FAC Explorer

Audit 358521

FY End
2024-09-30
Total Expended
$9.29M
Findings
4
Programs
8
Organization: City of Marquette, Michigan (MI)
Year: 2024 Accepted: 2025-06-11
Auditor: Anderson Tackman & Company Plc

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
564410 2024-001 Significant Deficiency - L
564411 2024-002 Significant Deficiency - L
1140852 2024-001 Significant Deficiency - L
1140853 2024-002 Significant Deficiency - L

Programs

ALN Program Spent Major Findings
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $5.29M Yes 1
66.458 Clean Water State Revolving Fund $1.46M Yes 0
20.823 Port Infrastructure Development Program $855,406 Yes 1
21.027 Coronavirus State and Local Fiscal Recovery Funds $238,645 - 0
45.024 Promotion of the Arts Grants to Organizations and Individuals $40,039 - 0
16.738 Edward Byrne Memorial Justice Assistance Grant Program $18,644 - 0
66.818 Brownfields Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements $13,048 - 0
66.472 Beach Monitoring and Notification Program Implementation Grants $5,719 - 0

Contacts

Name Title Type
NJTGBUGAVBF9 Mary Schlicht Auditee
9062258559 Michael Grentz Auditor
No contacts on file

Notes to SEFA

Title: NOTE D – OVERSIGHT AGENCY: Accounting Policies: NOTE A – BASIS OF PRESENTATION: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the City under programs of the federal government for the year ended September 30, 2024. 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 (Uniform Guidance). 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. NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the City has elected not to use the 10-percent de minimis indirect cost rate as permitted by §200.414 of the Uniform Guidance. Oversight agencies are assigned to entities that spend less than $50 million in total federal awards in during the fiscal year. The agency that provides the highest amount of direct awards listing on the Schedule is the Oversight Agency. If less than 25% of the City’s total spending comes from direct awards or there are not direct awards, the Oversight Agency is the agency that provides the highest amount of total funding. Based on this criterion, the Department of Housing and Urban Development is the current year’s Oversight Agency.
Title: NOTE E – RECONCILIATION TO THE FINANCIAL STATEMENTS: Accounting Policies: NOTE A – BASIS OF PRESENTATION: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the City under programs of the federal government for the year ended September 30, 2024. 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 (Uniform Guidance). 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. NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the City has elected not to use the 10-percent de minimis indirect cost rate as permitted by §200.414 of the Uniform Guidance. For purposes of the Schedule, the City’s basic financial statements do not include the operations of the Marquette Area Wastewater Treatment Facility (MAWTF or the “Facility”) as the Facility is a considered a joint venture under GASB Statement No. 14; however, the bond issued through the State of Michigan’s Clean Water State Revolving Fund for purposes of financing the biosolids handling project at the wastewater treatment plant was in the City’s legal name. The project qualified for partial federal funding under the Bipartisan Infrastructure Law (BIL) which resulted in the recognition of federal loan proceeds and federal loan forgiveness. The liability for this loan is reported on the Facility’s financial statements; however, since the bond is in the City’s legal name it is appropriately included on the Schedule. Therefore, these amounts will be reconciling items when reconciling the Schedule to the basic financial statements. The following reconciles federal sources reported in the financial statements to the federal expenditures reported in the Schedule: Governmental Funds – Federal Sources $5,413,985 Proprietary Funds – Federal grant 1,051,884 City’s subtotal 6,465,869 Reconciling items from MAWTF: CWSRF - Federal loan proceeds 1,362,280 CWSRF - Federal loan forgiveness 1,462,438 MAWTF subtotal 2,824,718 TOTAL FEDERAL EXPENDITURES $9,290,587
Title: NOTE F – AMOUNTS PASSED THROUGH TO SUBRECIPIENTS: Accounting Policies: NOTE A – BASIS OF PRESENTATION: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the City under programs of the federal government for the year ended September 30, 2024. 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 (Uniform Guidance). 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. NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the City has elected not to use the 10-percent de minimis indirect cost rate as permitted by §200.414 of the Uniform Guidance. The City did not have any amounts passed through to subrecipients for the fiscal year ended September 30, 2024.

