FAC Explorer

Finding 1215654 (2025-004)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2025
Accepted
2026-05-27
Audit: 402331
Organization: Oakland County, Michigan (MI)
Auditor: REHMANN ROBSON LLC

AI Summary

  • Core Issue: The County submitted inaccurate financial reports without independent review, leading to discrepancies in reported unexpended balances.
  • Impacted Requirements: Federal reporting criteria require accurate financial information supported by accounting records and independent approval before submission.
  • Recommended Follow-Up: Implement internal controls for review and approval of financial reports, ensuring alignment with accounting records by July FY2026.

Finding Text

Inaccurate Reporting/Lack of Independent Review and Approval of Reporting (Repeat) Finding Type. Material Noncompliance; Material Weakness in Internal Controls over Compliance. (Reporting) Federal program(s) U.S. Department of Housing and Urban Development - Community Development Block Grants/Entitlement Grants Cluster; Assistance Listing Number 14.218; Direct award; All project numbers Criteria. Recipients of federal awards are required to report periodically on financial information, as specified by the 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. Additionally, the PR-26 financial summary reports are submitted as part of the Consolidated Annual Performance Evaluation Report (CAPER) and should be properly reconciled to present all inflows and outflows of resources related to the program including the appropriate unexpended balance. Condition. During our audit procedures over the County's CDBG reporting, we noted that none of the reports were subject to an independent review and approval prior to submission in order to detect and correct potential errors or omissions until partway through the year under audit. We also noted that the PR-26 was submitted as required, but contained financial data that did not agree to the County's underlying accounting records. Expenditures were properly reported for the year under audit, but it was identified that the County had incorrectly reported its unexpended balance going back to 2020, when the unexpended balance was not properly carried over from the 2019 report to the 2020 report. This resulted in an incorrect unexpended balance which presented as a net negative unexpended balance in the current year report. Cause. The County implemented a review and approval process during calendar year 2025 in response to the findings from the prior year's audit, and appears to have controls in place moving forward. However, for the period under audit the County did not yet have the internal controls in place to ensure that financial reports were reviewed and approved prior to submission. In addition, the County does not have proper internal controls in place to ensure that the reporting submitted agrees to underlying accounting records with respect to the requirement that unexpended balances are properly carried forward between reporting periods. Effect. The County submitted inaccurate reporting in its PR-26 that was inconsistent with other financial reports submitted and with the County's general ledger. The County is also exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the County's internal controls until controls are consistently implemented across fiscal years. Questioned Costs. None. Recommendation. We recommend that the County implement necessary internal controls to ensure that proper review and approval is documented and reports agree to accounting records. Financial information being submitted to outside entities should be reviewed and approved by the Financial Services department to ensure that it is in agreement with the County's general ledger and consistent with other required financial reporting. View of Responsible Officials. Management acknowledges that financial reporting requires enhanced controls and reconciliation procedures. A review of detailed reconciliation steps will be conducted to identify areas within current processes where regular reviews can be implemented to ensure accuracy and completeness. The County plans to implement this process by July FY2026, which will provide two full quarters of reviewed and monitored activity prior to year-end reporting.

Corrective Action Plan

Inaccurate Reporting/Lack of Independent Review and Approval of Reporting (Repeat) Auditor Description of Criteria, Condition, and Effect: Recipients of federal awards are required to report periodically on financial information, as specified by the 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. Additionally, the PR-26 financial summary reports are submitted as part of the Consolidated Annual Performance Evaluation Report (CAPER) and should be properly reconciled to present all inflows and outflows of resources related to the program including the appropriate unexpended balance. During our audit procedures over the County's CDBG reporting, we noted that none of the reports were subject to an independent review and approval prior to submission in order to detect and correct potential errors or omissions until partway through the year under audit. We also noted that the PR-26 was submitted as required, but contained financial data that did not agree to the County's underlying accounting records. Expenditures were properly reported for the year under audit, but it was identified that the County had incorrectly reported its unexpended balance going back to 2020, when the unexpended balance was not properly carried over from the 2019 report to the 2020 report. This resulted in an incorrect unexpended balance which presented as a net negative unexpended balance in the current year report. The County submitted inaccurate reporting in its PR-26 that was inconsistent with other financial reports submitted and with the County's general ledger. The County is also exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the County's internal controls until controls are consistently implemented across fiscal years. Auditor Recommendation: We recommend that the County implement necessary internal controls to ensure that proper review and approval is documented and reports agree to accounting records. Financial information being submitted to outside entities should be reviewed and approved by the Financial Services department to ensure that it is in agreement with the County's general ledger and consistent with other required financial reporting. Corrective Action: Management acknowledges that financial reporting requires enhanced controls and reconciliation procedures. A review of detailed reconciliation steps will be conducted to identify areas within current processes where regular reviews can be implemented to ensure accuracy and completeness. The County plans to implement this process by July FY2026, which will provide two full quarters of reviewed and monitored activity prior to year-end reporting. Responsible Persons: Khadija Walker-Fobbs Neighborhood and Housing Development Officer, Curtis Smith, Chief, Neighborhood and Housing Development and Brian J. Lefler, Chief Financial Officer Anticipated Completion Date: September 2026

