Finding Text
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds.
Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024
Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section
Type: Material weakness in internal controls and material noncompliance with laws and regulations
Repeat Finding: No
Criteria: Per 2 CFR 200.510 (b), the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined with section 200.502.
Condition: The Township did not identify that they were subject to an audit under the Uniform Guidance (U.G.) and a schedule of expenditures of federal awards (SEFA) was not prepared by management.
Identification of How Likely Questioned Costs Were Computed: N/A
Known Questioned Costs: None
Context: In fiscal year 2023, the Township had $1,072,983 in expenditures under three federal awards to report on the SEFA. The Capitalization Grants of Clean Water Revolving Funds was determined to have $980,228 in federal expenditures subject to audit under the U.G. Cause/Effect: The Township's controls were not adequate to ensure that they identify the requirement to have an audit under the Uniform Guidance and the preparation of an accurate and complete SEFA. As a result, management may fail to identify that an audit under the Uniform Guidance is required and that all federal dollars are included.
Recommendation: We recommend the Township review federal, state, and local grants to determine if they are federally funded and, if federally funded, utilize the account number outlined in the State of Michigan chart of accounts to track federal funding.
View of responsible officials and planned corrective action plan: See attached corrective action plan.