FAC Explorer

Finding 519114 (2024-002)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2024
Accepted
2025-01-14
Audit: 337640
Organization: City of Detroit, Michigan (MI)
Auditor: Plante & Moran PLLC

AI Summary

  • Core Issue: There are significant deficiencies in internal controls over FEMA grant expenditures, leading to duplicate costs totaling $5,161.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) is lacking, as effective internal controls were not established to manage federal awards properly.
  • Recommended Follow-up: The City should assess and strengthen its manual processes, implementing effective controls to prevent future errors and ensure compliance.

Finding Text

Assistance Listing Number, Federal Agency, and Program Name - ALN 97.036, Department of Homeland Security, Disaster Grants - Public Assistance (Presidentially Declared Disasters) (FEMA) Federal Award Identification Number and Year - PA-05-MI-4607-PW-00098(0) Pass-through Entity - Michigan State Police Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The FEMA grant expenses are charged to various funds in the general ledger over several years but is managed and tracked by project in a manual spreadsheet that agrees to the amount of expenses reported on the fiscal year 2024 schedule of expenditures of federal awards (the "Schedule"). FEMA expenditures are reported on the Schedule when there is an award and expenditures. Given that the award is made subsequent to the expenditures being incurred, a manual spreadsheet is used to track expenditures being charged to the grant. There were instances of duplicated costs in the manual spreadsheet. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - The FEMA projects have periods of performances that began prior to fiscal year 2024. As a result, the City used spreadsheets to accumulate costs to charge to the projects. Given that manual processes carry a higher risk of error due to their reliance on human input, in addition to our allowability sample, we performed an analysis of the spreadsheet, which listed all costs charged to the grant during fiscal year 2024, and found 11 instances of duplicate costs totaling $5,161. Of the $5,161 submitted, FEMA reimburses ninety percent of the amount, i.e., $4,645. Cause and Effect - A lack of effective controls over the spreadsheet did not identify $5,161 of duplicative costs. The schedule of expenditures of federal awards was initially overstated by this amount. These costs have been excluded from the Schedule for the year ended June 30, 2024. Recommendation - We recommend the City continue to evaluate its processes and controls when manual processes are utilized to accumulate costs charged to a grant, including risk assessing for gaps that can cause noncompliance. Based on the gaps identified, we recommend the City implement effective controls to address the risks. Views of Responsible Officials and Corrective Action Plan - Detroit Water and Sewer Department (DWSD) management recognizes the importance of maintaining effective controls to ensure the accuracy and completeness of reported expenditures. The identified duplicate cost was an isolated occurrence caused by an oversight during the spreadsheet preparation process. While existing controls are in place, management will perform a secondary review of the end to end process to enhance these controls.

Corrective Action Plan

Federal Program, Assistance Listing Number and Name - ALN 97.036, Department of Homeland Security, Disaster Grants – Public Assistance (Presidentially Declared Disasters) (FEMA) Condition: Original Finding Description - The FEMA grant expenses are charged to various funds in the general ledger over several years but is managed and tracked by project in a manual spreadsheet which agrees to the amount of expenses reported on the fiscal year 2024 Schedule of Expenditures of Federal Awards (SEFA). FEMA expenditures are reported on the SEFA when there is an award and expenditures. Given that the award is made subsequent to the expenditures being incurred a manual spreadsheet is used to track expenditures being charged to the grant. There were instances of duplicated costs in the manual spreadsheet. Contact Person Responsible for Corrective Action / Anticipated Completion Date - Istakur Rahman; Anticipated completion date: June 2025 Planned Corrective Action - The identified duplicate cost was an isolated occurrence caused by an oversight during the spreadsheet preparation process. While existing controls are in place, management will perform a secondary review of the end-to-end process to enhance these controls.

Categories

Subrecipient Monitoring Internal Control / Segregation of Duties Matching / Level of Effort / Earmarking Allowable Costs / Cost Principles Reporting Significant Deficiency

