Assistance Listing Number, Federal Agency, and Program Name - ALN 97.036, Department of Homeland Security, Disaster Grants - Public Assistance (Presidentially Declared Disasters) (FEMA)
Federal Award Identification Number and Year - PA-05-MI-4607-PW-00098(0)
Pass-through Entity - Michigan State Police
Finding Type - Significant deficiency
Repeat Finding - No
Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The FEMA grant expenses are charged to various funds in the general ledger over several years but is managed and tracked by project in a manual spreadsheet that agrees to the amount of expenses reported on the fiscal year 2024 schedule of expenditures of federal awards (the "Schedule"). FEMA expenditures are reported on the Schedule when there is an award and expenditures. Given that the award is made subsequent to the expenditures being incurred, a manual spreadsheet is used to track expenditures being charged to the grant. There were instances of duplicated costs in the manual spreadsheet.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The FEMA projects have periods of performances that began prior to fiscal year 2024. As a result, the City used spreadsheets to accumulate costs to charge to the projects. Given that manual processes carry a higher risk of error due to their reliance on human input, in addition to our allowability sample, we performed an analysis of the spreadsheet, which listed all costs charged to the grant during fiscal year 2024, and found 11 instances of duplicate costs totaling $5,161. Of the $5,161 submitted, FEMA reimburses ninety percent of the amount, i.e., $4,645.
Cause and Effect - A lack of effective controls over the spreadsheet did not identify $5,161 of duplicative costs. The schedule of expenditures of federal awards was initially overstated by this amount. These costs have been excluded from the Schedule for the year ended June 30, 2024.
Recommendation - We recommend the City continue to evaluate its processes and controls when manual processes are utilized to accumulate costs charged to a grant, including risk assessing for gaps that can cause noncompliance. Based on the gaps identified, we recommend the City implement effective controls to address the risks.
Views of Responsible Officials and Corrective Action Plan - Detroit Water and Sewer Department (DWSD) management recognizes the importance of maintaining effective controls to ensure the accuracy and completeness of reported expenditures.
The identified duplicate cost was an isolated occurrence caused by an oversight during the spreadsheet preparation process. While existing controls are in place, management will perform a secondary review of the end to end process to enhance these controls.
Assistance Listing Number, Federal Agency, and Program Name - ALN 10.557, Department of Agriculture, Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
Federal Award Identification Number and Year - 232MI013W5003
Pass-through Entity - Michigan Department of Health and Human Services
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - Yes
2023-004
Criteria - Per 2 CFR 200.344(c), unless the federal awarding agency or pass through entity authorizes an extension, a nonfederal entity must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the end of the period of performance, as specified in the terms and conditions of the federal award. However, as outlined within the grant award from the Michigan Department of Health and Human Services and more restrictive than 2 CFR 200.344(c), the City must liquidate within 60 days after the State's fiscal year end any unpaid year end commitments and obligations. Any obligation remaining unliquidated after 60 days from the end of the period shall revert to the State for disposition in accordance with applicable state and/or federal requirements, except as specifically authorized in writing by the department.
Condition - The City did not have adequate controls in place to ensure obligations were liquidated (paid) within the required 60 days from the end of the grant period and certain costs were liquidated after 60 days.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - Refer to context below.
Context - There were two invoices totaling $251,332 that were not paid at the end of the grant period. A review of both invoices revealed that they were liquidated after the required 60 days for the performance period ended September 30, 2023. Based on email communication received by the City from the Michigan Department of Health and Human Services, the department granted the City retroactive approval to allow for the expenses despite being liquidated after the 60 day period. As a result, no questioned costs are reported.
Cause and Effect - The controls in place were not effective to ensure grant expenditures were liquidated within 60 days following the end of the grant period. Failure to comply with the terms and conditions of the grant agreement, including the liquidation provisions, may result in disallowed costs and the need to repay the funder for such costs.
Recommendation - We recommend the City ensure controls are in place to comply with liquidation requirements outlined in the award agreements and/or the Uniform Guidance issued by OMB (whichever is more restrictive).
Views of Responsible Officials and Planned Corrective Actions - The Office of the Chief Financial Officer (OCFO) is collaborating with the Health Department to implement enhanced processes over the final review of invoices to address timing related to the liquidation requirement.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The City is required to complete inspections of HOME assisted units to ensure they meet the HUD housing standards as outlined in 24 CFR 92.251(b) (viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on site inspections of rental housing occupied by tenants receiving HOME/HOME ARP assisted tenant based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)).
