Finding Text
Assistance Listing, Federal Agency, and Program Name - 66.818, U.S. Environmental Protection Agency, Brownfields Assessment and Cleanup Cooperative Agreements; 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Federal Award Identification Number and Year - ALN 21.027 SLFRP0127
Pass through Entity - ALN 21.027 - State of Michigan
Finding Type - Material weakness
Repeat Finding - Yes
2023-002
Criteria - The Single Audit Act and Uniform Guidance require a nonfederal entity that expends $750,000 or more of federal awards in a fiscal year to have a single or program-specific audit. 2 CFR §200.508 (b) indicates that the auditee must prepare financial statements, including the schedule of expenditures of federal awards in accordance with 2 CFR §200.510. Additionally, 2 CFR §200.502 describes the basis for determining the timing of when federal awards are deemed expended and, therefore, reportable on the schedule.
Condition - The schedule of expenditures of federal awards (SEFA) was not accurate.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - During the fiscal year ended September 30, 2024, the City expended approximately $2,831,000 of federal funding. The initial draft of the SEFA included the following inaccuracies:
ALN 66.818 - The expenditures reported on the SEFA were understated by $148,474.
ALN 21.027 - The expenditures reported on the SEFA were overstated by $2,078,221.
The SEFA was also ovestated by $116,625 related to a non federal program.
The errors noted above have been corrected on the SEFA as of September 30, 2024.
Cause and Effect - Controls in place did not ensure the SEFA was complete and accurate for the fiscal period under audit. The errors resulted in the overstatement of federal expenditures.
Recommendation - We recommend the City implement a process to ensure that the SEFA is complete and accurate.
Views of Responsible Officials and Planned Corrective Actions - The City will review its process for identifying and communicating federal grant expenditures to its auditors.