City of Benton Harbor, Michigan

2025-001 - Equipment and Real Property Management Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Real Property and Equipment Management). Program. Community Development Block Grant - Entitlement Grants Cluster; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; Award Numbers B22-MC-26-0035 and B20-MW-26-0035. Criteria. The Uniform Guidance requires entities that purchase equipment and real property to maintain records which indicate which of those assets were purchased with federal funds, and to conduct a physical inventory of equipment purchased with federal funds at least once every two years. Condition. The City has not conducted a physical inventory of equipment in accordance with the requirements of the Uniform Guidance. Cause. This condition was caused by a lack of complete understanding of the requirements associated with equipment and real property management. Effect. As a result of this condition, the City did not comply with the requirements of the Uniform Guidance, which could also result in further noncompliance if equipment and real property are disposed in future years as a result of not having completed the physical inventory. Questioned Costs. No costs have been questioned as a result of this finding inasmuch as no disallowed costs were identified. Recommendation. We recommend that the City take physical inventory counts of all equipment and real property purchased with federal funds at least once every two years. View of Responsible Officials. Management concurs with the finding. The City will perform an inventory of equipment purchased with federal funds.

2025-002 - Timeliness of Federal Funding Accountability and Transparency Act Reporting Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Reporting). Program. Community Development Block Grant - Entitlement Grants Cluster; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; Award Numbers B22-MC-26-0035 and B20-MW-26-0035. Criteria. Prime awardees must complete Federal Funding Accountability and Transparency Act Reporting (FFATA) for subawards and sub-contracts equal to or greater than $30,000. Reports must be filed within 30 days of the subaward to the FFATA reporting website SAM.gov. Condition. The City completed its FFATA reporting after the reporting deadline of 30 days. Cause. This condition was caused by a lack of complete understanding of the reporting requirements associated with FFATA. Effect. As a result of this condition, the City did not comply with the requirements of the Uniform Guidance to complete FFATA reporting in a timely manner. Questioned Costs. No costs have been questioned as a result of this finding inasmuch as no disallowed costs were identified. Recommendation. We recommend that the City complete FFATA reporting requirements in a timely manner. View of Responsible Officials. Management concurs with the finding. The City will complete FFATA reporting requirements in a timely manner going forward.

2022-001 ? Written Policies and Procedures Required by the Uniform Grant Guidance (Repeat) Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Allowable Costs/Cost Principles, Cash Management and Procurement, Suspension and Debarment). Program. Community Development Block Grants/Entitlement Grants; ALN Number 14.218; Award Numbers B21-MC-26-0035 and B20-MW-26-0035. Coronavirus State and Local Fiscal Recovery Funds; ALN Number 21.027; Award Numbers CKA9Q3H2PXH7 and SLFRP0127. Reducing Lead in Drinking Water Program (SDWA 1459B); ALN Number 66.443; Award Number 2105PKX003. Criteria. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014 to have written policies pertaining to various areas, including: 1) Payments (draws of federal funds and how to minimize the time elapsing between the receipt of federal funds and the disbursement to contractors/employees/subrecipients) (?200.302 (6)); 2) Procurement (including bidding and a conflict of interest policy) (?200.318); 3) Allowability of costs charged to federal programs (?200.302 (7)); 4) Compensation (personnel and benefits policy) (?200.430 and ?200.431); and 5) Travel costs (including mileage and per diem) (?200.474). Condition. Although the City has processes in place to cover these areas, and drafts of formal written policies covering the above items that address all of the areas required by the Uniform Guidance have been developed, these policies have not yet been formally approved and adopted by the City. Cause. This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect. As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing did not reveal any unallowed costs or excess cash draws. Recommendation. We recommend that the City review and approve the draft policies as soon as practical, but no later than the end of fiscal year 2023. View of Responsible Officials. The City has prepared a policies and procedures manual for the Community Development Block Grant and other federal grant programs, which was approved by the City Commission subsequent to the end of the fiscal year under audit.