Finding Details

Finding 2024-001
2024-001 – Internal Controls Over Service Agencies Federal Agency: Department of Housing and Urban Development Program Name: Community Development Block Grant Assistance Listing Number: ALN 14.228 Pass-through Entity: Michigan Economic Development Corporation Grant Number: MSC 222028-ESB 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 contracted with a service agency for administration of the grant. Processes and procedures were in place related to the review of the reimbursement requests prior to submission. However, as it relates to other reporting requirements, there was no formalized review process prior to submission. Cause: The project is related to the demolition and clearance of the former hospital location. The City is the grantee, but Northern Michigan University Foundation is the property owner. The City reimbursed the property owner for allowable costs in accordance with the grant agreement. In order to assist with grant administration, the service agency received information not only from the City, but also the property owner related to the project. The overall project consisted of multiple phases; however, only portions of Phase I were covered by the grant agreement. When preparing one of the semi-annual CDBG Progress Reports, the service agency erroneously included amounts that were not related to the grant. Effect: One of the semi-annual CDBG Progress Reports submitted to the Michigan Economic Development Corporation was erroneous. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: When informed of the error, the service agency immediately reached out to the Michigan Economic Development Corporation (MEDC), the pass-through entity, for guidance on how to proceed with correcting the error. Prior to re-submitting a revised CDBG Progress Report, the service agency forwarded the report to a responsible official at the City for review. Review of the MEDC’s Single Audit Certification report did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. Repeat Finding: No. Recommendation: Procedures should be put into place that when a service agency is utilized for administering a federal grant(s) that all reports are reviewed by a responsible City official prior to submission to the federal agency. This includes, but is not limited to, reimbursement requests, intermittent reporting, and any other required reports. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-002
2024-002 – Internal Controls Over Reporting Federal Agency: Department of Transportation Program Name: Port Infrastructure Development Program Assistance Listing Number: ALN 20.823 Pass-through Entity: N/A Grant Number: 693JF72245018 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: When preparing one of the quarterly reports the City erroneously included costs in the current quarter’s expenditures that were already included in a previous quarter’s expenditure amounts. Cause: The City’s Engineering department is performing services related to the grant including program management, construction management, along with engineering services. As a result, payroll costs are allocated to the grant. When preparing one of the Quarterly Progress Reports the wrong time range was used which resulted in duplication of some of the payroll expenditures. Effect: One of the Quarterly Progress Reports was over-stated. Cumulative expenditures on future Quarterly Progress Reports will be misstated. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: Review of other quarterly reports submitted during the fiscal year did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. When informed of the error, the City immediately reached out to the United States Department of Transportation Maritime Administration (MARAD) for guidance on how to proceeds with correcting the error. The City also reviewed, revised, and resubmitted any subsequent Quarterly Progress Reports that were impacted. Repeat Finding: No. Recommendation: Prior to submitting the Quarterly Progress Report a secondary review should be performed by someone other than the preparing to ensure the data properly reconciles to the City’s financial reporting system. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-001
2024-001 – Internal Controls Over Service Agencies Federal Agency: Department of Housing and Urban Development Program Name: Community Development Block Grant Assistance Listing Number: ALN 14.228 Pass-through Entity: Michigan Economic Development Corporation Grant Number: MSC 222028-ESB 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 contracted with a service agency for administration of the grant. Processes and procedures were in place related to the review of the reimbursement requests prior to submission. However, as it relates to other reporting requirements, there was no formalized review process prior to submission. Cause: The project is related to the demolition and clearance of the former hospital location. The City is the grantee, but Northern Michigan University Foundation is the property owner. The City reimbursed the property owner for allowable costs in accordance with the grant agreement. In order to assist with grant administration, the service agency received information not only from the City, but also the property owner related to the project. The overall project consisted of multiple phases; however, only portions of Phase I were covered by the grant agreement. When preparing one of the semi-annual CDBG Progress Reports, the service agency erroneously included amounts that were not related to the grant. Effect: One of the semi-annual CDBG Progress Reports submitted to the Michigan Economic Development Corporation was erroneous. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: When informed of the error, the service agency immediately reached out to the Michigan Economic Development Corporation (MEDC), the pass-through entity, for guidance on how to proceed with correcting the error. Prior to re-submitting a revised CDBG Progress Report, the service agency forwarded the report to a responsible official at the City for review. Review of the MEDC’s Single Audit Certification report did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. Repeat Finding: No. Recommendation: Procedures should be put into place that when a service agency is utilized for administering a federal grant(s) that all reports are reviewed by a responsible City official prior to submission to the federal agency. This includes, but is not limited to, reimbursement requests, intermittent reporting, and any other required reports. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-002
2024-002 – Internal Controls Over Reporting Federal Agency: Department of Transportation Program Name: Port Infrastructure Development Program Assistance Listing Number: ALN 20.823 Pass-through Entity: N/A Grant Number: 693JF72245018 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: When preparing one of the quarterly reports the City erroneously included costs in the current quarter’s expenditures that were already included in a previous quarter’s expenditure amounts. Cause: The City’s Engineering department is performing services related to the grant including program management, construction management, along with engineering services. As a result, payroll costs are allocated to the grant. When preparing one of the Quarterly Progress Reports the wrong time range was used which resulted in duplication of some of the payroll expenditures. Effect: One of the Quarterly Progress Reports was over-stated. Cumulative expenditures on future Quarterly Progress Reports will be misstated. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: Review of other quarterly reports submitted during the fiscal year did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. When informed of the error, the City immediately reached out to the United States Department of Transportation Maritime Administration (MARAD) for guidance on how to proceeds with correcting the error. The City also reviewed, revised, and resubmitted any subsequent Quarterly Progress Reports that were impacted. Repeat Finding: No. Recommendation: Prior to submitting the Quarterly Progress Report a secondary review should be performed by someone other than the preparing to ensure the data properly reconciles to the City’s financial reporting system. Views of Responsible Officials: Management agrees with the finding.