EIN: 386004521
UEI: NJTGBUGAVBF9
Audited by: Anderson, Tackman & Company, PLC
Oversight agency: 14 [Department of Housing and Urban Development]
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Data as of September 2, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on May 7, 2026. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by November 7, 2026 (65 days from today).
What is a management decision? →FAC accepted this audit on June 11, 2025 — management decision was due December 11, 2025.
The City contracted with a service agency for administration of the grant. Processes and procedures were in place related to the review of the reimbursement requests prior to submission. However, as it relates to other reporting requirements, there was no formalized review process prior to submission. Cause: The project is related to the demolition and clearance of the former hospital location. The City is the grantee, but Northern Michigan University Foundation is the property owner. The City reimbursed the property owner for allowable costs in accordance with the grant agreement. In order to assist with grant administration, the service agency received information not only from the City, but also the property owner related to the project. The overall project consisted of multiple phases; however, only portions of Phase I were covered by the grant agreement. When preparing one of the semi-annual CDBG Progress Reports, the service agency erroneously included amounts that were not related to the grant. Effect: One of the semi-annual CDBG Progress Reports submitted to the Michigan Economic Development Corporation was erroneous. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: When informed of the error, the service agency immediately reached out to the Michigan Economic Development Corporation (MEDC), the pass-through entity, for guidance on how to proceed with correcting the error. Prior to re-submitting a revised CDBG Progress Report, the service agency forwarded the report to a responsible official at the City for review. Review of the MEDC’s Single Audit Certification report did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. Repeat Finding: No. Recommendation: Procedures should be put into place that when a service agency is utilized for administering a federal grant(s) that all reports are reviewed by a responsible City official prior to submission to the federal agency. This includes, but is not limited to, reimbursement requests, intermittent reporting, and any other required reports. Views of Responsible Officials: Management agrees with the finding.
Show full finding ▾Hide full finding ▴2024-001 – Internal Controls Over Service Agencies Federal Agency: Department of Housing and Urban Development Program Name: Community Development Block Grant Assistance Listing Number: ALN 14.228 Pass-through Entity: Michigan Economic Development Corporation Grant Number: MSC 222028-ESB Criteria: Per 2 CFR 200.303, the recipient 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 City contracted with a service agency for administration of the grant. Processes and procedures were in place related to the review of the reimbursement requests prior to submission. However, as it relates to other reporting requirements, there was no formalized review process prior to submission. Cause: The project is related to the demolition and clearance of the former hospital location. The City is the grantee, but Northern Michigan University Foundation is the property owner. The City reimbursed the property owner for allowable costs in accordance with the grant agreement. In order to assist with grant administration, the service agency received information not only from the City, but also the property owner related to the project. The overall project consisted of multiple phases; however, only portions of Phase I were covered by the grant agreement. When preparing one of the semi-annual CDBG Progress Reports, the service agency erroneously included amounts that were not related to the grant. Effect: One of the semi-annual CDBG Progress Reports submitted to the Michigan Economic Development Corporation was erroneous. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: When informed of the error, the service agency immediately reached out to the Michigan Economic Development Corporation (MEDC), the pass-through entity, for guidance on how to proceed with correcting the error. Prior to re-submitting a revised CDBG Progress Report, the service agency forwarded the report to a responsible official at the City for review. Review of the MEDC’s Single Audit Certification report did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. Repeat Finding: No. Recommendation: Procedures should be put into place that when a service agency is utilized for administering a federal grant(s) that all reports are reviewed by a responsible City official prior to submission to the federal agency. This includes, but is not limited to, reimbursement requests, intermittent reporting, and any other required reports. Views of Responsible Officials: Management agrees with the finding.
reports be reviewed by a responsible City official prior to being submitted to a federal reporting agency. Responsible Party(ies): o Chief Financial Officer o City Manager Anticipated Completion Date: September 30, 2025
When preparing one of the quarterly reports the City erroneously included costs in the current quarter’s expenditures that were already included in a previous quarter’s expenditure amounts. Cause: The City’s Engineering department is performing services related to the grant including program management, construction management, along with engineering services. As a result, payroll costs are allocated to the grant. When preparing one of the Quarterly Progress Reports the wrong time range was used which resulted in duplication of some of the payroll expenditures. Effect: One of the Quarterly Progress Reports was over-stated. Cumulative expenditures on future Quarterly Progress Reports will be misstated. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: Review of other quarterly reports submitted during the fiscal year did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. When informed of the error, the City immediately reached out to the United States Department of Transportation Maritime Administration (MARAD) for guidance on how to proceeds with correcting the error. The City also reviewed, revised, and resubmitted any subsequent Quarterly Progress Reports that were impacted. Repeat Finding: No. Recommendation: Prior to submitting the Quarterly Progress Report a secondary review should be performed by someone other than the preparing to ensure the data properly reconciles to the City’s financial reporting system. Views of Responsible Officials: Management agrees with the finding.