Other Findings in this Audit

  • 519115 2024-003
    Material Weakness Repeat
  • 519116 2024-004
    Material Weakness
  • 519117 2024-004
    Material Weakness
  • 519118 2024-004
    Material Weakness
  • 519119 2024-005
    Material Weakness
  • 519120 2024-005
    Material Weakness
  • 519121 2024-005
    Material Weakness
  • 519122 2024-006
    Material Weakness
  • 519123 2024-006
    Material Weakness
  • 519124 2024-006
    Material Weakness
  • 1095556 2024-002
    Significant Deficiency
  • 1095557 2024-003
    Material Weakness Repeat
  • 1095558 2024-004
    Material Weakness
  • 1095559 2024-004
    Material Weakness
  • 1095560 2024-004
    Material Weakness
  • 1095561 2024-005
    Material Weakness
  • 1095562 2024-005
    Material Weakness
  • 1095563 2024-005
    Material Weakness
  • 1095564 2024-006
    Material Weakness
  • 1095565 2024-006
    Material Weakness
  • 1095566 2024-006
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
20.526 Buses and Bus Facilities Formula, Competitive, and Low Or No Emissions Programs $9.44M
93.914 Hiv Emergency Relief Project Grants $7.53M
14.239 Home Investment Partnerships Program $4.95M
14.241 Housing Opportunities for Persons with Aids $2.79M
93.686 Ending the Hiv Epidemic: A Plan for America Ryan White Hiv/aids Program Parts A and B $2.69M
10.557 Wic Special Supplemental Nutrition Program for Women, Infants, and Children $2.57M
14.231 Emergency Solutions Grant Program $2.53M
20.507 Federal Transit Formula Grants $2.24M
20.205 Highway Planning and Construction $1.98M
93.391 Covid-19 - Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $1.87M
14.920 Lead Hazard Control for High Risk Areas $1.55M
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $1.35M
14.231 Covid-19 - Emergency Solutions Grant Program $1.32M
16.738 Edward Byrne Memorial Justice Assistance Grant Program $798,748
21.023 Covid-19 - Emergency Rental Assistance Program $789,995
14.850 Public Housing Operating Fund $743,306
93.994 Maternal and Child Health Services Block Grant to the States $674,038
10.559 Summer Food Service Program for Children $562,094
14.905 Lead Hazard Reduction Demonstration Grant Program $526,534
21.027 Cocid-19 Coronavirus State and Local Fiscal Recovery Funds $454,561
20.507 Covid-19 - Federal Transit Formula Grants $403,873
14.239 Covid-19 - Home Investment Partnerships Program $351,577
16.753 Congressionally Recommended Awards $343,438
16.807 Covid-19 Voca Crime Victim Assistance Discretionary Grant Program $339,780
20.106 Covid-19 - Airport Improvement Program, Covid-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs $316,666
66.818 Brownfields Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements $266,516
93.767 Children's Health Insurance Program $234,136
93.917 Hiv Care Formula Grants $216,975
93.967 Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health $215,186
66.458 Clean Water State Revolving Fund $206,226
16.812 Second Chance Act Reentry Initiative $194,185
20.941 Strengthening Mobility and Revolutionizing Transportation (smart) Grants Program $193,332
15.929 Save America's Treasures $177,253
93.268 Covid-19 - Immunization Cooperative Agreements $158,747
20.616 National Priority Safety Programs $126,829
93.069 Public Health Emergency Preparedness $125,541
16.817 Byrne Criminal Justice Innovation Program $125,058
16.609 Project Safe Neighborhoods $116,170
15.904 Historic Preservation Fund Grants-in-Aid $111,505
16.575 Crime Victim Assistance $105,122
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $102,697
93.354 Covid-19 - Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $85,571
93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $83,212
14.218 Covid-19 Community Development Block Grants/entitlement Grants $82,184
93.136 Covid-19 - Injury Prevention and Control Research and State and Community Based Programs $60,230
16.710 Public Safety Partnership and Community Policing Grants $59,842
14.900 Lead Hazard Reduction Grant Program $58,103
93.940 Hiv Prevention Activities Health Department Based $50,783
16.590 Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program $38,618
93.778 Medical Assistance Program $34,101
93.217 Family Planning Services $30,672
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $27,832
93.361 Covid-19 - Nursing Research $26,641
97.067 Homeland Security Grant Program $26,514
93.421 Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nations Health $25,881
45.024 Promotion of the Arts Grants to Organizations and Individuals $24,761
16.034 Covid-19 Coronavirus Emergency Supplemental Funding Program $23,992
14.218 Community Development Block Grants/entitlement Grants $19,479
16.588 Violence Against Women Formula Grants $18,538
97.044 Assistance to Firefighters Grant $18,435
20.500 Federal Transit Capital Investment Grants $13,891
97.042 Emergency Management Performance Grants $11,669
16.036 Comprehensive Forensic Dna Analysis Grant Program $5,764
93.268 Immunization Cooperative Agreements $5,645
93.008 Medical Reserve Corps Small Grant Program $5,132
20.600 State and Community Highway Safety $4,698
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $4,341
97.036 Covid-19 - Disaster Grants - Public Assistance (presidentially Declared Disasters) $4,196
10.558 Child and Adult Care Food Program $1,720
93.946 Cooperative Agreements to Support State-Based Safe Motherhood and Infant Health Initiative Programs $1,544