CITY OF FLINT, MICHIGAN

2024-009– Report Filing - 2024 CAPER (repeat finding) Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Reporting). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Consolidated Annual Performance and Evaluation Report (CAPER) (24 CFR 91.520) – A grantee’s CAPER, submitted through the IDIS e-Con Planning Suite, is due 90 days after the close of a jurisdiction’s program year. Condition. As of the completion of audit fieldwork, the 2024 CAPER has not been filed. Cause. The City does not have the proper internal controls in place to ensure that all required reporting is submitted in a timely manner. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our tests of transactions did not indicate any unallowable costs. Recommendation. We recommend that the City implement necessary internal controls to ensure that all required reports are submitted in a timely manner. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2024-010 - Quarterly Project and Expenditure Reports Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Reporting). Program. Coronavirus State and Local Fiscal Recovery Funds (CLSFRF); U.S. Department of Treasury; Assistance Listing Number 21.027; Direct award only. Criteria. CSLFRF direct recipientsare required to submit quarterly project and expenditure reports for each calendar quarter. Condition. Although the City did prepare all of the quarterly reports required for fiscal year 2025, we noted that while the City had supporting reports from the accounting system for the amounts reported, there were several inconsistencies between the supporing reports and the report submitted. In addition, there were large variances between what was reported quarterly and what was posted to the general ledger and ulimately the schedule of expenditures of federal awards. Lastly, our testing of AP expenditures noted two items of cost, out of 40 tested, that did not appear to be related to approved projects noted in the quarterly reporting. The items were allowable costs for the CSLFRF grant, but the reports were not updated to reflect the inclusion. Cause. The City does not have the proper internal controls in place to ensure that all required reporting is accurate and complete. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our tests of transactions did not indicate any unallowable costs. Recommendation. We recommend that the City implement necessary internal controls to ensure that all reporting of financial data is supported by the City's accounting records. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2023-008 – Suspension and Debarment (repeat finding) Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Procurement, Suspension and Debarment). Programs. Coronavirus State and Local Fiscal Recovery Funds (SLFRF); U.S. Department of Treasury; Assistance Listing Number 21.027. Substance Abuse and Mental Health Services - Projects of Regional and National Significance; U.S. Department of Health and Human Services; Assistance Listing Number 93.243; Award Number 1H79SM084918-01. Criteria. Recipients of federal awards are required to follow their own internal purchasing policies, as well as comply with purchasing standards set forth in the Uniform Guidance. Part of that guidance requires an entity to check if a vendor is suspended or debarred before entering into a contract. Condition. The City was unable to provide documentation to support its consideration of suspension and debarment requirements for 7 out of 8 vendors selected for testing. Cause. Management has indicated that the City is conducting proper procurement processes and checking for suspension and debarment, but does not have the proper internal controls in place to ensure that documentation of the verification is retained in accordance with federal requirements. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. 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, and the vendors in question were not actually suspended or debarred. Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2023-009 – Subrecipient Monitoring Finding Type. Immaterial Noncompliance/Sigificant Deficiency in Internal Control over Compliance (Subrecipient Monitoring). Program. Substance Abuse and Mental Health Services - Projects of Regional and National Significance; U.S. Department of Health and Human Services; Assistance Listing Number 93.243; Award Number 1H79SM084918-01. Criteria. When a grant recipient makes subawards to other recipients, certain compliance requirements are required in order to monitor the activity of the subrecipients. The Uniform Guidance requires that the pass-through entity clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.331(a)(1); (2) all requirements imposed by the Pass-Through Entity (PTE) on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.331(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.331(a)(3)). The Uniform Guidance further requires that the pass-through entity valuate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.331(b)). This evaluation of risk may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR part 200, subpart F, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Condition. Subaward contracts review did not contain appropriate information related to the federal program. No assistance listing number or federal program name was noted in the language of the agreements. In addition, no evidence of formal risk assessment was documented. Cause. The City does not have the proper internal controls in place to ensure that contract language contains all of the information required to be communicated under the Uniform Guidance or that documentation of the risk assessment process related to subrecipients of federal awards is maintained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing of the monitoring process and tests of transactions did not indicate any unallowable costs. Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented. Part of the solution will be implementing grant management software.

