in Note 1 to the City's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable and have been identified in the Schedule. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the City has not elected to use the 10% de minimis cost rate as permitted by ?200.414 of the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of the City of Cheboygan (the City) under programs of the federal government for the year ended June 30, 2022. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City.The Citys reporting entity is defined in Note 1 of the Citys financial statements.

Finding Details

Finding 2022-001
2022-001 - Preparation of the Schedule of Expenditures of Federal Awards Finding Type: Material weakness. Programs: Capitalization Grants for Clean Water Revolving Funds (ALN #66.458) Criteria: The Uniform Guidance, ?200.510, requires that a recipient of federal awards subject to a single audit ?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 in accordance with ?200.502.? In addition, the City is required to prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (the "Schedule") in accordance with these guidelines. Condition/Finding: Management provided an initial Schedule of Expenditure of Awards; however, material adjustments were discovered during the audit process. This condition was primarily caused by the extreme infrequency of the City being required to prepare a Schedule of Expenditures of Federal Awards and the corresponding lack of established policies and procedures to produce an accurate Schedule. As a result of this condition, the City is not in compliance with the required written procedures under the Uniform Guidance. Cause: Required federal expenditures where not accurately recorded on the Schedule of Expenditures of Federal Awards. Effect: The schedule of expenditures of federal awards, would have been materially misstated if audit adjustments hadn?t been made. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: The City should develop and implement written procedures over the preparation of the schedule of expenditures of federal awards to be used as a reference for future year(s) subject to single audit reporting.
Finding 2022-002
2022-002 - Written Policies Required by the Uniform Grant Guidance Finding Type: Immaterial noncompliance. Programs: Capitalization Grants for Clean Water Revolving Funds (ALN #66.458) Criteria: The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014, to have written policies pertaining to allowability of costs charged to federal programs, controlled activities over allowable costs and allowable activities, cash management, financial management, compensation/payroll, and relocation cost of employees (?200.300 - 328)). Condition/Finding: Although the City has processes in place to cover these areas, the City lacks formal written policies covering these areas. Cause: This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the City ensures these policies are updated to conform with the Uniform Guidance as soon as practical, but no later than the end of fiscal year 2023.
Finding 2022-001
2022-001 - Preparation of the Schedule of Expenditures of Federal Awards Finding Type: Material weakness. Programs: Capitalization Grants for Clean Water Revolving Funds (ALN #66.458) Criteria: The Uniform Guidance, ?200.510, requires that a recipient of federal awards subject to a single audit ?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 in accordance with ?200.502.? In addition, the City is required to prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (the "Schedule") in accordance with these guidelines. Condition/Finding: Management provided an initial Schedule of Expenditure of Awards; however, material adjustments were discovered during the audit process. This condition was primarily caused by the extreme infrequency of the City being required to prepare a Schedule of Expenditures of Federal Awards and the corresponding lack of established policies and procedures to produce an accurate Schedule. As a result of this condition, the City is not in compliance with the required written procedures under the Uniform Guidance. Cause: Required federal expenditures where not accurately recorded on the Schedule of Expenditures of Federal Awards. Effect: The schedule of expenditures of federal awards, would have been materially misstated if audit adjustments hadn?t been made. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: The City should develop and implement written procedures over the preparation of the schedule of expenditures of federal awards to be used as a reference for future year(s) subject to single audit reporting.
Finding 2022-002
2022-002 - Written Policies Required by the Uniform Grant Guidance Finding Type: Immaterial noncompliance. Programs: Capitalization Grants for Clean Water Revolving Funds (ALN #66.458) Criteria: The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014, to have written policies pertaining to allowability of costs charged to federal programs, controlled activities over allowable costs and allowable activities, cash management, financial management, compensation/payroll, and relocation cost of employees (?200.300 - 328)). Condition/Finding: Although the City has processes in place to cover these areas, the City lacks formal written policies covering these areas. Cause: This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the City ensures these policies are updated to conform with the Uniform Guidance as soon as practical, but no later than the end of fiscal year 2023.