FAC Explorer

Finding 1215673 (2025-005)

Material Weakness Repeat Finding
Requirement
J
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 misreported prior year program income, leading to potential noncompliance with federal regulations.
  • Impacted Requirements: Accurate accounting and reporting of program income as per 2 CFR § 200.307 is essential for compliance with HUD guidelines.
  • Recommended Follow-Up: Conduct a thorough review of past program income records and coordinate with HUD to ensure proper future reporting and expenditure.

Finding Text

Reporting of Prior Year Program Income Finding Type. Material Noncompliance; Material Weakness in Internal Controls over Compliance. (Program Income) 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. In accordance with 2 CFR § 200.307, program income must be used in accordance with the terms and conditions of the federal award and must be accounted for and reported accurately. Recipients are required to reconcile program income received and expended during the grant period to ensure it is used for allowable purposes and properly reflected in financial reports. Failure to reconcile and report program income may result in noncompliance with federal grant regulations and could impact the allowability of costs charged to the award. Condition. The County recognized a substantial amount of program income during the fiscal year ended September 30, 2025, for program income that was received in prior periods but incorrectly reported as unearned over many years. It is unclear what portion of this prior year unearned revenue was reported to the Department of Housing and Urban Development ("HUD") through the Integrated Disbursement and Information System ("IDIS") now that the revenue has been properly recognized in the general ledger. Cause. In prior years, the County did not have the proper internal controls in place to ensure that program income was properly tracked, monitored and reported. Effect. The County has a risk of inaccurately reporting program income to HUD. The County is also exposed to an increased risk noncompliance could occur and not be prevented or detected by the County's internal controls. Questioned Costs. None. Recommendation. We recommend the County review its prior year records to determine which portion of the currently recognized revenue has already been reported to HUD. Additionally, the County's Neighborhood and Housing Development ("NHD") department should coordinate with HUD to establish the appropriate approach for reporting and expending this program income going forward. View of Responsible Officials. An in-depth review of all program income activity dating back to 1995 is currently underway within both the general ledger and the IDIS system. The purpose of this review is to determine the total amount of program income received and reported to HUD. Upon completion of the review, the County will collaborate with HUD to determine the appropriate use and expenditure of the identified funds in accordance with applicable program requirements.

Corrective Action Plan

Reporting of Prior Year Program Income Auditor Description of Criteria, Condition, and Effect: In accordance with 2 CFR § 200.307, program income must be used in accordance with the terms and conditions of the federal award and must be accounted for and reported accurately. Recipients are required to reconcile program income received and expended during the grant period to ensure it is used for allowable purposes and properly reflected in financial reports. Failure to reconcile and report program income may result in noncompliance with federal grant regulations and could impact the allowability of costs charged to the award. The County recognized a substantial amount of program income during the fiscal year ended September 30, 2025, for program income that was received in prior periods but incorrectly reported as unearned over many years. It is unclear what portion of this prior year unearned revenue was reported to the Department of Housing and Urban Development ("HUD") through the Integrated Disbursement and Information System ("IDIS") now that the revenue has been properly recognized in the general ledger. The County has a risk of inaccurately reporting program income to HUD. The County is also exposed to an increased risk noncompliance could occur and not be prevented or detected by the County's internal controls. Auditor Recommendation: We recommend the County review its prior year records to determine which portion of the currently recognized revenue has already been reported to HUD. Additionally, the County's Neighborhood and Housing Development ("NHD") department should coordinate with HUD to establish the appropriate approach for reporting and expending this program income going forward. Corrective Action: An in-depth review of all program income activity dating back to 1995 is currently underway within both the general ledger and the IDIS system. The purpose of this review is to determine the total amount of program income received and reported to HUD. Upon completion of the review, the County will collaborate with HUD to determine the appropriate use and expenditure of the identified funds in accordance with applicable program requirements. 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

HUD Housing Programs Material Weakness Reporting Program Income Internal Control / Segregation of Duties

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
  • 1215654 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

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