Finding Text
2024-006 - Lack of Independent Review and Approval of Reporting
Finding Type. Significant Deficiency in Internal Controls over Compliance (Reporting).
Federal program(s)
U.S. Department of Treasury -
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) (ALN 21.027); Passed through Michigan State Housing Development Authority, Michigan Department of Natural Resources, and Michigan Strategic Fund; All project numbers.
Criteria. Recipients of federal awards are required to report periodically on financial information, as specified by the 2 CFR 200 Compliance Supplement or grant agreement. Reported information should be supported by the entity’s accounting records and subjected to an independent review and approval prior to submission in order to detect and correct any errors or omissions.
Condition. During our audit procedures over the County's reporting process for CSLFRF grants received through pass-through entities, we noted that none of the financial reports selected for testing included documentation that the reports were subjected to an independent review and approval prior to submission in order to detect and correct potential errors or omissions.
Cause. This condition is the result of management not recognizing the importance of establishing such controls.
Effect. As a result of this condition, the County was exposed to an increased risk that the reports filed could contain errors and not be detected and corrected on a timely basis.
Questioned Costs. No costs have been questioned as a result of this finding inasmuch as no unallowable costs were identified.
Recommendation. We recommend that the County establish procedures to ensure that all reports are subject to review and approval by an independent employee prior to submission, and that the review and approval is adequately documented.
View of Responsible Officials. County grant policies and procedures outline requirements of review and approval of grant reporting. Management recognizes the importance of establishing controls as noted, however policies and procedures stop short of requiring the signature and dating of approvals by independent reviewers. Policies and procedures will be modified to include verbiage requiring documentation of review and approval, along with reconciliations to the general ledger prior to submission.
Responsible Official. County Administrator/Controller
Estimated Completion Date. December 31, 2025