Audit 396536

Improper Period Recognition of SEFA Expenses Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Allowable Costs/Cost Principles). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027; Award Number SLFRP0127: IIA Grant passed through Michigan Center for Adult College Success. Criteria. Under the accrual basis of accounting, an expense is reported in the period in which it is incurred, regardless of when it is paid, as specified in 42 CFR 413.24(b)(2). Condition. During our testing of compliance and related controls, we identified instances where expenses covering service periods extending beyond the fiscal year under audit were recorded in full rather than prorated for the portion incurred during the fiscal year. This resulted in an initial overstatement of expenses reported on the Schedule of Expenditures of Federal Awards (SEFA). Cause. The College recorded expenses based on payment date rather than the period incurred. Effect. Initial SEFA amounts were not accurately stated in accordance with accrual accounting requirements. Questioned Costs. No questioned costs were identified as a result of this finding, inasmuch as our testing did not reveal any unallowed costs. Recommendation. We recommend the College implement procedures to ensure expenses are recorded in the proper period in accordance with GAAP and Uniform Guidance requirements. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

Procurement Noncompliance Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Procurement, Suspension, and Debarment). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027; Award Number SLFRP0127: Reconnect Age Expansion - Financial Aid Compliance Funds passed through Michigan Department of Lifelong Education, Advancement, and Potential. Criteria. Uniform Guidance at 2 CFR §200.320 requires non-Federal entities to use one of the approved procurement methods: micro-purchase, small purchase procedures, sealed bids, competitive proposals, or noncompetitive (sole source) procurement. Noncompetitive (sole source) procurement is allowable only under specific circumstances, including: (a) The item is available only from a single source; (b) A public exigency or emergency does not permit delay; (c) The Federal awarding agency or pass-through entity authorizes a sole source in writing; or (d) Competition is determined inadequate after soliciting multiple sources. Entities must maintain documentation supporting the chosen procurement method and justification. Condition. During our testing of four procurement transactions charged to the federal award, we noted that the College procured goods/services totaling $18,750 from a single vendor using a sole source justification. The College did not obtain the required quotes for the purchase. Our review of the documentation determined that the rationale provided for sole source procurement did not meet the criteria outlined in Uniform Guidance. As a result, the College did not follow required competitive procurement procedures. Cause. Internal controls over procurement documentation were not adequately followed to ensure compliance with Uniform Guidance requirements. The College did not obtain sufficient evidence to demonstrate that the vendor was the only available provider or that any other sole source condition was met. Effect. Because competitive procurement procedures were not used, the College may not have obtained the best price or ensured full and open competition. Questioned Costs. $18,750. Recommendation. We recommend that the College strengthen internal controls to ensure personnel verify and document that sole source criteria under 2 CFR §200.320 are fully met before awarding a procurement without competition. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.