Show full finding ▾Hide full finding ▴2024-002 – Internal Controls Over Reporting Federal Agency: Department of Transportation Program Name: Port Infrastructure Development Program Assistance Listing Number: ALN 20.823 Pass-through Entity: N/A Grant Number: 693JF72245018 Criteria: Per 2 CFR 200.303, the recipient 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: When preparing one of the quarterly reports the City erroneously included costs in the current quarter’s expenditures that were already included in a previous quarter’s expenditure amounts. Cause: The City’s Engineering department is performing services related to the grant including program management, construction management, along with engineering services. As a result, payroll costs are allocated to the grant. When preparing one of the Quarterly Progress Reports the wrong time range was used which resulted in duplication of some of the payroll expenditures. Effect: One of the Quarterly Progress Reports was over-stated. Cumulative expenditures on future Quarterly Progress Reports will be misstated. Questioned Costs: None. Identification of How Questioned Costs were Computed: N/A Perspective: Review of other quarterly reports submitted during the fiscal year did not result in any errors detected. Furthermore, review of the reimbursement requests did not reveal any errors which would have resulted in the City over or under-receiving federal reimbursements. When informed of the error, the City immediately reached out to the United States Department of Transportation Maritime Administration (MARAD) for guidance on how to proceeds with correcting the error. The City also reviewed, revised, and resubmitted any subsequent Quarterly Progress Reports that were impacted. Repeat Finding: No. Recommendation: Prior to submitting the Quarterly Progress Report a secondary review should be performed by someone other than the preparing to ensure the data properly reconciles to the City’s financial reporting system. Views of Responsible Officials: Management agrees with the finding.
2024-002 – Internal Controls Over Reporting Corrective Action Plan: The City will develop and implement procedures that require all reports be reviewed by a responsible City official, other than the preparer, prior to being submitted to a federal reporting agency. Responsible Party(ies): o Chief Financial Officer o City Manager Anticipated Completion Date: September 30, 2025
FAC accepted this audit on April 17, 2024 — management decision was due October 17, 2024.
FAC accepted this audit on April 17, 2023 — management decision was due October 17, 2023.
FAC accepted this audit on April 22, 2022 — management decision was due October 22, 2022.
FAC accepted this audit on May 22, 2022 — management decision was due November 22, 2022.
FAC accepted this audit on April 18, 2021 — management decision was due October 18, 2021.
Construction on the project started 20 days prior to the Federal award being approved by FEMA. Cause: Award approval took longer than anticipated and the City had already awarded the construction contract. With a limited construction season and the unknown impact of the COVID-19 pandemic on the ability to perform construction work. Effect: Costs incurred prior to the award are not eligible for reimbursement or for counting towards the City?s local match requirement. Questioned Cost(s): The City incurred $119,341 in project costs prior to the award and as such the costs are ineligible and do not count towards the City?s local share related to the project. Prospective: Finalization of the award and construction of the project occurred during the unusual circumstances that surrounded the COVID-19 pandemic. The pandemic was announced by the World Health Organization on March 11, 2020. Bids for Phase 1 of the Lakeshore Boulevard Relocation Project were opened on March 26, 2020. The construction contract was awarded at the April 13, 2020 City Commission meeting. Construction for the project began on April 22, 2020.The federal grant was approved by FEMA on May 12, 2020. Repeat Finding: No. Recommendation: Better care should be taken in the future to ensure that, when necessary for reimbursement under a federal program, costs associated with a project are not incurred prior to approval of the federal award. Management Response: See separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴2020-001 COSTS INCURRED PRIOR TO AWARD Federal Agency: Department of Homeland Security Federal Program: Pre-Disaster Mitigation Grant CFDA/Assistance Listing: 97.047 Pass-through Agency: Michigan State Police Project Number: PDMC-PJ-05-MI-2018-11 Criteria: Pre-Disaster Mitigation Grant Program requirements in the February 27, 2015 Hazard Mitigation Assistance (HMA) Guidance Part IV Section F.2 states that ?Costs associated with implementation of the activity but incurred prior to Federal award or final approval are not eligible (projects initiated or completed prior to Federal award or full approval of the project are not eligible).? Condition: Construction on the project started 20 days prior to the Federal award being approved by FEMA. Cause: Award approval took longer than anticipated and the City had already awarded the construction contract. With a limited construction season and the unknown impact of the COVID-19 pandemic on the ability to perform construction work. Effect: Costs incurred prior to the award are not eligible for reimbursement or for counting towards the City?s local match requirement. Questioned Cost(s): The City incurred $119,341 in project costs prior to the award and as such the costs are ineligible and do not count towards the City?s local share related to the project. Prospective: Finalization of the award and construction of the project occurred during the unusual circumstances that surrounded the COVID-19 pandemic. The pandemic was announced by the World Health Organization on March 11, 2020. Bids for Phase 1 of the Lakeshore Boulevard Relocation Project were opened on March 26, 2020. The construction contract was awarded at the April 13, 2020 City Commission meeting. Construction for the project began on April 22, 2020.The federal grant was approved by FEMA on May 12, 2020. Repeat Finding: No. Recommendation: Better care should be taken in the future to ensure that, when necessary for reimbursement under a federal program, costs associated with a project are not incurred prior to approval of the federal award. Management Response: See separate Corrective Action Plan.
