CHARTER COUNTY OF WAYNE, MICHIGANLocal Government

Assistance Listing, Federal Agency, and Program Name - 93.045/93.053, Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year - N/A Pass through Entity - Area Aging on Aging 1C Finding Type - Material weakness Repeat Finding - Yes 2024-15 Criteria - Per 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per 2 CFR 200.318(b), recipients must maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. Per the “Minimum Nutrition Program Standards” issued Commission on Services to the Aging, individuals receiving certain nutrition benefits to undergo a periodic reassessment of eligibility that includes obtaining confirmation of medical necessity for certain benefit levels. Condition - The County engaged a third party contractor to perform certain eligibility reassessments, including obtaining verification of medical necessity, when required. While the County had a process in place to properly identify when reassessment was required and to follow up with the contractor about the status of reassessments, controls did not ensure the third party contractor followed through on reassessments on a timely basis. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The County is responsible for ensuring participants who receive meals are eligible under the terms of the grant. The County did not have a control over home delivered meal participants that ensured the third party contractor timely reassessed participants every six months. 3 of the 43 samples selected did not have updated assessment forms within six months of receiving meals and 17 of the 43 samples did not have updated assessment forms. Cause and Effect - The County's controls were not adequate to ensure that the third party contractor was reassessing participants every six months. The lack of controls could result in the County providing meals to ineligible participants. Recommendation - We recommend the County update its policy on the reassessment process, including actions to be taken when participants refuse to complete the reassessment or cannot be contacted. This plan should also include a schedule for actions to be taken when participants do not complete reassessment submissions timely. The County should also implement the appropriate controls to monitor the third-party contractor and ensure reassessments are being performed timely. Views of Responsible Officials and Corrective Action Plan - The Department of Senior Services would like to clarify that the third-party contractor is contracted through The Senior Alliance, the Area Agency on Aging for region 1 C and not Wayne County. Wayne County Senior Services will continue to monitor the third-party vendor for timely assessments and reassessments through the existing controls which include: • Providing the third-party contractor monthly lists of clients in need of assessment/reassessment • Generating monthly lists of outstanding reassessments (clients not reassessed from the monthly list) • Reminding clients of the requirement for six-month reassessments • Obtaining updated information (phone numbers, emergency contacts, etc.) twice per year • Providing updated information to third-party contractor • Documentation of communicated information regarding third-party contractor’s performance to The Senior Alliance

Assistance Listing, Federal Agency, and Program Name - 93.045/93.053, Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year - N/A Pass through Entity - Area Aging on Aging 1C Finding Type - Material weakness Repeat Finding - No Criteria - Uniform Guidance at 2 CFR 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately reports total federal expenditures for each federal program. In addition, effective internal control over compliance, as required by 2 CFR 200.303, requires controls that ensure expenditures reported on the SEFA are complete, accurate, and properly reconciled to underlying accounting records and amounts billed to the funding agency. Condition - The County did not maintain effective internal control over the reconciliation of expenditures reported on the Schedule of Expenditures of Federal Awards to amounts billed to the funding agency. If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - None Identification of How Questioned Costs Were Computed - N/A Context - The SEFA is a key component of the Single Audit and serves as the primary basis for determining major programs subject to audit under the Uniform Guidance. As part of the SEFA preparation process, management compiles federal expenditures from multiple sources, including underlying accounting records and amounts billed to funding agencies. Accurate reconciliation of these sources is critical to ensure that federal expenditures are reported completely and accurately, and that major program determinations are appropriately made. As a result of the audit, it was identified that expenditures related to the Aging Cluster were understated by approximately $126,000 on the preliminary SEFA due to the omission of expenditures that had been billed to the funding agency but backed out of amounts reported on the SEFA during the reconciliation process. Management recorded an adjustment to correct the understatement prior to issuance of the final SEFA. Cause and Effect - The County’s SEFA preparation process did not include a sufficiently designed and implemented control to ensure the accuracy of reconciling items between expenditures reported on the SEFA to amounts billed to the funding agency. As a result of this deficiency, expenditures in the Aging Cluster were understated by approximately $126,000 on the preliminary SEFA. The correction of this error on the final SEFA increased total expenditures for the Aging Cluster, resulting in the program being classified as a Type A program rather than a Type B program for major program determination purposes. Because the deficiency resulted in a material misstatement of the SEFA that was not prevented or detected by internal control, it is considered a material weakness in internal control over compliance. Recommendation - We recommend that management design and implement effective controls over the preparation of the SEFA, including maintaining adequate support for adjustments and reconciling items. Such controls should be performed and reviewed by personnel independent of the SEFA preparation process to ensure the completeness and accuracy of federal expenditures reported. Views of Responsible Officials and Planned Corrective Actions - The County has established procedures for reconciling general ledger activity to supporting documentation and Federal Financial Reports (FFRs/FSRs) throughout the fiscal year, including additional reconciliation procedures performed at year end to capture late or adjusting entries. The condition was further impacted by timing differences between departmental reporting and subsequent adjusting entries, as well as the aggregation of adjustments across multiple programs without sufficient program-level detail at the time of review. While follow-up was initiated to obtain supporting breakdowns, the process did not require resolution of these items prior to final classification and inclusion in year-end reporting. The County is strengthening internal controls over grant-related financial activity and SEFA preparation by enhancing and enforcing requirements for accurate transaction recording, supporting documentation, and independent validation. Key improvements include: • Enhanced documentation and classification requirements for grant-related entries • Strengthened review and validation controls to ensure proper support and classification • Improved reconciliation and adjustment protocols, including postreporting revalidation • Control enforcement and escalation for unsupported or unresolved items • Training and guidance on federal compliance requirements