2021-001 ? Written Policies and Procedures Required by the Uniform Grant Guidance Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Allowable Costs/Cost Principles, Cash Management and Procurement, Suspension and Debarment). Program. Capitalization Grants For Clean Water State Revolving Funds; ALN Number 66.458; Award Number 5682-01. Capitalization Grants For Drinking Water State Revolving Funds; ALN Number 66.468; Award Number 7464-01. Criteria. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014 to have written policies pertaining to various areas, including: 1) Payments (draws of federal funds and how to minimize the time elapsing between the receipt of federal funds and the disbursement to contractors/employees/subrecipients) (?200.302 (6)); 2) Procurement (including bidding and a conflict of interest policy) (?200.318); 3) Allowability of costs charged to federal programs (?200.302 (7)); 4) Compensation (personnel and benefits policy) (?200.430 and ?200.431); and 5) Travel costs (including mileage and per diem) (?200.474). Condition. Although the City has processes in place to cover these areas, and drafts of formal written policies covering the above items that address all of the areas required by the Uniform Guidance have been developed, these policies have not yet been formally approved and adopted by the City. Cause. This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect. As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing did not reveal any unallowed costs or excess cash draws. Recommendation. We recommend that the City review and approve the draft policies as soon as practical, but no later than the end of fiscal year 2022. View of Responsible Officials. The Community and Economic Development (CED) Department is in the process of compiling policies and procedures and has drafted policies for Financial Management, Procurement, Allowability of Costs, Compensation and Travel. The remaining required policies and procedures will be completed and all will be approved in fiscal year-end 2022.

2019-001 ? Errors and Omissions in HUD Reporting Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Reporting). Program. Community Development Block Grant; U.S. Department of Housing and Urban Development; CFDA Number 14.218; Award Number B-13-MC-26-0035, B-14-MC-26-0035, B-15-MC-26-0035, B-16-MC-26-0035, B-17-MC-26-0035, and B-18-MC-26-0035. Criteria. Recipients of federal awards are required to report various financial and non-financial information to the grantor or pass-through agency, as specified in the grant agreement and/or the OMB compliance supplement. Condition. The City is required for its Community Development Block Grant program to file a comprehensive annual performance and evaluation report (CAPER) and section three summary reports. During the year, the City failed to submit the required section three summary reports. In addition, the CAPER for the year ended June 30, 2019, which is due within 90 days of the fiscal year end, had not been completed through the date of audit fieldwork. The CAPER for the year ended June 30, 2018 was submitted as required, but contained financial data that did not agree to the City's underlying accounting records for the reporting period as required. Cause. This condition appears to have been caused by a lack of complete knowledge of applicable federal compliance requirements and also employee turnover in the economic development department. Effect. As a result of this condition, the City did not fully comply with the requirements of the grant and filed reports that contained financial errors. Questioned Costs. No costs are required to be questioned as a result of this finding, as the reports did not serve as a basis for cost-reimbursement. Recommendation. We recommend that reports required to be submitted to the oversight agency that contain financial information be reviewed and approved by the finance department to ensure accuracy of the financial information. View of Responsible Officials. Before submitting to HUD the required financial reports, the Community and Economic Development (CED) Department will submit the financial reporting to the Finance Department for review of accuracy of the information to be submitted. Also, the CED staff is currently working with HUD representatives to get technical assistance on reporting and processes to ensure all information is accurate and timely.

2019-002 ? Written Policies and Procedures Required by the Uniform Grant Guidance Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Allowable Costs/Costs Principles, Cash Management, and Procurement Suspension and Debarment). Program. Community Development Block Grant; U.S. Department of Housing and Urban Development; CFDA Number 14.218; Award Number B-13-MC-26-0035, B-14-MC-26-0035, B-15-MC-26-0035, B-16-MC-26-0035, B-17-MC-26-0035, and B-18-MC-26-0035. Criteria. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014 to have written policies pertaining to various areas, including: 1) Payments (draws of federal funds and how to minimize the time elapsing between the receipt of federal funds and the disbursement to contractors/employees/subrecipients) (?200.302 (6)); 2) Procurement (including bidding and a conflict of interest policy) (?200.318); 3) Allowability of costs charged to federal programs (?200.302 (7)); 4) Compensation (personnel and benefits policy) (?200.430 and ?200.431); and 5) Travel costs (including mileage and per diem) (?200.474). Condition. Although the City has processes in place to cover these areas, there are not formal written policies covering the above items that address all of the areas required by the Uniform Guidance. Cause. This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect. As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing did not reveal any unallowed costs or excess cash draws. Recommendation. We recommend that the City draft the required policies as soon as practical, but no later than the end of fiscal year 2020. View of Responsible Officials. The Community and Economic Development (CED) Department is in the process of compiling policies and procedures and has drafted policies for Financial Management, Procurement, Allowability of Costs, Compensation and Travel. The remaining required policies and procedures will be approved and in effect before the fiscal year end 2020.