FAC Explorer

Finding 1229417 (2024-002)

Material Weakness Repeat Finding
Requirement
H
Questioned Costs
-
Year
2024
Accepted
2026-09-11
Audit: 410809
Organization: MICHIGAN FOUNDERS FUND (MI)
Auditor: CBIZ CPAS PC

AI Summary

  • Core Issue: The Organization charged costs of $23,664 to a federal award outside the approved budget period.
  • Impacted Requirements: Costs must be incurred within the federal award's period of performance; inaccuracies were found in the schedule of expenditures.
  • Recommended Follow-Up: Improve the review process for grant expenditures to ensure compliance with all conditions before recognition.

Finding Text

Criteria: The Organization may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Exceptions were identified during testing of compliance with period of performance requirements. Specifically, one of thirty-seven sampled expenditures was incurred prior to the eligible grant period; two additional nonsampled expenditures were identified to have been incurred prior to the eligible grant period. In addition, two of thirty-seven sampled expenditures were incurred within the eligible grant period but subsequent to the reporting year under audit; one additional non-sampled expenditure was identified to have been similarly incurred outside the reporting period. Cause: The Organization did not have adequately designed or implemented internal controls to ensure expenditures were adequately reviewed and recorded within the appropriate period of performance for the federal award. Effect or Potential Effect: As a result, the Organization incurred and charged $23,664 of costs to the federal award outside of the approved period of performance. Additionally, the Organization’s unadjusted schedule of expenditures of federal awards included inaccurate information, which may impact decision-making by management or the granting agency. Management recorded an adjusting journal entry of $9,482 to remove a portion of these costs from federal expenditures reported on the schedule of expenditures of federal awards. However, $23,664 of remaining questioned costs were not adjusted and continue to be reported as federal expenditures. Questioned Costs: $33,146 Repeat Finding: No Recommendation: We recommend that management enhance the reconciliation and review process for government grant expenditures recognized as revenue to ensure all required conditions are satisfied prior to recognition.

Corrective Action Plan

Remediation Steps Completed: MFF will implement the following corrective actions between June 2026 and September 2026 to remediate the finding and address the cause of the finding. • A new contract financial firm and contracted Financial Officer was selected and engaged in February 2025 for regular and ongoing financial management and oversight. • Michigan Founders Fund has implemented balance sheet reconciliations to be prepared and completed by identified staff/consultants monthly to ensure expenditures are correctly captured in a timely fashion. • Michigan Founders Fund has documented accounting policies and procedures to reflect month-end processes and provide training to staff on current and future policies in coordination with contracted support. Implementation, Monitoring, and Sustainability of the Corrective Action: Michigan Founders Fund has implemented the above corrective actions to remediate the finding and address the cause of the finding. To ensure these controls remain effective beyond initial adoption and specifically prevent recurrence of costs charged outside the approved period of performance, MFF has built the following monitoring controls into its normal operating cycle: • As part of the monthly balance sheet reconciliation, designated staff/contractors will verify that all expenditures charged to the award were both incurred and obligated within the award's approved period of performance before the entry is posted. Any transaction falling outside the eligible period will be flagged, held from posting to the federal award, and routed for review. • The Executive Director will continue to review and approve all monthly journal entries prior to posting to the general ledger, with specific attention to period-of-performance alignment for federally funded transactions. Approval will be evidenced in writing and retained in accordance with the record retention requirements. • In addition to monthly reconciliations, the Financial Officer will perform a quarterly reconciliation of cumulative expenditures against the award's approved budget period and reporting deadlines, confirming that reported costs align with the eligible period of performance. • MFF's documented accounting policies and procedures will include specific cutoff procedures for the close of the period of performance, ensuring costs are not recorded in the wrong period and that any year-end or award-end accruals are properly evaluated. • All staff and contractors involved in processing or approving federally funded transactions will receive training on period-of-performance requirements as part of onboarding and as part of the annual policy review, ensuring the control does not depend on any single individual's institutional knowledge. • The Executive Director, with support from the Financial Officer, is responsible for overall monitoring and execution of these corrective actions. Any identified instance of an out-of period expenditure will be documented, corrected, and reported to the Board (or Finance/Audit Committee) at its next regularly scheduled meeting. Anticipated Completion Date: September 2026 Contact Person: Rishi Moudgil, Executive Director Contact Phone Number: (313) 338-8292

Categories

Reporting Subrecipient Monitoring Allowable Costs / Cost Principles Period of Performance

Other Findings in this Audit

  • 1229418 2024-003
    Material Weakness Repeat
  • 1229419 2024-004
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $727,936
11.307 ECONOMIC ADJUSTMENT ASSISTANCE $81,746