Audit 393493

Assistance Listing, Federal Agency, and Program Name 21.027 COVID 19 Coronavirus State and Local Fiscal Recovery Funds and 84.215 Innovative Approaches to Literacy Federal Award Identification Number and Year Coronavirus State and Local Fiscal Recovery Funds SLFRP1027 Innovative Approaches to Literacy S215K230129 Pass through Entity 21.027 Michigan Strategic Fund; 20 Fathoms; Lean Rocket Lab; Talent First Inc; Lansing Economic Area Partnership; Michigan Economic Development Corporation 84.215 N/A Finding Type Significant Deficiency Repeat Finding No Criteria Recipients of federal awards are required to follow their internal purchasing policies, as well as comply with purchasing standards set forth in the Uniform Guidance. Per the University policy, all grant funded purchases in excess of $25,000 should be verified using SAM.gov the supplier is not suspended or debarred and the results should be retained in the purchase requisition. As Uniform Guidance restricts making federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal award (CFR 200.214). Condition In accordance with the University's policy, the University was unable to provide documentation to support its consideration of the suspension and debarment for the only vendor selected within Coronavirus State and Local Fiscal Recovery Funds. In accordance with the University's policy, the University was unable to provide documentation to support its consideration of the suspension and debarment for the only vendor selected within Innovative Approaches to Literacy. 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 In the samples mentioned above, In accordance with University's policy the University did not maintain the appropriate documentation for the vendors to support their assessment of whether the vendors where included on Suspension or Debarment list. In either case the vendors included in the samples were not included in the Suspension and Debarment list and the University was allowed to contract with the vendor. Cause and Effect The University did not follow its policy to ensure that the documentation verifying the vendors were not suspended or debarred. Recommendation We recommend the University reviews its procedures and controls to ensure documentation of its compliance with the requirements under uniform guidance is maintained. Views of Responsible Officials and Planned Corrective Actions A new custom validation warning will be added to the requisitions business process at the buyer approval step to require the Procurement Specialist to verify SAM.gov and attach the results as required for grant funded purchases. This custom validation will ensure that each required consideration of suspension and debarment occurs and is documented in the procurement record.

Assistance Listing, Federal Agency, and Program Name 21.027 COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year SLFRP1027 Pass through Entity Michigan Strategic Fund; 20 Fathoms; Lean Rocket Lab; Talent First Inc.; Lansing Economic Area Partnership; Michigan Economic Development Corporation Finding Type Significant deficiency Repeat Finding Yes 2024 001 Criteria As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed, including complying with established accounting policies and practices of the University. Per the University policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair, or dean) of the work performed approximately 30 days after each reporting period. Condition Of the 6 employees included in the payroll expenditures sample selected for testing, the University did not complete a full, executed review of the effort certifications within the time period outlined for one employee. 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 None Context In the samples mentioned above, the University completed review of the effort certification to support salaries were allowable, one of the total of 6 employees tested were not reviewed timely. Cause and Effect The University implemented a new automated process during the year to initiate the employee groups that are required to complete an effort certification; however, an employee group was excluded during the set up of the process resulting a certification that was completed outside of the University policy. Recommendation We recommend the University review employee groups maintained in the enterprise resource planning (Workday) to ensure that all employees required to perform effort certifications are included. Views of Responsible Officials and Planned Corrective Actions A new control has been added to the effort certification process that occurs prior to the distribution of effort reports for certification. The Effort Certification Administrator reconciles a compiled listing of all federal grant effort by employee name from the general ledger to ensure that an effort report is subsequently generated for each qualifying employee who worked on a federal grant during the appropriate period.

Assistance Listing, Federal Agency, and Program Name 84.268 U.S. Department of Education, Federal Direct Student Loans; 84.038 U.S. Department of Education, Federal Perkins Loan Program; 84.063 Federal Pell Grant Program Pass through Entity None Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The University has 60 days from the date of the University determines an enrollment status change to report to the National Student Loan Data System (NSLDS). The enrollment reporting must be updated for changes in the data elements for the campus record and program record and submitted electronically through the batch method, spreadsheet submittal, or the NSLDS website (34 CFR 685.309) Condition Of the 25 students selected for enrollment reporting, the University did not update the student enrollment information for four students accurately. 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 None Context The University's process for submitting the enrollment status change includes using the National Student Clearing House, a third party, which ultimately submits the status changes to NSLDS on behalf of the University. The submission the sample selection was submitted was overridden and the entire batch was not transmitted to NSLDS. Cause and Effect The University did not have formal procedures to verify that the National Student Clearing House has accurately reported the data provided by the University to NSLDS resulting in inappropriate enrollment status reported to NSLDS. Recommendation The University should consider implementing a process to review all submissions to NSLDS to ensure the required reporting elements are submitted by the use of the third party. Views of Responsible Officials and Corrective Action Plan Upon learning of these errors during the audit, the University conducted a review of all 2024–2025 records to ensure that all other reports were accurate. The University uses a third party provider to perform these actions and while the University is responsible for verification, concrete controls have been put in place. The University will examine and compare NSLDS data three times per year to identify and resolve any inconsistencies in a timely manner. Additionally, the third party provider has indicated it is reviewing its internal practices to help ensure similar reporting issues do not occur in the future.