2020-001 COSTS INCURRED PRIOR TO AWARD Management Response: The City will coordinate with contractors/vendors and permitting agencies to ensure that projects funded through federal reimbursements do not incur costs outside of the approved grant period. Responsible Party(ies): ? Karen Kovacs, City Manager ? Mary Schlicht, Chief Financial Officer ? Dennis Stachewicz, Director of Community Development Anticipated Completion Date: December 31, 2021
Multiple modifications to the scope of work were made without prior written approval including the addition of a multi-use pathway, parking lots, and the extension of the road an additional 200 feet. Cause: At the April 13, 2020 City Commission meeting due to concerns from the public, it was noted in the agenda that the then City Manager directed staff to prepare estimates for the construction of the multi-use pathway and parking lots in order to have those items completed in the summer of 2020 instead of Phase II of the Lakeshore Boulevard Relocation Project as originally planned. The permitted future change modification was only to be utilized if FEMA funding was realized. This type of modification was deemed to be common practice and has been utilized by the City in other projects without problem. Effect: Change in scope without prior written approval could result in the disallowance of costs. FEMA reviewed the change in scope of work and amended the federal portion of the project. The original federal portion of the project was $2,025,000 (or 75%); the proposed amended federal portion of the project is $1,966,188 (or 69%). Questioned Cost(s): None. Prospective: The Lakeshore Boulevard Relocation Project has been on the City?s future projects agenda for over 20 years. Multiple seasonal storms have left the road in need of repairs multiple times. The community is very passionate about the relocation project and the City relies heavily on community input and support. The City?s portion of the project was funded as part of a bond package and was budgeted for in the City?s 2020 budget. Repeat Finding: No. Recommendation: Prior authorization for change in scope related to federally funded projects should be communicated to appropriate personnel to ensure compliance with grants. Management Response: See separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴2020-002 CHANGE IN SCOPE OF WORK APPROVAL Federal Agency: Department of Homeland Security Federal Program: Pre-Disaster Mitigation Grant CFDA/Assistance Listing: 97.047 Pass-through Agency: Michigan State Police Project Number: PDMC-PJ-05-MI-2018-11 Criteria: Pre-Disaster Mitigation Grant Program requirements in the February 27, 2015 Hazard Mitigation Assistance (HMA) Guidance Part VI Section D.2 states that ?In accordance with 2 CFR Section 200.308, pass-through entities must obtain FEMA approval whenever there is a proposed scope of work change. Requests for changes to the scope of work after award are permissible as long as they are consistent with the intent of the program. Requests must be made in writing and demonstrate the need for the scope change. The request also should include a revised scope, schedule, and budget. Any scope of work changes are subject to all programmatic requirements, including EHP review requirements. All approvals will be at FEMA?s discretion.? Condition: Multiple modifications to the scope of work were made without prior written approval including the addition of a multi-use pathway, parking lots, and the extension of the road an additional 200 feet. Cause: At the April 13, 2020 City Commission meeting due to concerns from the public, it was noted in the agenda that the then City Manager directed staff to prepare estimates for the construction of the multi-use pathway and parking lots in order to have those items completed in the summer of 2020 instead of Phase II of the Lakeshore Boulevard Relocation Project as originally planned. The permitted future change modification was only to be utilized if FEMA funding was realized. This type of modification was deemed to be common practice and has been utilized by the City in other projects without problem. Effect: Change in scope without prior written approval could result in the disallowance of costs. FEMA reviewed the change in scope of work and amended the federal portion of the project. The original federal portion of the project was $2,025,000 (or 75%); the proposed amended federal portion of the project is $1,966,188 (or 69%). Questioned Cost(s): None. Prospective: The Lakeshore Boulevard Relocation Project has been on the City?s future projects agenda for over 20 years. Multiple seasonal storms have left the road in need of repairs multiple times. The community is very passionate about the relocation project and the City relies heavily on community input and support. The City?s portion of the project was funded as part of a bond package and was budgeted for in the City?s 2020 budget. Repeat Finding: No. Recommendation: Prior authorization for change in scope related to federally funded projects should be communicated to appropriate personnel to ensure compliance with grants. Management Response: See separate Corrective Action Plan.
