Finding 1238758 (2025-001)

2025-001 Department of the Treasury, Passed through the State of Michigan Federal Financial Assistance Listing 21.029, CPFFN0190, 2025 COVID-19 – Coronavirus Capital Projects Fund Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance Criteria – Management is responsible for establishing and maintaining internal controls to ensure the Schedule of Expenditures of Federal Awards (SEFA) is prepared completely and accurately in accordance with Uniform Guidance requirements. Such controls should include procedures to identify all federal expenditures incurred during the reporting period and ensure proper year-end cutoff. Condition – During our audit procedures, we identified errors in the preparation of the SEFA. Specifically, certain 2025 federal expenditures incurred during the year were omitted from the original SEFA provided for audit, while certain expenditures related to 2024 activity were included in the 2025 SEFA. The Cooperative subsequently reconciled the schedule and revised the SEFA to correct these errors. Cause – The Cooperative's controls over the preparation and review of the SEFA were not sufficiently designed or operating effectively to ensure federal expenditures were accurately accumulated and reported in the proper fiscal year. Effect – As a result, the SEFA was initially misstated and required adjustment during the audit. A failure to identify and correct such errors could result in a material misstatement of the SEFA. Questioned Costs – None reported. Context/Sampling – The finding relates to the overall process used to prepare the SEFA. Repeat Finding from Prior Year(s) – No. Recommendation – We recommend the Cooperative strengthen its SEFA preparation and review procedures by performing a reconciliation of reported federal expenditures to the underlying grant activity, including a review of year-end accounts payable, retainage balances, and other cutoff-related items, to ensure all federal expenditures are reported within the SEFA in the appropriate fiscal year. Views of Responsible Officials – There is no disagreement with the audit finding.