Per the City’s Home Program manual adopted on July 1, 2022, at least 20 percent of the HOME assisted units must be rented to households at or below 50 percent of the area median income. The City is required to perform the inspections under the housing quality standards for these units.
Condition - The City’s on site inspections for compliance with the housing quality standards are triggered by the City’s process to audit developers for compliance with HOME eligibility requirements. This basis is more restrictive than federal requirements for housing quality inspections. At the end of an inspection cycle, a certificate of completion is completed and signed by the responsible inspector. The City did not have effective controls to ensure the certificate of completion is reviewed for completeness and accuracy.
The City did not inspect 20 percent of the units, as required by its policy.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - In the process of understanding the controls over compliance with housing quality standards requirement, we noted that the certificate of completion, which is completed at the end of an inspection cycle, was not consistently reviewed.
In addition, in one out the three projects selected for testing for compliance with the housing quality standards, the City did not inspect 20 percent of the units at the property, as outlined in their Home Program manual.
Cause and Effect - The controls in place to ensure the certificate of completion is reviewed for completeness and accuracy, including review to ensure 20 percent of the units are inspected, were not in place. The lack of controls resulted in a project not having adequate units reviewed. Furthermore, the lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the City ensure controls are in place to comply with the Home Program manual and federal regulations related to housing quality standards.
Views of Responsible Officials and Planned Corrective Actions - The City will review its processes and implement additional controls to ensure certificates of completion are reviewed for completeness and accuracy and to verify 20 percent of the units are inspected to comply with the HOME Program manual and federal regulations related to housing quality standards.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The City is required to complete inspections of HOME assisted units to ensure they meet the HUD housing standards as outlined in 24 CFR 92.251(b) (viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on site inspections of rental housing occupied by tenants receiving HOME/HOME ARP assisted tenant based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)).
Per the City’s Home Program manual adopted on July 1, 2022, at least 20 percent of the HOME assisted units must be rented to households at or below 50 percent of the area median income. The City is required to perform the inspections under the housing quality standards for these units.
Condition - The City’s on site inspections for compliance with the housing quality standards are triggered by the City’s process to audit developers for compliance with HOME eligibility requirements. This basis is more restrictive than federal requirements for housing quality inspections. At the end of an inspection cycle, a certificate of completion is completed and signed by the responsible inspector. The City did not have effective controls to ensure the certificate of completion is reviewed for completeness and accuracy.
The City did not inspect 20 percent of the units, as required by its policy.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - In the process of understanding the controls over compliance with housing quality standards requirement, we noted that the certificate of completion, which is completed at the end of an inspection cycle, was not consistently reviewed.
In addition, in one out the three projects selected for testing for compliance with the housing quality standards, the City did not inspect 20 percent of the units at the property, as outlined in their Home Program manual.
Cause and Effect - The controls in place to ensure the certificate of completion is reviewed for completeness and accuracy, including review to ensure 20 percent of the units are inspected, were not in place. The lack of controls resulted in a project not having adequate units reviewed. Furthermore, the lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the City ensure controls are in place to comply with the Home Program manual and federal regulations related to housing quality standards.
Views of Responsible Officials and Planned Corrective Actions - The City will review its processes and implement additional controls to ensure certificates of completion are reviewed for completeness and accuracy and to verify 20 percent of the units are inspected to comply with the HOME Program manual and federal regulations related to housing quality standards.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The City is required to complete inspections of HOME assisted units to ensure they meet the HUD housing standards as outlined in 24 CFR 92.251(b) (viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on site inspections of rental housing occupied by tenants receiving HOME/HOME ARP assisted tenant based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)).
Per the City’s Home Program manual adopted on July 1, 2022, at least 20 percent of the HOME assisted units must be rented to households at or below 50 percent of the area median income. The City is required to perform the inspections under the housing quality standards for these units.
Condition - The City’s on site inspections for compliance with the housing quality standards are triggered by the City’s process to audit developers for compliance with HOME eligibility requirements. This basis is more restrictive than federal requirements for housing quality inspections. At the end of an inspection cycle, a certificate of completion is completed and signed by the responsible inspector. The City did not have effective controls to ensure the certificate of completion is reviewed for completeness and accuracy.