2020-002 CHANGE IN SCOPE OF WORK APPROVAL Management Response: The City will communicate and wait for approval before proceeding on any change in scope of a federally funded project to ensure such changes are in compliance with the grant. Responsible Party(ies): ? Karen Kovacs, City Manager ? Mary Schlicht, Chief Financial Officer ? Dennis Stachewicz, Director of Community Development Anticipated Completion Date: December 31, 2021
FAC accepted this audit on September 28, 2021 — management decision was due March 28, 2022.
Construction on the project started 20 days prior to the Federal award being approved by FEMA. Cause: Award approval took longer than anticipated and the City had already awarded the construction contract. With a limited construction season and the unknown impact of the COVID-19 pandemic on the ability to perform construction work. Effect: Costs incurred prior to the award are not eligible for reimbursement or for counting towards the City?s local match requirement. Questioned Cost(s): The City incurred $119,341 in project costs prior to the award and as such the costs are ineligible and do not count towards the City?s local share related to the project. Prospective: Finalization of the award and construction of the project occurred during the unusual circumstances that surrounded the COVID-19 pandemic. The pandemic was announced by the World Health Organization on March 11, 2020. Bids for Phase 1 of the Lakeshore Boulevard Relocation Project were opened on March 26, 2020. The construction contract was awarded at the April 13, 2020 City Commission meeting. Construction for the project began on April 22, 2020.The federal grant was approved by FEMA on May 12, 2020. Repeat Finding: No. Recommendation: Better care should be taken in the future to ensure that, when necessary for reimbursement under a federal program, costs associated with a project are not incurred prior to approval of the federal award. Management Response: See separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴2020-001 COSTS INCURRED PRIOR TO AWARD Federal Agency: Department of Homeland Security Federal Program: Pre-Disaster Mitigation Grant CFDA/Assistance Listing: 97.047 Pass-through Agency: Michigan State Police Project Number: PDMC-PJ-05-MI-2018-11 Criteria: Pre-Disaster Mitigation Grant Program requirements in the February 27, 2015 Hazard Mitigation Assistance (HMA) Guidance Part IV Section F.2 states that ?Costs associated with implementation of the activity but incurred prior to Federal award or final approval are not eligible (projects initiated or completed prior to Federal award or full approval of the project are not eligible).? Condition: Construction on the project started 20 days prior to the Federal award being approved by FEMA. Cause: Award approval took longer than anticipated and the City had already awarded the construction contract. With a limited construction season and the unknown impact of the COVID-19 pandemic on the ability to perform construction work. Effect: Costs incurred prior to the award are not eligible for reimbursement or for counting towards the City?s local match requirement. Questioned Cost(s): The City incurred $119,341 in project costs prior to the award and as such the costs are ineligible and do not count towards the City?s local share related to the project. Prospective: Finalization of the award and construction of the project occurred during the unusual circumstances that surrounded the COVID-19 pandemic. The pandemic was announced by the World Health Organization on March 11, 2020. Bids for Phase 1 of the Lakeshore Boulevard Relocation Project were opened on March 26, 2020. The construction contract was awarded at the April 13, 2020 City Commission meeting. Construction for the project began on April 22, 2020.The federal grant was approved by FEMA on May 12, 2020. Repeat Finding: No. Recommendation: Better care should be taken in the future to ensure that, when necessary for reimbursement under a federal program, costs associated with a project are not incurred prior to approval of the federal award. Management Response: See separate Corrective Action Plan.
