Audit 360257

Assistance Listing, Federal Agency, and Program Name COVID 19 21.027, U.S. Department of Treasury, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year N/A Pass through Entity Michigan Department of Health and Human Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The City must establish and maintain effective internal controls to ensure compliance with federal requirements including period of performance as outlined in 2 CFR 200.303. Condition The City lacked adequate controls to verify that expenditures charged to the grant were incurred within the proper period of performance. Transactions were processed without sufficient review or procedures around the period of performance, resulting in expenditures being charged from outside the allowable timeframe. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context During the year, the City requested reimbursement for $151,621 of expenditures that were not within the period of performance. Cause and Effect The City's control for identifying whether expenditures charged to the grant was not effective as it relied on the date of the vendor's invoice and not the period in which the services were performed. As a result, reports and reimbursement requests improperly included $64,109 of expenditures incurred prior to the period of performance. The City identified the error after year end and appropriately excluded the expenditures from the final SEFA. Later, it was discovered that an additional $87,512 was improperly included on the SEFA. The City removed the additional expenditures discovered from the SEFA as well, thus creating no questioned costs. Recommendation Internal controls should be strengthened to ensure expenditures are being properly reviewed for period of performance before submitting for reimbursement. Views of Responsible Officials and Corrective Action Plan The CIty concurs with this finding and has already implemented controls to look specifically at service period of expenditures when reviewing invoices and submitting reports and reimbursement requests.

Assistance Listing, Federal Agency, and Program Name COVID 19 21.027, U.S. Department of Treasury, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year N/A Pass through Entity Michigan Department of Health and Human Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The City must establish and maintain effective internal controls to ensure compliance with federal requirements including period of performance as outlined in 2 CFR 200.303. Condition The City lacked adequate controls to verify that expenditures charged to the grant were incurred within the proper period of performance. Transactions were processed without sufficient review or procedures around the period of performance, resulting in expenditures being charged from outside the allowable timeframe. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context During the year, the City requested reimbursement for $151,621 of expenditures that were not within the period of performance. Cause and Effect The City's control for identifying whether expenditures charged to the grant was not effective as it relied on the date of the vendor's invoice and not the period in which the services were performed. As a result, reports and reimbursement requests improperly included $64,109 of expenditures incurred prior to the period of performance. The City identified the error after year end and appropriately excluded the expenditures from the final SEFA. Later, it was discovered that an additional $87,512 was improperly included on the SEFA. The City removed the additional expenditures discovered from the SEFA as well, thus creating no questioned costs. Recommendation Internal controls should be strengthened to ensure expenditures are being properly reviewed for period of performance before submitting for reimbursement. Views of Responsible Officials and Corrective Action Plan The CIty concurs with this finding and has already implemented controls to look specifically at service period of expenditures when reviewing invoices and submitting reports and reimbursement requests.