FAC Explorer

Audit 331022

FY End
2024-06-30
Total Expended
$1.54M
Findings
4
Programs
3
Organization: Village of Lexington (MI)
Year: 2024 Accepted: 2024-12-05
Auditor: Uhy LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
513087 2024-002 Material Weakness - P
513088 2024-003 Material Weakness - I
1089529 2024-002 Material Weakness - P
1089530 2024-003 Material Weakness - I

Programs

ALN Program Spent Major Findings
10.760 Water and Waste Disposal Systems for Rural Communities $1.43M Yes 2
97.044 Assistance to Firefighters Grant $107,746 - 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $10,304 - 0

Contacts

Name Title Type
C1G4SXHFW5E5 Lori Fisher Auditee
8103598631 Amber Sutter Auditor
No contacts on file

Notes to SEFA

Title: Note 1 - Summary of Significant Accounting Policies Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Village of Lexington, Michigan, (the “Village”), for the year ended June 30, 2024. Expenditures reported on the Schedule are reported on the same basis of accounting 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 Village has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Village, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Village. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Village of Lexington, Michigan, (the “Village”), for the year ended June 30, 2024. Expenditures reported on the Schedule are reported on the same basis of accounting 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 Village has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Village, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Village.
Title: Note 2 - Loans Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Village of Lexington, Michigan, (the “Village”), for the year ended June 30, 2024. Expenditures reported on the Schedule are reported on the same basis of accounting 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 Village has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Village, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Village. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimis cost rate. Funding has been provided for the water and waste disposal systems for rural communities by the U. S. Department of Agriculture (“USDA”) project at and for the year ended June 30, 2024 as follows:
Title: NOTE 3 - RECONCILIATION OF FEDERAL AWARD ACTIVITY PER FINANCIAL STATEMENTS TO EXPENDITURES PER SEFA Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Village of Lexington, Michigan, (the “Village”), for the year ended June 30, 2024. Expenditures reported on the Schedule are reported on the same basis of accounting 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 Village has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Village, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Village. De Minimis Rate Used: N Rate Explanation: 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:
Title: NOTE 4 - PRIOR-YEAR COSTS REPORTED ON SEFA Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Village of Lexington, Michigan, (the “Village”), for the year ended June 30, 2024. Expenditures reported on the Schedule are reported on the same basis of accounting 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 Village has elected not to use the 10% de minimis cost rate. Because the Schedule presents only a selected portion of the operations of the Village, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the Village. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimis cost rate. The village incurred costs associated with the water and waste disposal systems for rural communities by the USDA project prior to receiving the funding. The costs were approved by the USDA and the funds were received during the year ended June 30, 2024.

Finding Details

Finding 2024-002
2024-002: Written Policies and Procedures Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 10.760, U. S Department of Agriculture - Water and waste disposal systems for rural communities Federal Award Identification Number and Year: RD Loan 92-12 Loan Period 9/6/23 - 9/1/2063, RD Loan 10 Loan and RD Loan 13 Loan period 1/1/24 - 1/1/2064 Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: The Office of Management and Budget (OMB) provides requirements for federal awards in 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Under the Uniform Guidance, non-federal entities must have written procedures for five (5) of the compliance areas, if applicable, and it is recommended that entities have written procedures for any of the other applicable compliance areas that are significant to grant administration. Condition: The Village does not have documented written procedures over the required compliance areas. The five areas are procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of the Uniform Guidance and the terms and conditions of the federal award; standards of conduct covering conflicts of interest and governing actions of employees engaged in the selection, award, and administration of contracts; procurement procedures; procedures for conducting technical evaluations of proposals and selecting recipients; and travel policy stating the lodging and subsistence costs incurred by employees and officers for travel will comply with the non-federal entity’s written travel policy. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Village controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Village adopt written policies and procedures. In addition, we recommend that management review and modify the procurement policy to include all the necessary items outlined in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2024-003
2024-003: Procurement Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 10.760, U. S Department of Agriculture - Water and waste disposal systems for rural communities Federal Award Identification Number and Year: RD Loan 92-12 Loan Period 9/6/23 - 9/1/2063, RD Loan 10 Loan and RD Loan 13 Loan period 1/1/24 - 1/1/2064 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 Village did not utilize federal procurement requirements cited above for the engineering services for the Water and Sewer 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 July 6, 2018 through June 30, 2024 period as summarized from the request for disbursement of funds submitted. Known Questioned Costs: $562,676 Context: We tested the procurement of three contracts and identified one contract that did not follow federal procurement requirements. Cause/Effect: The Village's controls were not adequate to ensure it followed the federal requirement for procurement process. As a results, there was one instance of noncompliance related to procurements. Recommendation: We recommend the Village 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 2024-002
2024-002: Written Policies and Procedures Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 10.760, U. S Department of Agriculture - Water and waste disposal systems for rural communities Federal Award Identification Number and Year: RD Loan 92-12 Loan Period 9/6/23 - 9/1/2063, RD Loan 10 Loan and RD Loan 13 Loan period 1/1/24 - 1/1/2064 Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: The Office of Management and Budget (OMB) provides requirements for federal awards in 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Under the Uniform Guidance, non-federal entities must have written procedures for five (5) of the compliance areas, if applicable, and it is recommended that entities have written procedures for any of the other applicable compliance areas that are significant to grant administration. Condition: The Village does not have documented written procedures over the required compliance areas. The five areas are procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of the Uniform Guidance and the terms and conditions of the federal award; standards of conduct covering conflicts of interest and governing actions of employees engaged in the selection, award, and administration of contracts; procurement procedures; procedures for conducting technical evaluations of proposals and selecting recipients; and travel policy stating the lodging and subsistence costs incurred by employees and officers for travel will comply with the non-federal entity’s written travel policy. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Village controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Village adopt written policies and procedures. In addition, we recommend that management review and modify the procurement policy to include all the necessary items outlined in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding 2024-003
2024-003: Procurement Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 10.760, U. S Department of Agriculture - Water and waste disposal systems for rural communities Federal Award Identification Number and Year: RD Loan 92-12 Loan Period 9/6/23 - 9/1/2063, RD Loan 10 Loan and RD Loan 13 Loan period 1/1/24 - 1/1/2064 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 Village did not utilize federal procurement requirements cited above for the engineering services for the Water and Sewer 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 July 6, 2018 through June 30, 2024 period as summarized from the request for disbursement of funds submitted. Known Questioned Costs: $562,676 Context: We tested the procurement of three contracts and identified one contract that did not follow federal procurement requirements. Cause/Effect: The Village's controls were not adequate to ensure it followed the federal requirement for procurement process. As a results, there was one instance of noncompliance related to procurements. Recommendation: We recommend the Village 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.