Audit 392455

Assistance listing number: 21.027 Program name: Coronavirus State and Local Fiscal Recovery Funds Pass-through entity: State of Michigan EGLE Project numbers: A7588-01 and A5817-01 Finding type: Material weakness and material noncompliance with laws and regulations Repeat finding: No Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-federal entities to maintain specific written policies to ensure accountability for federal awards. Minimum mandatory policies include procurement procedures, allowability of costs, conflict of interest, cash management, and internal controls. Conditions: The City did not have written policies, as are required by Uniform Guidance, that adhered fully to the requirements of Uniform Guidance. Questioned Costs: None Why Questioned Costs Not Determinable: N/A How Questioned Computed: N/A Context: The City has some written policies or resolutions that address procurement and conflict of interest. The procurement policy, however, did not fully address the requirements of UG Section 200.318. In addition, the City had developed some procedures for cash management, allowability costs and internal control but did not adopt the written policies for cash management, allowability of costs and internal control that would fully address the requirements of UG Sections 200.305, 200.302, 200.400 and 200.303. Cause: The City was not in compliance with the UG requirements to have the correct written policies related to procurement, cash management, allowability costs and internal control. Effect: The absence of those properly prepared written policies increases the potential for further noncompliance because the City’s procedures may not adequately address the relevant compliance requirements. Recommendation: We recommend that the City create and put in place the written policies that address the requirements of 2 CFR 200.318-Procurement, 200.305-Cash Management, 200.302 & 200.400-Allowability of Costs, 200.303-Internal Control. View and Response of Responsible Officials: The City is reviewing existing documents and the requirements of UG for written policies to determine the best course of action to create and put in place the written policies required by UG.

Assistance listing number: 21.027 Program name: Coronavirus State and Local Fiscal Recovery Funds Pass-through entity: State of Michigan EGLE Project numbers: A7588-01 and A5817-01 Finding type: Material weakness and material noncompliance with laws and regulations Repeat finding: No Criteria: The grant agreement states that the City certifies that it agrees to check the federal debarment/suspension list at SAM.gov to verify that its contractors have not been debarred, suspended or had other related debarment and suspension issues or problems. Conditions: There is no evidence that the City checked SAM.gov as required. Questioned Costs: None Why Questioned Costs Not Determinable: N/A How Questioned Computed: N/A Context: The City did not have evidence of a check on SAM.gov as required. The City, however, did obtain signed certification statements from its contractors that they were not debarred or suspended. A SAM.gov check by the audit firm did not find any matches/debarment of the City’s contractors. Cause: The City may have not done the check on SAM.gov assuming that the contractor certifications were adequate or assuming that the project engineer did the SAM.gov check. Effect: The failure to check SAM.gov increased the potential of hiring a debarred contractor and possibly incurring related problems in the completion of the construction work. Recommendation: We recommend that the City establish a proper written procurement policy that establishes the needed procedure to always check for contractor debarment/suspension on SAM.gov. View and Response of Responsible Officials: The City is reviewing the requirements of UG for written policies and will determine the best course of action to create a written procurement policy and develop related procedures to do contractor checks on SAM.gov.

Assistance listing number: 21.027 Program name: Coronavirus State and Local Fiscal Recovery Funds Pass-through entity: State of Michigan EGLE Project numbers: A7588-01 and A5817-01 Finding type: Material weakness and material noncompliance with laws and regulations Repeat finding: No Criteria: The City management is primarily responsible to, each year, identify all City federal revenues and prepare its Schedule of Expenditures of Federal Awards (SEFA). The auditor uses management’s SEFA to determine major programs and perform the single audit. Conditions: The City management has not prepared the SEFA and relies on the auditors to find the federal revenues and assist with the SEFA preparation. Context: The City has relied on the auditors to assist with the SEFA. The City reviews and understands the SEFA. The City usually has only a limited number of federal programs and amounts. Cause: The City has not developed a process for any internal effort to identify federal revenues and prepare the SEFA. Effect: The City lacks internal control over the preparation of the SEFA. In the current year, it was discovered that a correct SEFA was not prepared in/for the prior year and it has been determined that a single audit was required for the prior year ended June 30, 2024 but it was not done. Recommendation: We recommend that the City management establish procedures and a process to identify all federal revenues each year and prepare a SEFA that will be provided to the audit firm. We, of course, also recommend that a single audit for year end June 30, 2024 be performed. View and Response of Responsible Officials: The City will establish the required procedures and process to prepare a correct SEFA that will be provided to the audit firm each year. The City has engaged the audit firm to perform the single audit for the year ended June 30, 2024.