The City did not inspect 20 percent of the units, as required by its policy.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - In the process of understanding the controls over compliance with housing quality standards requirement, we noted that the certificate of completion, which is completed at the end of an inspection cycle, was not consistently reviewed.
In addition, in one out the three projects selected for testing for compliance with the housing quality standards, the City did not inspect 20 percent of the units at the property, as outlined in their Home Program manual.
Cause and Effect - The controls in place to ensure the certificate of completion is reviewed for completeness and accuracy, including review to ensure 20 percent of the units are inspected, were not in place. The lack of controls resulted in a project not having adequate units reviewed. Furthermore, the lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the City ensure controls are in place to comply with the Home Program manual and federal regulations related to housing quality standards.
Views of Responsible Officials and Planned Corrective Actions - The City will review its processes and implement additional controls to ensure certificates of completion are reviewed for completeness and accuracy and to verify 20 percent of the units are inspected to comply with the HOME Program manual and federal regulations related to housing quality standards.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City is required to track and report program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger. The City reported fiscal 2024 program income in fiscal 2025.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The repayments of principal and interest provided to developers with HOME funds constitute program income. Approximately $2.2 million received in program income during fiscal year 2024 was reported within IDIS and the City’s general ledger in fiscal year 2025.
Cause and Effect - The City has a process to reconcile program income received each month to the monthly bank statements; however, the controls in place did not ensure that program income was reported within IDIS and the general ledger in a timely manner. As a result, program income revenue for fiscal year 2024 was initially understated in the general ledger, which was subsequently corrected to be reflected in fiscal year 2024. Additionally, within IDIS, program income was not reported as available for fiscal year 2024 expenditures.
Recommendation - We recommend the City ensure controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS.
Views of Responsible Officials and Planned Corrective Actions - Management understands the importance of timely reconciliation and reporting of program income to maintain compliance and ensure accurate financial reporting. The City will work to enhance controls and processes with the department stakeholders and monitor the process to ensure timely and consistent receipts of the program income and reconciliations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City is required to track and report program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger. The City reported fiscal 2024 program income in fiscal 2025.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The repayments of principal and interest provided to developers with HOME funds constitute program income. Approximately $2.2 million received in program income during fiscal year 2024 was reported within IDIS and the City’s general ledger in fiscal year 2025.
Cause and Effect - The City has a process to reconcile program income received each month to the monthly bank statements; however, the controls in place did not ensure that program income was reported within IDIS and the general ledger in a timely manner. As a result, program income revenue for fiscal year 2024 was initially understated in the general ledger, which was subsequently corrected to be reflected in fiscal year 2024. Additionally, within IDIS, program income was not reported as available for fiscal year 2024 expenditures.
Recommendation - We recommend the City ensure controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS.
Views of Responsible Officials and Planned Corrective Actions - Management understands the importance of timely reconciliation and reporting of program income to maintain compliance and ensure accurate financial reporting. The City will work to enhance controls and processes with the department stakeholders and monitor the process to ensure timely and consistent receipts of the program income and reconciliations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City is required to track and report program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger. The City reported fiscal 2024 program income in fiscal 2025.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The repayments of principal and interest provided to developers with HOME funds constitute program income. Approximately $2.2 million received in program income during fiscal year 2024 was reported within IDIS and the City’s general ledger in fiscal year 2025.
Cause and Effect - The City has a process to reconcile program income received each month to the monthly bank statements; however, the controls in place did not ensure that program income was reported within IDIS and the general ledger in a timely manner. As a result, program income revenue for fiscal year 2024 was initially understated in the general ledger, which was subsequently corrected to be reflected in fiscal year 2024. Additionally, within IDIS, program income was not reported as available for fiscal year 2024 expenditures.
Recommendation - We recommend the City ensure controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS.
Views of Responsible Officials and Planned Corrective Actions - Management understands the importance of timely reconciliation and reporting of program income to maintain compliance and ensure accurate financial reporting. The City will work to enhance controls and processes with the department stakeholders and monitor the process to ensure timely and consistent receipts of the program income and reconciliations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - The HOME program has income targeting requirements such that only low income or very low income persons can receive housing assistance as prescribed by 24 CFR 92.216.
Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City did not have adequate controls in place to exercise its oversight responsibility of eligibility determinations that were reviewed by a contractor for the program.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The City entered into an agreement with a contractor to perform eligibility reviews over developers’ determinations of income eligibility. While the City arranges for the contractor to perform the review of eligibility, the City is fully responsible for compliance with eligibility requirements. Testing revealed that the City contractor reviewed the developers’ income eligibility determinations of individuals and families living in HOME funded housing units. In 7 out of a sample of 10 projects, there was no evidence of the City’s review of the contractor’s work.
Cause and Effect - In the current year, the City contracted with a contractor to perform eligibility reviews over developers’ determination of income eligibility. However, the City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without a review of the contractor’s procedures to assess participant eligibility, ineligible participants could receive program benefits, resulting in material noncompliance and the need to repay the funder for such costs.
Recommendation - We recommend the City develop oversight procedures to perform a documented review of the work completed by contractors, which pertains to compliance requirements and programmatic decisions, in this case, eligibility review.
Views of Responsible Officials and Planned Corrective Actions - The City will implement a control for completeness and accuracy by hosting regular meetings with the contractor to review recent projects for which the contractor has documented their determinations of income eligibility. When a recently reviewed project is not due for an annual review, staff will still have timely insight into the income eligibility of properties in its HOME portfolio, thereby maintaining compliance with HOME program regulations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - The HOME program has income targeting requirements such that only low income or very low income persons can receive housing assistance as prescribed by 24 CFR 92.216.
Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City did not have adequate controls in place to exercise its oversight responsibility of eligibility determinations that were reviewed by a contractor for the program.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The City entered into an agreement with a contractor to perform eligibility reviews over developers’ determinations of income eligibility. While the City arranges for the contractor to perform the review of eligibility, the City is fully responsible for compliance with eligibility requirements. Testing revealed that the City contractor reviewed the developers’ income eligibility determinations of individuals and families living in HOME funded housing units. In 7 out of a sample of 10 projects, there was no evidence of the City’s review of the contractor’s work.
Cause and Effect - In the current year, the City contracted with a contractor to perform eligibility reviews over developers’ determination of income eligibility. However, the City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without a review of the contractor’s procedures to assess participant eligibility, ineligible participants could receive program benefits, resulting in material noncompliance and the need to repay the funder for such costs.
Recommendation - We recommend the City develop oversight procedures to perform a documented review of the work completed by contractors, which pertains to compliance requirements and programmatic decisions, in this case, eligibility review.
Views of Responsible Officials and Planned Corrective Actions - The City will implement a control for completeness and accuracy by hosting regular meetings with the contractor to review recent projects for which the contractor has documented their determinations of income eligibility. When a recently reviewed project is not due for an annual review, staff will still have timely insight into the income eligibility of properties in its HOME portfolio, thereby maintaining compliance with HOME program regulations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - The HOME program has income targeting requirements such that only low income or very low income persons can receive housing assistance as prescribed by 24 CFR 92.216.
Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City did not have adequate controls in place to exercise its oversight responsibility of eligibility determinations that were reviewed by a contractor for the program.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The City entered into an agreement with a contractor to perform eligibility reviews over developers’ determinations of income eligibility. While the City arranges for the contractor to perform the review of eligibility, the City is fully responsible for compliance with eligibility requirements. Testing revealed that the City contractor reviewed the developers’ income eligibility determinations of individuals and families living in HOME funded housing units. In 7 out of a sample of 10 projects, there was no evidence of the City’s review of the contractor’s work.
Cause and Effect - In the current year, the City contracted with a contractor to perform eligibility reviews over developers’ determination of income eligibility. However, the City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without a review of the contractor’s procedures to assess participant eligibility, ineligible participants could receive program benefits, resulting in material noncompliance and the need to repay the funder for such costs.
Recommendation - We recommend the City develop oversight procedures to perform a documented review of the work completed by contractors, which pertains to compliance requirements and programmatic decisions, in this case, eligibility review.
