Finding Text
Assistance Listing, Federal Agency, and Program Name - 21.027 U.S. Department of Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - SLFRP0127 2025 Pass through Entity - Michigan Department of Environment, Great Lakes, and Energy (EGLE) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The pass through grant agreement between the City and EGLE requires the City to submit financial progress reports in a form and format prescribed by EGLE, including supporting documentation of eligible project expenses. Reports are due no less than quarterly, with specified quarterly reporting periods and due dates. Accordingly, the City should have a process in place to ensure all required quarterly reports are prepared, reviewed, and submitted timely in accordance with the grant agreement. Condition For the year ended June 30, 2025, the City did not submit quarterly reports to EGLE as required by the grant agreement. The City submitted drawdown/reimbursement documentation only when expenditures were incurred, but quarterly reporting deliverables to EGLE were not completed for each quarter during the fiscal year. 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 - The City is performing a single water system improvements project funded through EGLE administered grant components under ALN 21.027, and the agreement requires recurring quarterly financial/progress reporting to support EGLE’s monitoring and year end accounting, regardless of whether the City requests reimbursement in a given quarter. Cause and Effect - The City’s processes and internal control structure did not ensure that all necessary reports were completed and reviewed as required by the grant agreement. The effect was that no reports were filed during the year as required. Recommendation - We recommend the City implement and document processes and controls to ensure all quarterly financial progress reports required by the EGLE grant agreement are prepared, reviewed, and submitted timely, regardless of whether a drawdown request is made during the quarter. Views of Responsible Officials and Corrective Action Plan - The City agrees with the finding and acknowledges that quarterly financial/progress reports required under the EGLE grant agreement were not submitted for each reporting period during the fiscal year ended June 30, 2025. While the City did submit reimbursement requests in conjunction with incurred expenditures, the required quarterly reporting deliverables were not consistently completed and submitted in accordance with the grant requirements. The City engaged a third-party administrator to assist with grant compliance, including the preparation and submission of required reports; however, internal processes did not include sufficient oversight to ensure all reporting requirements, regardless of reimbursement activity, were tracked and fulfilled in a timely manner. The City recognizes that responsibility for compliance with grant requirements ultimately resides with the City. To address this deficiency, the City will implement enhanced internal oversight procedures, assign responsibility for monitoring compliance, and improve communication and coordination with the third-party administrator to ensure all required reports are completed and submitted timely.