City of Port HuronLocal Government

2025-003: Suspension and debarment. Assistance Listing Number, Federal Agency, and Program Name: ALN 21.027, Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year: SLT-4262 Pass-through Entity: Not applicable Finding Type: Material weakness in internal control over suspension and debarment Repeat Finding: Yes Criteria: In accordance with 2 CFR 200.214 (Suspension and Debarment) and related compliance requirements under the Uniform Guidance, non-federal entities must not enter into covered transactions with parties that are suspended or debarred. Condition: During testing of procurement transactions subject to the Uniform Guidance requirement for suspension and debarment, we noted that the City could not provide evidence that it performed a check to verify the selected vendors were not suspended or debarred prior to executing the contract. Subsequently, the City did complete the search on sam.gov and retained evidence to support that the contractor was not suspended or debarred, thereby creating no questioned costs. The City did not have controls to perform the search for suspended or debarred entities prior to entering into a contract/agreement; as a result, the City did not comply with the requirements under 2 CFR 214. Questioned Costs: None Cause: The lack of evidence indicates that the City did not implement or enforce a process to verify suspension and debarment status prior to contracting with the vendors. Effect: Without performing and documenting the required verification, the City risks entering into contracts with vendors who may be suspended or debarred, which could result in noncompliance with federal requirement. Recommendation: We recommend the City implement controls to ensure that the search for whether a contractor is suspended or debarred is completed prior to enter into a contract/agreement and retain evidence of the results of the search. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See corrective action plan.

2025-004: Subrecipient monitoring Assistance Listing Number, Federal Agency, and Program Name: ALN 21.027, Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year: SLT-4262 Pass-through Entity: Not applicable Finding Type: Material weakness in internal control over subrecipient monitoring and on noncompliance Repeat Finding: No Criteria: Under 2 CFR 200.331 - 200.332 (Subrecipient Monitoring and Management), pass-through entities must: 1) Evaluate each subrecipient's risk of noncompliance to determine appropriate monitoring. 2) Establish and maintain written policies and procedures for subrecipient monitoring. 3) Communicate federal award requirements to subrecipients, including audit requirements under 2 CFR 200, Subpart F. 4) Monitor subrecipient to ensure compliance, which may include: - Reviewing financial and performance reports, - Following up on corrective actions, - Conducting onsite review or other appropriate monitoring tools. 5) Verify whether the subrecipient is required to obtain a Single Audit and obtain and review such audit reports, if applicable. Condition: During our testing of the City's subrecipient monitoring process, we identified areas of noncompliance with the Uniform Guidance requirements under 2 CFR 200, Subpart D (Post Federal Award Requirements) and Subpart F (Audit Requirements), specifically, we noted: 1) The City does not have written policies and procedures addressing: - The Evaluation of subrecipient risk of noncompliance, - The monitoring activities required to ensure subrecipient compliance with federal program requirements. 2) The City did not conduct onsite reviews or other substantive monitoring activities. 3) The City reviewed financial reports only; however, no performance or programmatic report were requested or reviewed. 4) The city did not communicate to the subrecipient the requirement to undergo a Single Audit (when applicable) as required under 2 CFR 200, subpart F, or request or obtain the subrecipient's Single Audit report. As a result, we were unable to determine if the City adequately monitors its subrecipients in accordance with federal requirements. Questioned Costs: None Cause: The City has not developed or implemented formal written policies and procedures over subrecipient risk assessment and ongoing monitoring. In addition, monitoring responsibilities were not clearly assigned resulting in incomplete compliance with federal requirements. Effect: Failure to properly monitor subrecipients increases the risk that federal funds may be used for unallowable or noncompliant purposes. Recommendation: We recommend that the City: 1) Develop and implement a comprehensive written procedures for subrecipient monitoring in accordance with 2 CFR 200.332. 2) Conduct and document a formal risk assessment for each subrecipient. 3) Ensure all required award information and audit requirement under 2 CFR 200, Subpart F are communicated to subrecipients. 4) Obtain and review financial and performance reports from subrecipients. 5) Verify whether subrecipients are required to undergo a Single Audit and obtain and review the audit reports when applicable. 6) Implement ongoing monitoring activities, such as onsite review, desk review, or other appropriate mechanisms based on risk. Views of Responsible Officials and Planned Corrective Actions -Management agrees with the finding. See corrective action plan.

2025-005: Reporting Assistance Listing Number, Federal Agency, and Program Name: ALN 21.027, Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year: Not applicable Pass-through Entity: The State of Michigan Department of Environment, Great Lakes, and Energy and The State of Michigan Department of Natural Resources Finding Type: Significant deficiency in internal control over reporting Repeat Finding: No Criteria: Per the grant agreement, the City is required to prepare and submit quarterly financial and/or progress reports to the grantor within the prescribed timeline. Timely submission of required reports is a key federal compliance requirement designed to ensure proper oversight, transparency, and timely communication of program status to the awarding agency. Condition: During our testing of the City's reporting compliance requirements, we noted that the grant agreement requires the City to submit quarterly financial and/or progress reports to the grantor agency. For the reporting testing, the City did not submit the required quarterly report within the deadline specified in the grant agreement. The report was submitted after the required due date. Questioned Costs: None Cause: The untimely submission appears to be due to the absence of a formal tracking mechanism or designated individual responsible for ensuring deadlines are met. Effect: Because the City did not submit the required report within the timeline established by the state pass-through agency, the state was unable to rely on timely information to complete its own oversight, reporting, and compliance responsibilities for the program. Late submissions from the City may affect the state’s ability to meet federal reporting deadlines and maintain compliance with U.S. Treasury requirements. Recommendation: We recommend that the City develop and implement written procedures to ensure timely preparation, review, and submission of all required reports. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See corrective action plan.