Views of Responsible Officials and Planned Corrective Actions - The City will implement a control for completeness and accuracy by hosting regular meetings with the contractor to review recent projects for which the contractor has documented their determinations of income eligibility. When a recently reviewed project is not due for an annual review, staff will still have timely insight into the income eligibility of properties in its HOME portfolio, thereby maintaining compliance with HOME program regulations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 97.036, Department of Homeland Security, Disaster Grants - Public Assistance (Presidentially Declared Disasters) (FEMA)
Federal Award Identification Number and Year - PA-05-MI-4607-PW-00098(0)
Pass-through Entity - Michigan State Police
Finding Type - Significant deficiency
Repeat Finding - No
Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The FEMA grant expenses are charged to various funds in the general ledger over several years but is managed and tracked by project in a manual spreadsheet that agrees to the amount of expenses reported on the fiscal year 2024 schedule of expenditures of federal awards (the "Schedule"). FEMA expenditures are reported on the Schedule when there is an award and expenditures. Given that the award is made subsequent to the expenditures being incurred, a manual spreadsheet is used to track expenditures being charged to the grant. There were instances of duplicated costs in the manual spreadsheet.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The FEMA projects have periods of performances that began prior to fiscal year 2024. As a result, the City used spreadsheets to accumulate costs to charge to the projects. Given that manual processes carry a higher risk of error due to their reliance on human input, in addition to our allowability sample, we performed an analysis of the spreadsheet, which listed all costs charged to the grant during fiscal year 2024, and found 11 instances of duplicate costs totaling $5,161. Of the $5,161 submitted, FEMA reimburses ninety percent of the amount, i.e., $4,645.
Cause and Effect - A lack of effective controls over the spreadsheet did not identify $5,161 of duplicative costs. The schedule of expenditures of federal awards was initially overstated by this amount. These costs have been excluded from the Schedule for the year ended June 30, 2024.
Recommendation - We recommend the City continue to evaluate its processes and controls when manual processes are utilized to accumulate costs charged to a grant, including risk assessing for gaps that can cause noncompliance. Based on the gaps identified, we recommend the City implement effective controls to address the risks.
Views of Responsible Officials and Corrective Action Plan - Detroit Water and Sewer Department (DWSD) management recognizes the importance of maintaining effective controls to ensure the accuracy and completeness of reported expenditures.
The identified duplicate cost was an isolated occurrence caused by an oversight during the spreadsheet preparation process. While existing controls are in place, management will perform a secondary review of the end to end process to enhance these controls.
Assistance Listing Number, Federal Agency, and Program Name - ALN 10.557, Department of Agriculture, Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
Federal Award Identification Number and Year - 232MI013W5003
Pass-through Entity - Michigan Department of Health and Human Services
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - Yes
2023-004
Criteria - Per 2 CFR 200.344(c), unless the federal awarding agency or pass through entity authorizes an extension, a nonfederal entity must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the end of the period of performance, as specified in the terms and conditions of the federal award. However, as outlined within the grant award from the Michigan Department of Health and Human Services and more restrictive than 2 CFR 200.344(c), the City must liquidate within 60 days after the State's fiscal year end any unpaid year end commitments and obligations. Any obligation remaining unliquidated after 60 days from the end of the period shall revert to the State for disposition in accordance with applicable state and/or federal requirements, except as specifically authorized in writing by the department.
Condition - The City did not have adequate controls in place to ensure obligations were liquidated (paid) within the required 60 days from the end of the grant period and certain costs were liquidated after 60 days.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - Refer to context below.
Context - There were two invoices totaling $251,332 that were not paid at the end of the grant period. A review of both invoices revealed that they were liquidated after the required 60 days for the performance period ended September 30, 2023. Based on email communication received by the City from the Michigan Department of Health and Human Services, the department granted the City retroactive approval to allow for the expenses despite being liquidated after the 60 day period. As a result, no questioned costs are reported.
Cause and Effect - The controls in place were not effective to ensure grant expenditures were liquidated within 60 days following the end of the grant period. Failure to comply with the terms and conditions of the grant agreement, including the liquidation provisions, may result in disallowed costs and the need to repay the funder for such costs.
Recommendation - We recommend the City ensure controls are in place to comply with liquidation requirements outlined in the award agreements and/or the Uniform Guidance issued by OMB (whichever is more restrictive).
Views of Responsible Officials and Planned Corrective Actions - The Office of the Chief Financial Officer (OCFO) is collaborating with the Health Department to implement enhanced processes over the final review of invoices to address timing related to the liquidation requirement.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The City is required to complete inspections of HOME assisted units to ensure they meet the HUD housing standards as outlined in 24 CFR 92.251(b) (viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on site inspections of rental housing occupied by tenants receiving HOME/HOME ARP assisted tenant based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)).
Per the City’s Home Program manual adopted on July 1, 2022, at least 20 percent of the HOME assisted units must be rented to households at or below 50 percent of the area median income. The City is required to perform the inspections under the housing quality standards for these units.