2023-010– Special Reporting for Federal Funding Accountability and Transparency Act Finding Type. Immaterial Noncompliance/Sigificant Deficiency in Internal Control over Compliance (Reporting). Programs. Choice Neighborhoods Implementation Grant; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.889' Award Number MI5F519CNG117. Substance Abuse and Mental Health Services - Projects of Regional and National Significance; U.S. Department of Health and Human Services; Assistance Listing Number 93.243; Award Number 1H79SM084918-01. Criteria. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition. Despite passing through qualifying amounts, the City could produce no evidence that the subawards had been reported through the FSRS. Cause. The City does not have the proper internal controls in place to ensure that subaward reporting is submitted for all direct grants. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our tests of transactions did not indicate any unallowable costs. Recommendation. We recommend that the City implement necessary internal controls to ensure that reporting of subawards greater than $30,000 is submitted to the FSRS for all direct grants. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2023-011– Report Filing - 2022 and 2023 CAPER Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Reporting). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Consolidated Annual Performance and Evaluation Report (CAPER) (24 CFR 91.520) – A grantee’s CAPER, submitted through the IDIS e-Con Planning Suite, is due 90 days after the close of a jurisdiction’s program year. Condition. As of the completion of audit fieldwork, the 2022 and 2023 CAPERs have not been filed. Cause. The City does not have the proper internal controls in place to ensure that all required reporting is submitted in a timely manner. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our tests of transactions did not indicate any unallowable costs. Recommendation. We recommend that the City implement necessary internal controls to ensure that all required reports are submitted in a timely manner. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2022-007 ? Suspension and Debarment (repeat finding) Finding Type. Immaterial Noncompliance (Procurement, Suspension and Debarment). Program. Coronavirus State and Local Fiscal Recovery Funds (SLFRF); U.S. Department of Treasury; Assistance Listing Number 21.027. Criteria. Recipients of federal awards are required to follow their own internal purchasing policies, as well as complying with purchasing standards set forth in the Uniform Guidance. Part of that guidance requires an entity to check if a vendor is suspended or debarred before entering into a contract. Condition. The City was unable to provide documentation to support its consideration of suspension and debarment requirements for 1 out of 3 vendors selected for testing. Cause. Management has indicated that the City is conducting proper procurement processes and checking for suspension and debarment, but does not have the proper internal controls in place to ensure that documentation of the verification is retained in accordance with federal requirements. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. 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, and the vendors in question were not actually suspended or debarred. Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

2021-009 - Suspension and Debarment (repeat finding) Finding Type. Material Noncompliance/Material Weakness in Internal Controls over Compliance (Procurement, Suspension and Debarment). Program. Drinking Water State Revolving Fund Cluster; U.S. Environmental Protection Agency; Passed through Michigan Department of the Environment, Great Lakes, and Energy; Assistance Listing Number 66.468; All Award Numbers. Criteria. All nonfederal subrecipients are required to follow their own internal purchasing policies, as well as complying with purchasing standards set forth in the Uniform Guidance. Part of that guidance requires an entity to check if a vendor is suspended or debarred before entering into a contract. Condition. The City was unable to provide documentation to support its consideration of suspension and debarment requirements for 5 out of 9 vendors selected for testing. They also could not locate procurement documentation for 2 out of 9 tested. Cause. Management has indicated that the City is conducting proper procurement process and checking suspension and debarment, but does not have the proper internal controls in place to ensure that documentation of the verification is retained in accordance with federal requirements. Effect. Procurement and suspension and debarment documentation was not available for several vendors selected for testing, which exposes the City to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. 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, and the vendors in question were not suspended or debarred. Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained. View of Responsible Officials. Management concurs with this finding. The City plans to update its document retention procedures to ensure all documents are maintained and can be found, including attaching documents to records in the BS&A Purchasing system.

2021-010 - Charging of Salaries Earned Outside of Period of Performance Finding Type. Immaterial Noncompliance (Period of Performance). Program. Coronavirus Relief Fund (CRF); U.S. Department of Treasury; Passed through Michigan Department of Treasury; Assistance Listing Number 21.019; Award Numbers SLT0040 and SLT0247. Criteria. Grant expenditures are required to be incurred during the period of performance for the grant. For the CRF grants, expenditures are to be incurred between March 1 and December 31, 2020. Condition. The public safety department payrolls for the periods ended May 2 and May 16, 2020 were charged to the Public Safety and Public Health Reimbursement Program (PSPHPR) grant. Due to a recently signed collective bargaining agreement, retroactive pay that included amounts earned prior to March 1, 2020, the beginning of the period of performance, were included in the aforementioned payrolls. Cause. This condition was caused by certain members of the City's grant management being unaware of the presence of retroactive pay in the payroll charged to the grant. Effect. Costs were charged to the PSPHPR program that were incurred outside of the period of performance. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of ineligible cost did not exceed reportable thresholds. Recommendation. We recommend that the City implement necessary internal controls to ensure that costs charged to federal programs are incurred within the known period of availability related to a specific federal award program. View of Responsible Officials. Management concurs with this finding. The City plans to improve its grant procedures by ensuring proper communication between the department with the grant, grants administration, and payroll (as needed).

