FAC Explorer

Finding 1229418 (2024-003)

Material Weakness Repeat Finding
Requirement
ABHL
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 lacks sufficient documentation to prove that internal controls over compliance are functioning as required.
  • Impacted Requirements: This affects compliance with federal statutes and regulations, particularly in areas like cost reviews and financial reporting.
  • Recommended Follow-Up: Strengthen internal controls by retaining evidence of reviews, developing a procurement policy, and ensuring independent review of financial reports.

Finding Text

Criteria: The Organization is responsible for establishing and maintaining effective internal control over compliance with applicable federal statutes, regulations, and federal awards, and for retaining sufficient documentation to demonstrate that such controls are operating as intended. Condition: During our testing, we identified various instances where sufficient evidence of internal control performance was not maintained across multiple compliance requirements: • Costs Incurred (Non-Payroll and Payroll): The Organization has established procedures whereby non-payroll expenditures are reviewed by the Executive Director, including comparison to supporting invoices and documentation followed by an approval via email prior to payment. Similarly, payroll is reviewed each pay period by the Executive Director through comparison of individual and total period wages to a payroll tracking workbook with allocated time by grant. Review is evidence by email when completed. Documentation evidencing these reviews was not maintained to demonstrate that controls were performed. Of our thirty-seven sample items tested, there were no instances of noncompliance pertaining to allowable costs. • Reporting: Quarterly financial reports are prepared by one individual and reviewed by a different individual in management prior to submission to the federal agency. However, evidence of this independent review was not consistently retained. Evidence supporting timely submission was also not maintained, though report dates indicated compliance with required deadlines. Cause: The Organization did not design or maintain sufficient internal controls to ensure consistent performance and documentation of control activities in accordance with federal requirements. Effect or Potential Effect: Due to the absence of adequate control documentation and formalized procedures, the Organization risks noncompliance with federal regulators that could occur and remain undetected. Questioned Costs: None Repeat Finding: No Recommendation: We recommend that management strengthen its internal control framework to ensure accurate and timely reporting, including: • Implement procedures to consistently retain evidence of review and approval for all costs and expenditures. • Develop, formally document, and implement a procurement policy that complies with Uniform Guidance, including maintaining documentation supporting adherence to procurement requirements. • Enhance controls over financial reporting by ensuring that all reports are reviewed by an independent individual and evidence of such review is retained.

Corrective Action Plan

Remediation Steps Completed: In advance of this finding, MFF began remediation for this issue starting in 2024, through key hires, and extended in 2025 with the development of a full suite of financial and procurement policies. The steps taken are as follows: • A new Executive Director was hired on May 1, 2024 to run the organization. • A full-time Impact Manager was hired on December 9, 2024 to oversee grant management, reporting, and compliance. • A new contract finance and accounting firm and contract Financial Officer was selected and engaged in February 2025 for regular and ongoing financial management, accounting, and oversight. • A full-time Operations Director was hired on August 21, 2025 to oversee organizational systems development and management. • A full suite of financial and procurement policies was drafted in the Fall of 2025 with input and guidance from the Financial Officer, Impact Manager, and Executive Director and informed by procurement standards as described in 2 CFR Part 200, Subpart D. • The Financial and Procurement Policies were formally adopted by the Michigan Founders Fund Board of Directors on June 15, 2026. • The Financial and Procurement Policies were implemented organization-wide on July 15, 2026. Implementation, Monitoring, and Sustainability of the Corrective Action: To ensure this corrective action is implemented and remains effective beyond initial adoption, MFF built the following monitoring controls: The Financial Officer and Impact Manager will follow a documented monthly close checklist that applies the newly adopted Financial and Procurement Policies consistently across all federal awards, ensuring transactions are coded, reviewed, and approved using the same process each month. • For every cost charged to a federal award, MFF will retain evidence of review and approval — including approver name, date, and basis for allowability. This evidence will be centrally filed by grant/award number to support ready retrieval during monitoring or audit. • The Executive Director, Financial Officer, and Impact Manager will conduct a quarterly review of internal controls over compliance with all staff and contractors who have a role in federal award administration. • The Financial and Procurement Policies are scheduled for internal review at least annually, with the next review scheduled for July 1, 2027, or sooner if required. o All staff and board members with purchasing authority will receive training on the new Financial and Procurement Policies at the time of adoption; training is repeated annually and incorporated into new-hire onboarding. o The Executive Director has been designated as the official with overall responsibility for procurement-policy compliance; the Operations Director is responsible for day-to-day monitoring and enforcement of the policy, including maintenance of complete procurement files. • MFF will maintain a written internal controls procedures manual, distinct from the Boardadopted policies, that documents the step-by-step mechanics of compliance processes (e.g., approval routing, filing conventions, reporting deadlines). • These monitoring activities will be reviewed by the Executive Director and Financial Officer on a quarterly basis, with any unresolved control deficiencies escalated to the Board within 60 days of identification. Anticipated Completion Date: September 2026 Contact Person: Rishi Moudgil, Executive Director Contact Phone Number: (313) 338-8292

Categories

Procurement, Suspension & Debarment Allowable Costs / Cost Principles Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1229417 2024-002
    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