Condition - The City’s on site inspections for compliance with the housing quality standards are triggered by the City’s process to audit developers for compliance with HOME eligibility requirements. This basis is more restrictive than federal requirements for housing quality inspections. At the end of an inspection cycle, a certificate of completion is completed and signed by the responsible inspector. The City did not have effective controls to ensure the certificate of completion is reviewed for completeness and accuracy.
The City did not inspect 20 percent of the units, as required by its policy.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - In the process of understanding the controls over compliance with housing quality standards requirement, we noted that the certificate of completion, which is completed at the end of an inspection cycle, was not consistently reviewed.
In addition, in one out the three projects selected for testing for compliance with the housing quality standards, the City did not inspect 20 percent of the units at the property, as outlined in their Home Program manual.
Cause and Effect - The controls in place to ensure the certificate of completion is reviewed for completeness and accuracy, including review to ensure 20 percent of the units are inspected, were not in place. The lack of controls resulted in a project not having adequate units reviewed. Furthermore, the lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the City ensure controls are in place to comply with the Home Program manual and federal regulations related to housing quality standards.
Views of Responsible Officials and Planned Corrective Actions - The City will review its processes and implement additional controls to ensure certificates of completion are reviewed for completeness and accuracy and to verify 20 percent of the units are inspected to comply with the HOME Program manual and federal regulations related to housing quality standards.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The City is required to complete inspections of HOME assisted units to ensure they meet the HUD housing standards as outlined in 24 CFR 92.251(b) (viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on site inspections of rental housing occupied by tenants receiving HOME/HOME ARP assisted tenant based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)).
Per the City’s Home Program manual adopted on July 1, 2022, at least 20 percent of the HOME assisted units must be rented to households at or below 50 percent of the area median income. The City is required to perform the inspections under the housing quality standards for these units.
Condition - The City’s on site inspections for compliance with the housing quality standards are triggered by the City’s process to audit developers for compliance with HOME eligibility requirements. This basis is more restrictive than federal requirements for housing quality inspections. At the end of an inspection cycle, a certificate of completion is completed and signed by the responsible inspector. The City did not have effective controls to ensure the certificate of completion is reviewed for completeness and accuracy.
The City did not inspect 20 percent of the units, as required by its policy.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - In the process of understanding the controls over compliance with housing quality standards requirement, we noted that the certificate of completion, which is completed at the end of an inspection cycle, was not consistently reviewed.
In addition, in one out the three projects selected for testing for compliance with the housing quality standards, the City did not inspect 20 percent of the units at the property, as outlined in their Home Program manual.
Cause and Effect - The controls in place to ensure the certificate of completion is reviewed for completeness and accuracy, including review to ensure 20 percent of the units are inspected, were not in place. The lack of controls resulted in a project not having adequate units reviewed. Furthermore, the lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the City ensure controls are in place to comply with the Home Program manual and federal regulations related to housing quality standards.
Views of Responsible Officials and Planned Corrective Actions - The City will review its processes and implement additional controls to ensure certificates of completion are reviewed for completeness and accuracy and to verify 20 percent of the units are inspected to comply with the HOME Program manual and federal regulations related to housing quality standards.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The City is required to complete inspections of HOME assisted units to ensure they meet the HUD housing standards as outlined in 24 CFR 92.251(b) (viii). During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing 1 to 4 units, (b) every two years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on site inspections of rental housing occupied by tenants receiving HOME/HOME ARP assisted tenant based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)).
Per the City’s Home Program manual adopted on July 1, 2022, at least 20 percent of the HOME assisted units must be rented to households at or below 50 percent of the area median income. The City is required to perform the inspections under the housing quality standards for these units.
Condition - The City’s on site inspections for compliance with the housing quality standards are triggered by the City’s process to audit developers for compliance with HOME eligibility requirements. This basis is more restrictive than federal requirements for housing quality inspections. At the end of an inspection cycle, a certificate of completion is completed and signed by the responsible inspector. The City did not have effective controls to ensure the certificate of completion is reviewed for completeness and accuracy.
The City did not inspect 20 percent of the units, as required by its policy.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - In the process of understanding the controls over compliance with housing quality standards requirement, we noted that the certificate of completion, which is completed at the end of an inspection cycle, was not consistently reviewed.
