Audit 370048

2024-001 – Lack of Subrecipient Monitoring Activities Finding Type. Immaterial Noncompliance/Material Weakness in Internal Control over Compliance (Subrecipient Monitoring). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; ALN 21.027, All Awards. Criteria. When a grant recipient makes subawards to other recipients, certain compliance requirements are required in order to monitor the activity of the subrecipients. The following are included as requirements of the pass-through entity: (a) identify the award and applicable requirements, (b) evaluate risk related to the subrecipient, and (c) monitor the activities of the subrecipient. Condition. Six subrecipients were selected for testing during the audit procedures. There was no subrecipient agreement noted for one of the subrecipients selected, therefore the required federal award information was not properly communicated. Additionally, no risk assessment was performed, nor was a monitoring plan within documentation of monitoring activities noted for this subrecipient. For the remaining five subrecipients selected for testing, the required federal award information was not properly communicated within the agreements. Lastly, the Organization does not have a procedure requiring the review of subrecipient audits. Cause. This condition was caused by management oversight in knowing the federal compliance requirements of the grant. Effect. As a result of this condition, the Organization did not fully comply with the requirements of the Uniform Guidance. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing did not identify any unallowed costs. Recommendation. We recommend that management become familiar with the subrecipient monitoring requirements and draft a policy and procedures that provide reasonable assurance that future subrecipient arrangements will be in compliance with the Uniform Guidance. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

2024-002 – Documentation of Controls over Suspension and Debarment (Repeat Finding) Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Procurement, Suspension and Debarment, Subrecipient Monitoring). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; ALN 21.027, All Awards. Criteria. A recipient of federal awards, when using a contractor for $25,000+ in services, the entity is required to determine whether the contractor has been suspended or debarred by the federal government. Condition. During our testing of suspension and debarment for three vendors and six subrecipients, it was determined that the Organization did not verify that vendors or subrecipients were not suspended, debarred or otherwise excluded when the Organization contracted with them to provide goods or services for five of the nine vendors and subrecipients. The searches at www.sam.gov were done in early 2025 by management, which was well after the date of the applicable contractual agreement and expenditure activity. Cause. The Organization does not have the proper internal controls in place to ensure that verification of procured transaction is performed in accordance with the requirements of the Uniform Guidance. Effect. The failure to monitor suspension and debarment could cause funds to be disbursed to vendors or subrecipients who are not eligible to have goods and services purchased with federal monies. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing did not reveal any suspended or debarred vendors or subrecipients. Recommendation. We recommend that the Organization retain documentation of their procurement process including checking vendors for potential exclusions from federal award work. We further recommend that these checks be done prior to entering into a contractual agreement. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

2024-003 – Grant Reporting Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Reporting). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; ALN 21.027, Small Business Support Hubs Program passed through the Michigan Strategic Fund. Criteria. The federal reporting requirements for this program are only applicable to the primary recipient. However, the pass-through grant agreement stipulates that the following reports are required: (1) State Progress Report, Due October 10, (2) Federal Quarterly Reports, Due January 10, April 10, July 7 and October 10, and (3) Federal Annual Report, Due July 7. Condition. Although we were able to review the quarterly reporting due during the fiscal year, we initially noted that the reports quarterly totals did not add up to the year-to-date totals, and total cost for the year reported, as well as quarterly totals, did not agree to the general ledger or the Schedule of Expenditures of Federal Awards. Management was able to subsequently correct these errors. Additionally, it was noted that there was no formal review and approval process over the completion and submission of the grant reports. Cause. The errors in the reporting were due to inadequate internal controls over the grant management process, including lack of proper training for personnel responsible for preparing and submitting the reports and lack of management oversight over this grant management process. Effect. As a result of this condition, the Organization reported inaccurate amounts to the grant pass-through agency. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing did not identify any unallowed costs. Recommendation. We recommend that the Organization base all grant financial reporting on general ledger detail of costs and that the reporting be reconciled to the Schedule of Expenditures of Federal Awards at year-end. In addition, all reports should be reviewed and approved by appropriate personnel prior to submission. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.