Categories

Reporting Material Weakness

Other Findings in this Audit

  • 1215636 2025-004
    Material Weakness Repeat
  • 1215637 2025-004
    Material Weakness Repeat
  • 1215638 2025-004
    Material Weakness Repeat
  • 1215639 2025-004
    Material Weakness Repeat
  • 1215640 2025-004
    Material Weakness Repeat
  • 1215641 2025-004
    Material Weakness Repeat
  • 1215642 2025-004
    Material Weakness Repeat
  • 1215643 2025-004
    Material Weakness Repeat
  • 1215644 2025-004
    Material Weakness Repeat
  • 1215645 2025-004
    Material Weakness Repeat
  • 1215646 2025-004
    Material Weakness Repeat
  • 1215647 2025-004
    Material Weakness Repeat
  • 1215648 2025-004
    Material Weakness Repeat
  • 1215649 2025-004
    Material Weakness Repeat
  • 1215650 2025-004
    Material Weakness Repeat
  • 1215651 2025-004
    Material Weakness Repeat
  • 1215652 2025-004
    Material Weakness Repeat
  • 1215653 2025-004
    Material Weakness Repeat
  • 1215655 2025-005
    Material Weakness Repeat
  • 1215656 2025-005
    Material Weakness Repeat
  • 1215657 2025-005
    Material Weakness Repeat
  • 1215658 2025-005
    Material Weakness Repeat
  • 1215659 2025-005
    Material Weakness Repeat
  • 1215660 2025-005
    Material Weakness Repeat
  • 1215661 2025-005
    Material Weakness Repeat
  • 1215662 2025-005
    Material Weakness Repeat
  • 1215663 2025-005
    Material Weakness Repeat
  • 1215664 2025-005
    Material Weakness Repeat
  • 1215665 2025-005
    Material Weakness Repeat
  • 1215666 2025-005
    Material Weakness Repeat
  • 1215667 2025-005
    Material Weakness Repeat
  • 1215668 2025-005
    Material Weakness Repeat
  • 1215669 2025-005
    Material Weakness Repeat
  • 1215670 2025-005
    Material Weakness Repeat
  • 1215671 2025-005
    Material Weakness Repeat
  • 1215672 2025-005
    Material Weakness Repeat
  • 1215673 2025-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
66.458 CLEAN WATER STATE REVOLVING FUND $15.33M
10.557 WIC SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN $2.62M
93.558 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES $2.52M
93.563 CHILD SUPPORT SERVICES $1.51M
93.493 CONGRESSIONAL DIRECTIVES $1.30M
66.202 CONGRESSIONALLY MANDATED PROJECTS $1.01M
66.468 DRINKING WATER STATE REVOLVING FUND $947,464
17.225 UNEMPLOYMENT INSURANCE $813,059
93.778 GRANTS TO STATES FOR MEDICAID $615,255
21.019 CORONAVIRUS RELIEF FUND $577,946
93.870 MATERNAL, INFANT AND EARLY CHILDHOOD HOME VISITING GRANT $556,814
16.838 COMPREHENSIVE OPIOID, STIMULANT, AND OTHER SUBSTANCES USE PROGRAM $531,516
16.741 DNA BACKLOG REDUCTION PROGRAM $421,443
93.323 EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) $389,912
11.307 ECONOMIC ADJUSTMENT ASSISTANCE $386,444
14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS $326,907
17.268 H-1B JOB TRAINING GRANTS $295,897
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $275,816
97.039 HAZARD MITIGATION GRANT $265,802