In addition, in one out the three projects selected for testing for compliance with the housing quality standards, the City did not inspect 20 percent of the units at the property, as outlined in their Home Program manual.
Cause and Effect - The controls in place to ensure the certificate of completion is reviewed for completeness and accuracy, including review to ensure 20 percent of the units are inspected, were not in place. The lack of controls resulted in a project not having adequate units reviewed. Furthermore, the lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the City ensure controls are in place to comply with the Home Program manual and federal regulations related to housing quality standards.
Views of Responsible Officials and Planned Corrective Actions - The City will review its processes and implement additional controls to ensure certificates of completion are reviewed for completeness and accuracy and to verify 20 percent of the units are inspected to comply with the HOME Program manual and federal regulations related to housing quality standards.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City is required to track and report program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger. The City reported fiscal 2024 program income in fiscal 2025.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The repayments of principal and interest provided to developers with HOME funds constitute program income. Approximately $2.2 million received in program income during fiscal year 2024 was reported within IDIS and the City’s general ledger in fiscal year 2025.
Cause and Effect - The City has a process to reconcile program income received each month to the monthly bank statements; however, the controls in place did not ensure that program income was reported within IDIS and the general ledger in a timely manner. As a result, program income revenue for fiscal year 2024 was initially understated in the general ledger, which was subsequently corrected to be reflected in fiscal year 2024. Additionally, within IDIS, program income was not reported as available for fiscal year 2024 expenditures.
Recommendation - We recommend the City ensure controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS.
Views of Responsible Officials and Planned Corrective Actions - Management understands the importance of timely reconciliation and reporting of program income to maintain compliance and ensure accurate financial reporting. The City will work to enhance controls and processes with the department stakeholders and monitor the process to ensure timely and consistent receipts of the program income and reconciliations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City is required to track and report program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger. The City reported fiscal 2024 program income in fiscal 2025.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The repayments of principal and interest provided to developers with HOME funds constitute program income. Approximately $2.2 million received in program income during fiscal year 2024 was reported within IDIS and the City’s general ledger in fiscal year 2025.
Cause and Effect - The City has a process to reconcile program income received each month to the monthly bank statements; however, the controls in place did not ensure that program income was reported within IDIS and the general ledger in a timely manner. As a result, program income revenue for fiscal year 2024 was initially understated in the general ledger, which was subsequently corrected to be reflected in fiscal year 2024. Additionally, within IDIS, program income was not reported as available for fiscal year 2024 expenditures.
Recommendation - We recommend the City ensure controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS.
Views of Responsible Officials and Planned Corrective Actions - Management understands the importance of timely reconciliation and reporting of program income to maintain compliance and ensure accurate financial reporting. The City will work to enhance controls and processes with the department stakeholders and monitor the process to ensure timely and consistent receipts of the program income and reconciliations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City is required to track and report program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger. The City reported fiscal 2024 program income in fiscal 2025.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The repayments of principal and interest provided to developers with HOME funds constitute program income. Approximately $2.2 million received in program income during fiscal year 2024 was reported within IDIS and the City’s general ledger in fiscal year 2025.
Cause and Effect - The City has a process to reconcile program income received each month to the monthly bank statements; however, the controls in place did not ensure that program income was reported within IDIS and the general ledger in a timely manner. As a result, program income revenue for fiscal year 2024 was initially understated in the general ledger, which was subsequently corrected to be reflected in fiscal year 2024. Additionally, within IDIS, program income was not reported as available for fiscal year 2024 expenditures.
Recommendation - We recommend the City ensure controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS.
Views of Responsible Officials and Planned Corrective Actions - Management understands the importance of timely reconciliation and reporting of program income to maintain compliance and ensure accurate financial reporting. The City will work to enhance controls and processes with the department stakeholders and monitor the process to ensure timely and consistent receipts of the program income and reconciliations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - The HOME program has income targeting requirements such that only low income or very low income persons can receive housing assistance as prescribed by 24 CFR 92.216.
Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City did not have adequate controls in place to exercise its oversight responsibility of eligibility determinations that were reviewed by a contractor for the program.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The City entered into an agreement with a contractor to perform eligibility reviews over developers’ determinations of income eligibility. While the City arranges for the contractor to perform the review of eligibility, the City is fully responsible for compliance with eligibility requirements. Testing revealed that the City contractor reviewed the developers’ income eligibility determinations of individuals and families living in HOME funded housing units. In 7 out of a sample of 10 projects, there was no evidence of the City’s review of the contractor’s work.