2020-008 - Suspension and Debarment (repeat finding) Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Procurement, Suspension and Debarment). Program. Drinking Water State Revolving Fund Cluster; U.S. Environmental Protection Agency; Passed through Michigan Department of the Environment, Great Lakes, and Energy; CFDA Number 66.468; All Award Numbers. Criteria. The Uniform Guidance requires the City to determine if a vendor is suspended or debarred before entering into a contract. Condition. The City was unable to provide documentation to support its consideration of suspension and debarment requirements for 10 out of 14 vendors selected for testing. Cause. Management has indicated that the City is checking suspension and debarment, but does not have the proper internal controls in place to ensure that documentation of the verification is retained in accordance with federal requirements. Effect. Documentation was not available for 10 out of 14 vendors selected for testing, which exposes the City to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. 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, and the vendors in question were not suspended or debarred. Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained. View of Responsible Officials. Management concurs with this finding. A complete Request for Proposal (RFP) for all Drinking Water Revolving Funds must be approved by the State of Michigan and must include a debarment form, filled out by the vendor. The awarded Contractor must have a debarment form on file and approved by the State of Michigan before the contract is awarded by City Council. A verification through SAM.gov is checked for debarred Contractors.

2020-009 - Subrecipient Monitoring Activities (repeat comment) Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Subrecipient Monitoring). Program. HOME Investment Partnership Program (HOME); U.S. Department of Housing and Urban Development (HUD); CFDA Number 14.239; All Award Numbers. Criteria. A pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.331(d) through (f)), plus any additional procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award. Condition. We noted during testing that the City utilized ?desk audits? as its only method of during-the-award monitoring. While this is an acceptable monitoring activity, the use of this as the only activity should be supported by a formal risk assessment process and associated policies and procedures that dictate what monitoring plan must be followed for specific ranges of subrecipient risk. We did observe that the City has a risk assessment worksheet that classifies subrecipients as low, medium or high risk, but did not find that there was a procedure in place to link the assessed risk to the appropriate monitoring plan. Cause. This condition appears to be the result of vacancies in the program manager position over the past few fiscal years. Effect. As a result of this condition, the HOME program at the City is not fully in compliance with requirements related to subrecipient monitoring, and is exposed to an increased risk that its subrecipients may also be out of compliance without the City's knowledge. 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. Recommendation. We recommend that the City review policies and procedures related to the subrecipient monitoring process to make sure that there is a logical connection between the results of risk assessment activities and the monitoring plan devised for each subrecipient. The City should also consider the applicable compliance requirements related to this program and make sure that its monitoring plan covers all applicable areas. View of Responsible Officials. The City created a CED monitoring plan in July, 2020, partly in response to a finding in fiscal year 2019, that requires risk based monitoring. As such, the City maintains that corrective action has already taken place. However, due to the pandemic, onsite visits are limited. Desk monitoring does take place with every submitted request prior to payment and CED does review areas of compliance included but not limited to procurement practices, financial accounting and accuracy, reporting, benefit and accomplishment data and progress toward goals. If any items are identified during the desk monitoring process, CED communicates further with the subrecipient through additional phone calls and technical assistance. Due to the pandemic, in-person monitoring was restricted. In fact, the HOME program issued waivers to limit or omit in-person contact through December 31, 2021. It is expected that when in-person contact is allowed and subrecipients are in-office, CED will again begin in-person monitoring for high risk subrecipients as required by our Monitoring Manual.