14.231 EMERGENCY SOLUTIONS GRANT PROGRAM $255,622
16.321 ANTITERRORISM EMERGENCY RESERVE $226,024
93.069 PUBLIC HEALTH EMERGENCY PREPAREDNESS $223,653
17.285 REGISTERED APPRENTICESHIP $210,578
93.658 FOSTER CARE TITLE IV-E $201,342
93.959 BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE $199,588
97.067 HOMELAND SECURITY GRANT PROGRAM $187,142
93.967 CENTERS FOR DISEASE CONTROL AND PREVENTION COLLABORATION WITH ACADEMIA TO STRENGTHEN PUBLIC HEALTH $176,929
10.331 GUS SCHUMACHER NUTRITION INCENTIVE PROGRAM $166,175
97.132 FINANCIAL ASSISTANCE FOR TARGETED VIOLENCE AND TERRORISM PREVENTION $142,792
16.710 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS $134,453
81.041 STATE ENERGY PROGRAM $100,000
66.469 GEOGRAPHIC PROGRAMS - GREAT LAKES RESTORATION INITIATIVE $95,000
97.012 BOATING SAFETY FINANCIAL ASSISTANCE $84,800
17.259 WIOA YOUTH ACTIVITIES $76,019
93.977 SEXUALLY TRANSMITTED DISEASES (STD) PREVENTION AND CONTROL GRANTS $72,409
93.994 MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT TO THE STATES $67,506
17.245 TRADE ADJUSTMENT ASSISTANCE $63,972
93.991 PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK GRANT $63,016
17.258 WIOA ADULT PROGRAM $53,500
17.277 WIOA NATIONAL DISLOCATED WORKER GRANTS / WIA NATIONAL EMERGENCY GRANTS $47,703
16.738 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT PROGRAM $46,607
10.553 SCHOOL BREAKFAST PROGRAM $45,250
10.727 INFLATION REDUCTION ACT URBAN & COMMUNITY FORESTRY PROGRAM $43,896
17.207 EMPLOYMENT SERVICE/WAGNER-PEYSER FUNDED ACTIVITIES $42,034
95.001 HIGH INTENSITY DRUG TRAFFICKING AREAS PROGRAM $41,618
93.268 IMMUNIZATION COOPERATIVE AGREEMENTS $36,450
10.558 CHILD AND ADULT CARE FOOD PROGRAM $29,298
93.597 GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS $29,288
10.555 NATIONAL SCHOOL LUNCH PROGRAM $29,042
93.940 HIV PREVENTION AND SURVEILLANCE ACTIVITIES-HEALTH DEPARTMENT BASED $24,960
10.561 STATE ADMINISTRATIVE MATCHING GRANTS FOR THE SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM $22,647
16.742 PAUL COVERDELL FORENSIC SCIENCES IMPROVEMENT GRANT PROGRAM $16,256
16.U00 CIRCUIT COURT TECHNICAL ASSISTANCE $14,284
93.116 PROJECT GRANTS AND COOPERATIVE AGREEMENTS FOR TUBERCULOSIS CONTROL PROGRAMS $13,061
17.278 WIOA DISLOCATED WORKER FORMULA GRANTS $11,348
66.818 BROWNFIELDS MULTIPURPOSE, ASSESSMENT, REVOLVING LOAN FUND, AND CLEANUP COOPERATIVE AGREEMENTS $10,350
14.169 HOUSING COUNSELING ASSISTANCE PROGRAM $4,738
97.042 EMERGENCY MANAGEMENT PERFORMANCE GRANTS $4,384
20.205 HIGHWAY PLANNING AND CONSTRUCTION $3,810
17.801 JOBS FOR VETERANS STATE GRANTS $2,028
20.703 INTERAGENCY HAZARDOUS MATERIALS PUBLIC SECTOR TRAINING AND PLANNING GRANTS $861
14.239 HOME INVESTMENT PARTNERSHIPS PROGRAM $437
16.582 CRIME VICTIM ASSISTANCE/DISCRETIONARY GRANTS $427
84.126 REHABILITATION SERVICES VOCATIONAL REHABILITATION GRANTS TO STATES $353
16.001 LAW ENFORCEMENT ASSISTANCE NARCOTICS AND DANGEROUS DRUGS LABORATORY ANALYSIS $-496
16.824 EMERGENCY LAW ENFORCEMENT ASSISTANCE GRANT $-1,143