Cause and Effect - In the current year, the City contracted with a contractor to perform eligibility reviews over developers’ determination of income eligibility. However, the City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without a review of the contractor’s procedures to assess participant eligibility, ineligible participants could receive program benefits, resulting in material noncompliance and the need to repay the funder for such costs.
Recommendation - We recommend the City develop oversight procedures to perform a documented review of the work completed by contractors, which pertains to compliance requirements and programmatic decisions, in this case, eligibility review.
Views of Responsible Officials and Planned Corrective Actions - The City will implement a control for completeness and accuracy by hosting regular meetings with the contractor to review recent projects for which the contractor has documented their determinations of income eligibility. When a recently reviewed project is not due for an annual review, staff will still have timely insight into the income eligibility of properties in its HOME portfolio, thereby maintaining compliance with HOME program regulations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - The HOME program has income targeting requirements such that only low income or very low income persons can receive housing assistance as prescribed by 24 CFR 92.216.
Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City did not have adequate controls in place to exercise its oversight responsibility of eligibility determinations that were reviewed by a contractor for the program.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The City entered into an agreement with a contractor to perform eligibility reviews over developers’ determinations of income eligibility. While the City arranges for the contractor to perform the review of eligibility, the City is fully responsible for compliance with eligibility requirements. Testing revealed that the City contractor reviewed the developers’ income eligibility determinations of individuals and families living in HOME funded housing units. In 7 out of a sample of 10 projects, there was no evidence of the City’s review of the contractor’s work.
Cause and Effect - In the current year, the City contracted with a contractor to perform eligibility reviews over developers’ determination of income eligibility. However, the City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without a review of the contractor’s procedures to assess participant eligibility, ineligible participants could receive program benefits, resulting in material noncompliance and the need to repay the funder for such costs.
Recommendation - We recommend the City develop oversight procedures to perform a documented review of the work completed by contractors, which pertains to compliance requirements and programmatic decisions, in this case, eligibility review.
Views of Responsible Officials and Planned Corrective Actions - The City will implement a control for completeness and accuracy by hosting regular meetings with the contractor to review recent projects for which the contractor has documented their determinations of income eligibility. When a recently reviewed project is not due for an annual review, staff will still have timely insight into the income eligibility of properties in its HOME portfolio, thereby maintaining compliance with HOME program regulations.
Assistance Listing Number, Federal Agency, and Program Name - ALN 14.239, Department of Housing and Urban Development, Home Investment Partnerships Program and COVID-19 Home Investment Partnerships
Federal Award Identification Number and Year - M22-MC260202, M21-MP260202, Various
Pass-through Entity - N/A
Finding Type - Material weakness
Repeat Finding - No
Criteria - The HOME program has income targeting requirements such that only low income or very low income persons can receive housing assistance as prescribed by 24 CFR 92.216.
Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition - The City did not have adequate controls in place to exercise its oversight responsibility of eligibility determinations that were reviewed by a contractor for the program.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The City entered into an agreement with a contractor to perform eligibility reviews over developers’ determinations of income eligibility. While the City arranges for the contractor to perform the review of eligibility, the City is fully responsible for compliance with eligibility requirements. Testing revealed that the City contractor reviewed the developers’ income eligibility determinations of individuals and families living in HOME funded housing units. In 7 out of a sample of 10 projects, there was no evidence of the City’s review of the contractor’s work.
Cause and Effect - In the current year, the City contracted with a contractor to perform eligibility reviews over developers’ determination of income eligibility. However, the City did not implement controls to ensure eligibility reviews performed by the contractor were in compliance with the terms and conditions of the award. Without a review of the contractor’s procedures to assess participant eligibility, ineligible participants could receive program benefits, resulting in material noncompliance and the need to repay the funder for such costs.
Recommendation - We recommend the City develop oversight procedures to perform a documented review of the work completed by contractors, which pertains to compliance requirements and programmatic decisions, in this case, eligibility review.
Views of Responsible Officials and Planned Corrective Actions - The City will implement a control for completeness and accuracy by hosting regular meetings with the contractor to review recent projects for which the contractor has documented their determinations of income eligibility. When a recently reviewed project is not due for an annual review, staff will still have timely insight into the income eligibility of properties in its HOME portfolio, thereby maintaining compliance with HOME program regulations.