2020-010 - Subrecipient Monitoring - Subgrantee Agreements Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Subrecipient Monitoring). Program. HOME Investment Partnership Program (HOME); U.S. Department of Housing and Urban Development (HUD); CFDA Number 14.239; All Award Numbers. Criteria. The pass-through entity must clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.331(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.331(a)(2)); and (3) any additional requirements that the pass-through entity (PTE) imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.331(a)(3)). Condition. The City provided subawards to 2 subrecipients. Although there are several references to the HOME program in the subgrant agreements, along with numerous references to sections of HUD's HOME code as being applicable, the Catalog of Federal Domestic Assistance (CFDA) number is not mentioned. In addition, Exhibit B of the subgrant agreement, Financial Management Standards, refers to administrative guidance in OMB Circulars A-110, A-122 and A-133, which have all been superseded by the Uniform Guidance. Cause. This condition appears to be the result of the City's standard subgrant contract not being updated to comply with current grant guidance. Effect. As a result of this condition, the City's HOME program is not in compliance with requirements related to subgrant agreement contents. 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. Recommendation. e recommend that the City take the necessary steps to update all standard contract language to reflect current compliance requirements, including the appropriate CFDA number. We further recommend that the City implement procedures to make sure that future changes in standards be reflected in contract language. View of Responsible Officials. Management concurs with this finding. CED will review and update its subgrantee agreements to include the appropriate CFDA number. CED will also review its exhibits for references to 2 CFR Part 200 and remove OMB references considered no longer applicable as identified by auditors.

2019-012 - PurchasingFinding Type. Material Weakness in Internal Control over Financial Reporting.Criteria. The City's purchasing ordinance states that some form of competitive bidding based upon adequate and complete specifications will be implemented for all purchases projected to exceed $10,000. Any competitive bids and the related bid selection documentation should be retained by the City. Purchases should not be made until an approved purchase order is in place.Condition. During our testing of the procurement process for the Department of Public Works ("DPW") we noted two vendors starting work prior to purchase order approval and/or contracts with vendors being fully executed. We further noted two issues with contracts where they were not dated. We were not able to test bid tabulation for two requests for proposals because the City could not provide support for the selected requests.Additionally, we examined a City Council resolution for a fire truck purchase that had signatures from another document taped over it and copied. We were unable to find an original signed copy of the final resolution.Finally, the City had approximately $11.5 million in expenditures that did not have an associated purchase order. Most of the largest items are for construction contractors.Cause. This condition appears to be the result of City not implementing proper internal controls.Effect. As a result of this condition, the City is exposed to an increased risk that misstatements or misappropriations might occur and not be detected by management in a timely manner.Recommendation. We recommend that the City implement procedures over purchasing that requires all requisitions, purchase orders and contracts be approved before a purchase is made or work commences. Additionally, the City should require and retain a purchase order for all payments being made.View of Responsible Officials. Management concurs with this finding.

2019-013 - Suspension and DebarmentFinding Type. Material Weakness in Internal Controls over Compliance (Procurement, Suspension and Debarment).Programs. Drinking Water State Revolving Fund Cluster; U.S. Environmental Protection Agency; Passed through Michigan Department of Environmental Quality; CFDA Number 66.468; All Award Numbers.Criteria. The Uniform Guidance requires the City to determine if a vendor is suspended or debarred before entering into a contract.Condition. The City was unable to provide documentation to support its consideration of suspension and debarment requirements for all 11 vendors in our selection.Cause. The City appears to be checking suspension and debarment, but does not have the proper internal controls in place to ensure that documentation of the verification is retained in accordance with federal requirements.Effect. Documentation was not available for 11 contracts selected for testing, which exposes the City to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls.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.Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained.View of Responsible Officials. To be provided by Management...

2019-014 - Reporting (repeat comment)Finding Type. Material Noncompliance/Material Weakness in Internal Controls over Compliance (Reporting).Programs. Medicaid Cluster; U.S. Department of Health and Human Services; CFDA Number 93.778; All Award Numbers.Criteria. Per the City's agreements with the State, the following reports are required to be submitted:Work Progress Reports - QuarterlyFiscal Questionnaire - AnnuallyObligation Report - AnnuallyFinal Financial Status Report - AnnuallyCondition. The City was unable to provide documentation that any of the above reports were submitted, as required. Either the reports were not submitted, or evidence of their submission was not retained.Cause. This condition appears to be the result of miscommunication within various City departments as to what reports need to be submitted and who is responsible.Effect. As a result of this condition, the City did not comply with the provisions of its Medicaid cluster grant agreements, and is exposed to an increased risk of having future costs disallowed.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.Recommendation. We recommend that the City implement policies, procedures and internal controls to ensure that all required reports are submitted and retained.View of Responsible Officials. To be provided by Management...

