Finding Text
#2025-004 – Major Federal Award Finding – Reporting; Procurement and Suspension and Debarment; Subrecipient Monitoring; Allowable Costs/Cost Principles Nature of Finding: Maintenance of Documentation/Records – Compliance Finding and Significant Deficiency in Internal Control over Compliance This is a repeat of prior year #2024-005. Criteria/Condition: Documentation was not maintained to support financial data provided in reports submitted to the funding source. Documentation was also not maintained to support certain procurement procedures. Per 2 CFR 200.334, financial records and supporting documentation must be maintained for three years from the date of the final financial report. Per 2 CFR 200.318(i), recipients must maintain records sufficient to detail the history of each procurement transaction, including (among other items) rationale for contractor selection or rejection. Cause/Context: The following activities did not consistently have supporting documentation: Expenditure balances reported to the State of Michigan in quarterly reports were not amended or reconciled to the final accounting records for each reporting period. The accounting periods were impacted by various transactions between the dates of the grant expenditure reports and the close of the respective period financial statement. Performance of subrecipient and contractor/vendor suspension and debarment search on SAM.gov prior to September 2025. No documentation was maintained to support review for the review of processed payroll registers for two of the three pay periods tested. For 1 of the 7 employee wage allocations tested, no documentation was retained to support independent review of the allocation. Effect: Evidence to support a reconciliation between reports submitted to a funding source and the general ledger is not readily available. Evidence to support that the appropriate contractor/vendor vetting process was conducted is not available. Recommendation: The Organization should produce and maintain supporting documentation for all reports submitted to funding sources, including information to reconcile reports to the final financial statements for the respective period and resolution of any reporting differences with the funding agency. We also recommend that the Organization maintain all documentation to support the decision process associated with procurement. Views of Responsible Officials and Planned Corrective Actions: Since the Finance Manager's arrival, a process has been implemented to reconcile quarterly expenditure reports submitted to the State of Michigan against the general ledger; this reconciliation has become clearer and more consistent with each subsequent period. Beginning in September 2025, suspension and debarment checks on SAM.gov are performed for every new vendor and subrecipient — owned by the Executive Director of the Center for Adult College Success for Center vendors and the Finance Manager for TalentFirst vendors, with all checks reviewed by the Finance Manager. Employee wage allocations are now supported by timesheets and documented on the monthly journal accrual e-signature form, which retains the allocation and its approval electronically.