Finding 574757 (2024-003)

Identification of the Federal Program: Federal Agency and Program Name: U.S. Department of Homeland Security Disaster Grants – Public Assistance (Presidentially Declared Disasters) Pass Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass Through Award Number: 4494-DR-MI Pass through Award Period: 7/1/2022-4/30/2023 Assistance Listing #: 97.036 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that the non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per FEMA’s Public Assistance Program and Policy Guide V4, “The Subrecipient must provide documentation to support the actual costs within 90 days of work completion” Per FEMA FAQ: COVID-19 Pandemic: Public Assistance Disposition Requirements for Equipment and Supplies, Version 2, Question 14. Will FEMA allow stockpiling of equipment and supplies after May 11, 2023? “FEMA will apply the 90% federal cost share to funding for all eligible costs for work performed and items used from July 2, 2022, through May 11, 2023. FEMA will only reimburse for supplies purchased based on a justifiable need to be used or distributed by May 11, 2023. If supplies were purchased during the incident/eligibility period but ultimately not needed for pandemic response, those supplies would become part of the applicant’s stock and would be subject to disposition requirements.” Condition: During our audit we identified $1,077,759 in costs, included in the project 10 application, where the Personal Protective Equipment (PPE) and other COVID related supplies were not used within the period of performance outlined within the project worksheet. Cause: Corewell did not complete the inventory and usage analysis prior to submission of the project application to FEMA. Effect or Potential Effect: As a result of including PPE and other COVID related supplies that were not used prior to the specified period of performance, Corewell overstated the FEMA expenditures in the project 10 application. In addition, not completing the inventory and usage analysis prior to submission of the application could also potentially lead to requesting funding for such costs. Questioned Costs: $1,077,759 Context: There were three FEMA obligations during FY 2024. We identified the overstatement of expenditures in one of the projects (project 10) with an obligation amount of $6,732,507. The period of performance as specified within the project 10 application is July 2, 2022 to April 30, 2023 and $1,077,759 of costs were not used by April 30, 2023. The overstatement represents approximately 16% of the amounts reported in the project 10 application and 14% of the total FEMA obligations in FY 2024. The total federal expenditures for FEMA for FY 2024 were $7,795,530. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend management strengthen its internal controls and procedures and timely perform the inventory and usage of costs analysis prior to submission to FEMA. Views of Responsible Officials: Management will develop a process to perform, document, and sign off on a thorough claim review to validate that all final adjustments have been submitted prior to submitting the Request for Reimbursement to the State.