Assistance Listing, Federal Agency, and Program Name ALN 21.027, Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year SLFRP2024 2001 Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2023 002 Criteria Per 2 CFR 200.214 non federal entities are subject to the non procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition The City could not provide evidence that it performed a check to verify vendors or subrecipients were not suspended or debarred. Questioned Costs None Identification of How Questioned Costs Were Computed Not applicable Context During the fiscal year, the City entered into contracts/agreements with 11 contractors and subrecipients. and was unable to provide evidence that the check for suspension and debarment was completed prior to entering into a contract/agreement with them. Subsequently, the City did complete the search on Sam.gov and retained evidence to support that the contractor was not suspended of debarred, thereby creating no questioned costs. Cause and Effect The City did not have controls to perform the search for suspended or debarred entities prior to entering into a contract or subrecipient agreement, as a result the City did not comply with the requirements under 2 CFR 214. Recommendation We recommend the City implement controls to ensure that complete the search for whether a contractor/subrecipient is suspended or debarred prior to entering into a contract/agreement with a contractor or subrecipient and retain evidence of the results of the search. Views of Responsible Officials and Corrective Action Plan The City of Port Huron will implement a new process for approval of all invoices related to ARPA grant expenses. This includes a check for suspension and debarment prior to any invoices approval and appropriate documentation.

Listing Number, Federal Agency, and Program Name - ALN 21 .027, Department of the Treasury, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year - SLFRP2024-2001 Pass-through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2022-002 Criteria - The City should ensure there is a process in place, prior to entering contracts with subrecipients, to verify that such subrecipients are not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. Condition - We noted during testing that the City had unintentionally omitted a subrecipient from its search to ensure that the subrecipient was not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - From July 1, 2022 through June 30, 2023, any subrecipient with which the City entered into a contract using federal award funds should have been verified as not being suspended, debarred, or otherwise excluded pursuant to 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. We selected three subrecipients for testing, and one lacked any verification. However, based on our testing, we noted that the one subrecipient was not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300, thereby creating no questioned costs. Cause and Effect - The City is required to verify that any subrecipient with which it plans to enter into a contract using federal award funds is not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. The City did not complete this requirement due to timing of final approval of the subrecipient pass-through funds. Recommendation - We recommend that an additional internal control be put in place to ensure the dual verification of subrecipients occurs. Views of Responsible Officials and Corrective Action Plan - Procedures have already been put into place to ensure that each new contractor is not on the federal list of suspended and/or debarred contractors. Furthermore, all vendors previously paid have been searched for in the federal list, and none were suspended and/or debarred.

Assistance Listing Number, Federal Agency, and Program Name - ALN 21 .027, Department of the Treasury, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year - SLFRP2024-2001 Pass-through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The City should ensure there is a process in place, prior to theprocurement of goods and services, to verify that the City has followed its internal procurement policy pursuant to 2 CFR 200.319 and 200.320. Condition - We identified 4 expenditures, during testing, that the City did not verify were in accordance with its internal procurement policy, pursuant to 2 CFR 200.319 and 200.320 prior to entering into contracts with award funds. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - From July 1, 2022 through June 30, 2023, any good or service purchased by the City is subject to the City's internal procurement policy, pursuant to 2 CFR 200.319 and 200.320. We selected 22 expenditures for testing, and 4 lacked evidence of the City following its internal procurement policy. However, based on our testing, we noted that all 4 expenditures were allowable under the terms of the grant, thereby creating no questioned costs. Cause and Effect - The City is required to verify that there is a process in place to ensure all eligible expenditures adhere to its internal procurement policy, pursuant to 2 CFR 200.319 and 200.320. The City did not complete this requirement due to override of preexisting controls implemented by the City. Recommendation - We recommend that an additional internal control be put in place to ensure that all eligible expenditures adhere to the City's internal procurement policy. Views of Responsible Officials and Planned Corrective Actions - Procedures have already been put into place to ensure that each purchase adheres to the internal purchasing policies. City management and staff will continue to improve communication with and between departments to ensure all staff understand the purchasing policy.

Assistance Listing Number, Federal Agency, and Program Name - ALN 21.027, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year - SLFRP2024-2001 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The City should ensure there is a process in place to verify, prior to entering into contracts with vendors, that such vendors are not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. Condition - We noted during testing that the City had no procedure in place to verify contractors are not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300 prior to entering into contracts with award funds. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - From July 1, 2021 through June 30, 2022 any contractor the City entered into a contract with using federal award funds should be verified, that they are not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. We selected fourteen contractors for testing, and five lacked any verification. However based on our testing we noted that all five contractors were not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300, thereby creating no questioned costs. Cause and Effect - The City is required to verify that any contractor the City plans to enter into a contract with, using federal award funds, is not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. Recommendation - We recommend that an internal control be put in place to ensure the verification of contractors occurs. Views of Responsible Officials and Corrective Action Plan - Procedures have already been put into place to ensure that each new contractor is not on the Federal list of suspended and/or debarred contractors. Furthermore, all vendors previously paid have been searched for in the Federal list and none were suspended and/or debarred.

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