2020-001 COSTS INCURRED PRIOR TO AWARD Management Response: The City will coordinate with contractors/vendors and permitting agencies to ensure that projects funded through federal reimbursements do not incur costs outside of the approved grant period. Responsible Party(ies): ? Karen Kovacs, City Manager ? Mary Schlicht, Chief Financial Officer ? Dennis Stachewicz, Director of Community Development Anticipated Completion Date: December 31, 2021
Multiple modifications to the scope of work were made without prior written approval including the addition of a multi-use pathway, parking lots, and the extension of the road an additional 200 feet. Cause: At the April 13, 2020 City Commission meeting due to concerns from the public, it was noted in the agenda that the then City Manager directed staff to prepare estimates for the construction of the multi-use pathway and parking lots in order to have those items completed in the summer of 2020 instead of Phase II of the Lakeshore Boulevard Relocation Project as originally planned. The permitted future change modification was only to be utilized if FEMA funding was realized. This type of modification was deemed to be common practice and has been utilized by the City in other projects without problem. Effect: Change in scope without prior written approval could result in the disallowance of costs. FEMA reviewed the change in scope of work and amended the federal portion of the project. The original federal portion of the project was $2,025,000 (or 75%); the proposed amended federal portion of the project is $1,966,188 (or 69%). Questioned Cost(s): None. Prospective: The Lakeshore Boulevard Relocation Project has been on the City?s future projects agenda for over 20 years. Multiple seasonal storms have left the road in need of repairs multiple times. The community is very passionate about the relocation project and the City relies heavily on community input and support. The City?s portion of the project was funded as part of a bond package and was budgeted for in the City?s 2020 budget. Repeat Finding: No. Recommendation: Prior authorization for change in scope related to federally funded projects should be communicated to appropriate personnel to ensure compliance with grants. Management Response: See separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴2020-002 CHANGE IN SCOPE OF WORK APPROVAL Federal Agency: Department of Homeland Security Federal Program: Pre-Disaster Mitigation Grant CFDA/Assistance Listing: 97.047 Pass-through Agency: Michigan State Police Project Number: PDMC-PJ-05-MI-2018-11 Criteria: Pre-Disaster Mitigation Grant Program requirements in the February 27, 2015 Hazard Mitigation Assistance (HMA) Guidance Part VI Section D.2 states that ?In accordance with 2 CFR Section 200.308, pass-through entities must obtain FEMA approval whenever there is a proposed scope of work change. Requests for changes to the scope of work after award are permissible as long as they are consistent with the intent of the program. Requests must be made in writing and demonstrate the need for the scope change. The request also should include a revised scope, schedule, and budget. Any scope of work changes are subject to all programmatic requirements, including EHP review requirements. All approvals will be at FEMA?s discretion.? Condition: Multiple modifications to the scope of work were made without prior written approval including the addition of a multi-use pathway, parking lots, and the extension of the road an additional 200 feet. Cause: At the April 13, 2020 City Commission meeting due to concerns from the public, it was noted in the agenda that the then City Manager directed staff to prepare estimates for the construction of the multi-use pathway and parking lots in order to have those items completed in the summer of 2020 instead of Phase II of the Lakeshore Boulevard Relocation Project as originally planned. The permitted future change modification was only to be utilized if FEMA funding was realized. This type of modification was deemed to be common practice and has been utilized by the City in other projects without problem. Effect: Change in scope without prior written approval could result in the disallowance of costs. FEMA reviewed the change in scope of work and amended the federal portion of the project. The original federal portion of the project was $2,025,000 (or 75%); the proposed amended federal portion of the project is $1,966,188 (or 69%). Questioned Cost(s): None. Prospective: The Lakeshore Boulevard Relocation Project has been on the City?s future projects agenda for over 20 years. Multiple seasonal storms have left the road in need of repairs multiple times. The community is very passionate about the relocation project and the City relies heavily on community input and support. The City?s portion of the project was funded as part of a bond package and was budgeted for in the City?s 2020 budget. Repeat Finding: No. Recommendation: Prior authorization for change in scope related to federally funded projects should be communicated to appropriate personnel to ensure compliance with grants. Management Response: See separate Corrective Action Plan.
2020-002 CHANGE IN SCOPE OF WORK APPROVAL Management Response: The City will communicate and wait for approval before proceeding on any change in scope of a federally funded project to ensure such changes are in compliance with the grant. Responsible Party(ies): ? Karen Kovacs, City Manager ? Mary Schlicht, Chief Financial Officer ? Dennis Stachewicz, Director of Community Development Anticipated Completion Date: December 31, 2021
FAC accepted this audit on March 17, 2020 — management decision was due September 17, 2020.
FAC accepted this audit on March 23, 2019 — management decision was due September 23, 2019.
FAC accepted this audit on March 20, 2018 — management decision was due September 20, 2018.
FAC accepted this audit on March 6, 2017 — management decision was due September 6, 2017.
FAC accepted this audit on June 28, 2017 — management decision was due December 28, 2017.
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