HEALTH DEPARTMENT OF NORTHWEST MICHIGANLocal Government

Finding 2023-001 Assistance Listing # 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Allowable Costs/Cost Principles Immaterial Noncompliance Criteria: Allowable costs for the federal award program are to be used for non-research activities that (1) strengthen epidemiologic capacity; (2) enhance laboratory capacity; (3) improve information systems; and (4) enhance collaboration among epidemiology, laboratory and information system components of public health departments. Condition: The Health Department charged a community luncheon to the federal award program that was not related to the purpose of the grant. Cause: Department supervisors overseeing the coding of expenditures miscoded the expenditure to the federal award program. Effect: An unallowed expenditure was charged to the federal award program. Context: The Health Department miscoded an expenditure to the federal award program in error. Upon discovery of the miscoded expenditure during audit testing, the questioned expenditure was removed from the federal award program, and other excess program-eligible costs were coded against the federal award program in its place. Questioned Costs: Known questioned costs are below the reporting threshold of $25,000. Recommendation: Per the Health Department's internal control policies, department supervisors are responsible for coding of grant expenditures. We recommend department supervisors carefully review the coding of individual transactions to ensure reasonableness of expenditures charged to federal award programs. Management's Response and Planned Corrective Action: Accounting leadership will review general Federal guidelines for allowable costs with directors and supervisors. Additionally, directors and supervisors will be reminded of their responsibility for, and the importance of, carefully reviewing coding of individual program expenditures to align with Federal guidelines. Accountants currently meet monthly with directors and supervisors to review the financial status of each program, including unreasonable budget variances and the reasonableness of current expenditure levels. Going forward, they will also review the individual expenditures in categories deemed most likely to have unallowable transactions. Responsible Party for Corrective Action: Shannon Klownowski, Chief Financial and Administrative Officer Anticipated Completion Date: January 2024. -

Finding 2022-001 Assistance Listing # 93.498 - Provider Relief Funds (PRF) and American Rescue Plan (ARP) Rural Distribution Reporting Significant Deficiency in Internal Control over Compliance Immaterial Noncompliance Criteria: Grantees are required to file a report on the Provider Relief Fund Reporting portal, if payments in excess of $10,000 were received. Reporting should be completed based on either loss of revenues or other PRF expenditures. Condition: The Health Department utilized PRF funds for lost revenues but filed the Period 2 PRF report showcasing expenditures rather than lost revenues as intended. Cause: Limited guidance was available to the Health Department at the time the Period 2 report was required to be filed. Effect: The Period 2 report was inadvertently completed utilizing expenditures rather than claiming lost revenues. Context: The Health Department incurred lost revenues equal to PRF funds received. Questioned Costs: None. Recommendation: Follow guidance available to correctly file reports within the portal.

Assistance Listing # 93.323 - Epidemiology and Laboratory Capacity for Infectious Disease Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance Immaterial Noncompliance Criteria: 2 CFR Part 180 requires grantee may not make any award to any party which is suspended or debarred or is otherwise excluded from participation in federal contracts. Condition: The Department did not verify a procurement contractor was not suspended or debarred. Cause: The Department circumvented internal controls to contract with a procurement vendor without verifying the vendor was not suspended or debarred or was otherwise excluded from participating in federal contracts. The Department relied upon the fact another government agency utilized the same vendor for a similar procurement project. Effect: The Department may have contracted with suspended or debarred vendors. However, during the audit it was verified the vendor was not suspended or debarred. Questioned Costs: None. Recommendation: Follow established procedures to verify vendors are not suspended or debarred, or otherwise excluded from participation in federal contracts prior to executing a subcontract. Management's Response and Planned Corrective Action: Distribute the Department's Procurement, Suspension and Debarment policy to appropriate management and purchasing staff and discuss with them the requirement to use the Excluded Party List System at www.sam.gov to verify a vendor is not suspended, debarred or otherwise excluded from participating in federal contracts prior to contracting for a transaction exceeding $25,000. Responsible Party for Corrective Action: Andrea Pierce, Finance Supervisor