Finding 2025-004: MATERIAL WEAKNESS—Uniform Guidance Written Internal Control Procedures Type of Finding: Control U.S. Department of Justice Pass-through Entity: Michigan Department of Health and Human Services Assistance Listing Number: 16.575 Award Numbers: E20253442-00, E20252994-00, E20254307-00, and E20252103-00 Award Year End: September 30, 2025 Specific Requirements: All twelve areas of compliance Criteria: Section 200.303 of the Cost Principles of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-federal entity to establish and maintain effective internal control over the federal award that provides a reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The required internal control procedures should address the five components of internal control for each of the applicable twelve areas of compliance for each federal award maintained by the non-federal entity. Questioned Costs: None. Condition: The Organization does not have written internal control procedure memos for any of its federal programs. Context: During our audit of the Crime Victim Assistance program, it was noted that the Organization does not have written internal control procedure memos as mandated by the Uniform Guidance that cover the required five components of internal control for each area of compliance. The sample was not a statistically valid sample, and the matter appears to be a systemic condition. Effect: Essential internal control steps may be lacking for federal programs without the adoption of written internal control procedure memos, potentially resulting in issues of noncompliance. Cause: The Organization is in the process of addressing prior year audit recommendations and, because of the change in accounting personnel, has not yet had the capacity to implement its planned corrective action for this area. Repeat Finding: A similar finding was reported during the single audit for the year ended September 30, 2024. Recommendation: The Organization should establish and maintain written internal control procedures that cover the required five components of internal control for each area of compliance for each of its federal programs. The Organization should educate all employees working with federal programs of the Organization’s procedures and monitor compliance with them. Views of Responsible Officials: The Organization agrees with this finding.
Finding 2025-005: Crime Victim Assistance Documented Review and Approval Procedures Type of Finding: Control U.S. Department of Justice Pass-through Entity: Michigan Department of Health and Human Services Assistance Listing Number: 16.575 Award Numbers: E20253442-00, E20252994-00, E20254307-00, and E20252103-00 Award Year End: September 30, 2025 Specific Requirement: (L.) Reporting Criteria: Section 200.303 of the Cost Principles of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-federal entity to establish and maintain effective internal control over the federal award that provides a reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the specified guidance that requires proper segregation of duties by dividing key responsibilities among different people to reduce the risk of error or fraud. This should include separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets. No one individual should control all key aspects of a transaction or event. In addition, this guidance also requires transactions and internal controls to be clearly documented, and the records should be properly maintained and readily available for examination. Questioned Costs: None. Condition: During our detailed testing of the area of reporting for the Crime Victim Assistance program, we noted that the performance reports were missing documented approval by an appropriate individual with adequate skills, knowledge, and experience. Context: During the fiscal year, the Organization properly implemented procedures that require the documented review of the monthly financial reports, including the corresponding indirect cost calculations. As a result, all four monthly financial reports tested contained proper documented approval. However, of the four monthly performance activity reports and the two quarterly performance reports tested, none were reviewed and approved by an appropriate individual with adequate skills, knowledge, and experience. The sample was not a statistically valid sample, and the matter appears to be a systemic condition. Effect: Failure to properly review performance reports before they are submitted could result in inaccurate information being transmitted, resulting in a compliance finding. Cause: During the fiscal year, the Organization properly implemented procedures for the documented review and approval of the Crime Victim Assistance Financial Status Reports, which include the corresponding indirect cost calculations and serve as the monthly requests for funds. However, the Organization did not realize that the requirement for a documented review and approval of reporting includes the areas of financial and performance reports (both monthly and quarterly). Repeat Finding: A similar finding was reported during the single audit for the year ended September 30, 2024 Recommendation: The Organization should expand its financial reporting review procedures to require the documented review and approval of all performance reports by an individual with adequate skills, knowledge, and experience prior to submission. Views of Responsible Officials: The Organization agrees with this finding.