2019-015 - Grant Accounting and Draw RequestsFinding Type. Immaterial Noncompliance/Material Weakness in Internal Controls over Compliance (Reporting).Programs:Medicaid Cluster; U.S. Department of Health and Human Services; CFDA Number 93.778; All Award Numbers.Drinking Water State Revolving Fund Cluster; U.S. Environmental Protection Agency; Passed through Michigan Department of Environmental Quality; CFDA Number 66.468; All Award Numbers.Criteria. 2 CFR 200.302(a) states, "Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award."Condition. We selected 15 grant draws for testing (a single draw request includes both federal programs), and noted 10 instances in which the signed draw requests provided were not able to be reconciled to the general ledger. None of the differences were significant to the programs, however, reconciling the draws to the general ledger was difficult and required additional audit work. Additionally, we noted three instances in which signed draw requests were not available at the end of the audit and approximately $834,000 in expenditures that were not on any requests as of the date of this report, which is almost nine months after year end.Cause. This condition appears to be the result of a lack of internal controls at the City which would require management to agree each draw request to the general ledger prior to submitting it to the granting agency for reimbursement and to verify that draw requests are done timely. This is important for cash flow and for accurate reporting.Effect. As a result of this condition, the City is at increased risk that reporting submitted to the State is not accurate.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.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.Recommendation. We recommend that the City implement policies, procedures and internal controls to ensure that all reports are completed timely, approved appropriately and agree to its accounting records.View of Responsible Officials. To be provided by Management...

2019-016 - Subrecipient Monitoring ActivitiesFinding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Subrecipient Monitoring).Programs. HOME Investment Partnership Program; U.S. Department of Housing and Urban Development; CFDA Number 14.239; All Award Numbers.Criteria. A pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.331(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award.Condition. We noted during testing that the City utilized ?desk audits? as their only method of during-the-award monitoring. While this is an acceptable monitoring activity, the use of this as the only activity should be supported by a formal risk assessment process and associated policies and procedures that dictate what monitoring plan must be followed for specific ranges of subrecipient risk. We did observe that the City has a risk assessment worksheet that classifies subrecipients as low, medium or high risk, but did not find that there was a procedure in place to link the assessed risk to the appropriate monitoring plan.Cause. This condition appears to be the result of vacancies in the program manager position over the past few fiscal years.Effect. As a result of this condition, the HOME program at the City is not in compliance with requirements related to subrecipient monitoring.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.Recommendation. We recommend that the City review policies and procedures related to the subrecipient monitoring process to make sure that there is a logical connection between the results of risk assessment activities and the monitoring plan devised for each subrecipient. The City should also consider the applicable compliance requirements related to this program and make sure that your monitoring plan covers all applicable areas.View of Responsible Officials. To be provided by Management...

2019-017 - Special Tests and Provisions - On-site InspectionsFinding Type. Material Noncompliance/Material Weakness in Controls over ComplianceProgram(s) - HOME Investment Partnership Program; U.S. Department of Housing and Urban Development (CFDA #14.239); All Award NumbersCriteria. During the period of affordability (i.e., the period for which the non-Federal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every 3 years for projects containing 1 to 4 units, (b) every 2 years for projects containing 5 to 25 units, and (c) every year for projects containing 26 or more units.Condition. For certain properties, all of which fall in the 5 to 25 unit range shown in the criteria section, HQS inspections have not been completed since the 2015-16 fiscal year. One property selected for testing is also under review for non-compliance with the required submission of tenant data, staying current on utilities and property taxes, as well as not granting access for HQS inspections.Cause. This condition appears to be the result of delays in processing HQS inspections due to vacancies in the program manager and City inspector positions, as well as a legal challenge to the City?s rental inspection process.Effect. As a result of this condition, the HOME program at the City is not in compliance with requirements related to Housing Quality Inspections.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.Recommendation. We recommend that the City take the necessary steps to, either internally or through outsourcing, bring all properties in compliance with HQS inspection requirements. We further recommend that the City review policies and procedures related to this process to make sure that such a lapse will not occur in the future.View of Responsible Officials. To be provided by Management...

2019-018 ? Written Policies Required by the Uniform Grant GuidanceFinding Type. Immaterial noncomplianceProgram. All programs.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: 1) Payments (draws of federal funds and how to minimize the time lapsing between the receipt of federal funds and the disbursement to contractors/employees/subrecipients) (?200.302(6)); 2) Allowability of costs charged to federal programs (?200.302(7)) and 3) Compensation (personnel & benefits) (?200.430-431).Condition. Although the City has processes in place to cover these areas, there are no formal written policies covering payments, allowability of costs and compensation in accordance with 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 have been questioned as a result of this finding.Recommendation. We recommend that the City develop these policies as soon as practical, but no later than the end of fiscal year 2020.View of Responsible Officials. To be provided by Management...

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