Assistance Listing, Federal Agency, and Program Name 93.045/93.053, U.S. Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year N/A Pass through Entity Area Agency on Aging 1C Finding Type Material weakness Repeat Finding No Criteria Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with 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 County’s controls over meal participants did not ensure a review was in place to check the intake forms for Halal Home Delivered meal participants or that updated assessments were obtained for home delivered meals. Lastly there was not a control in place to ensure liquid meal participants maintained a physician order, renewed every six months, stating the need for the additional supplement. Questioned Costs N/A Identification of How Questioned Costs Were Computed Not applicable, as there are no questioned costs Context The County is responsible for ensuring participants who receive meals are eligible under the terms of the grant. The County did not have a control over any Home Delivered Halal meal participants for eligibility, which made up 1 of 30 Home Delivered participants tested. In total, there are approximately 110 Home Delivered Halal participants out of a total of 3,872 Home Delivered participants given meals during the year. These participants made up about 3% of the total population. The County did not perform an updated assessment on 2 out of 30 participants tested for home delivered meals. The County did not obtain updated physician orders for all 4 of the liquid meal participants tested. In total there are about 386 liquid meal participants. This is less than 10% of all meals delivered. Of the 386 only 1% did not receive updated doctor notes. Cause and Effect The Country’s controls were not adequate to ensure that meals were only provided to eligible individuals. The lack of controls can result in the County not identifying ineligible participants timely. Recommendation We recommend the County implement the appropriate controls to ensure meals are provided to eligible individuals. Views of Responsible Officials and Corrective Action Plan Wayne County’s Department of Senior Services will implement processes to ensure only eligible individuals receive meals. A quarterly report will be run to verify all home delivered meal clients have updated assessments and reassessments and will be reviewed by the Department Director and or Division Director quarterly. Halal home delivered meal clients assessments will be reviewed by a second staff member to ensure eligibility and verified by the Department Director and or Division Director monthly.

Assistance Listing Number, Federal Agency, and Program Name - 21.023, U.S. Department of the Treasury, COVID-19 - Emergency Rental Assistance Federal Award Identification Number and Year - ERA2-0476 Pass-through Entity - N/A - Direct funded Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with 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 County’s controls over general ledger to schedule of expenditures of federal awards (SEFA) and beneficiary payment database reconciliation did not identify several adjustments that were needed to both the general ledger and the SEFA. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - The County’s controls to track and reconcile grant activities between the general ledger and SEFA were not adequate to identify all grant activity. As a result, the following adjustments were necessary for the year ended September 30, 2023: • Approximately $550,000 adjustment to record beneficiary payments on the SEFA • Approximately $160,000 adjustment to accrue for subrecipient activity in the general ledger Cause and Effect - The controls in place to ensure that the SEFA and beneficiary payment database reconciled to the general ledger were not effective. As a result, an audit adjustment was posted to the general ledger to record approximately $550,000 of beneficiary payments that was included in the SEFA and beneficiary payment database but not the general ledger. Additionally, the SEFA was initially understated by approximately $160,000 as a result of the County not accruing for its subrecipient activity through September 30, 2023. The SEFA was adjusted to include this amount. Recommendation - We recommend that the County review its processes and controls to ensure that grant activity is properly tracked, properly accounted for in the general ledger, and fully reconciled between the beneficiary database, general ledger, and SEFA to ensure completeness and accuracy of the SEFA. Views of Responsible Officials and Planned Corrective Actions - Management will update processes and controls to ensure completeness of grant activity is received for review and reconciliation.

Assistance Listing Number, Federal Agency, and Program Name - 21.023, U.S. Department of the Treasury, COVID-19 - Emergency Rental Assistance Federal Award Identification Number and Year - ERA2-0476 Pass-through Entity - N/A - Direct funded Finding Type - Significant deficiency Repeat Finding - No Criteria - The County has written procedures for subrecipient monitoring, including risk assessments. The County’s internal policy requires departments to perform a risk assessment on subrecipients prior to an executed agreement and establish a monitoring plan based on the assessed risk. Condition - Controls were not adequate to ensure risk assessments were performed in advance of the executing agreement with the County’s two subrecipients for the ERA program for the fiscal year ended September 30, 2023. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - By not performing risk assessments before entering into agreements with its two subrecipients, the County did not follow its policy related to timing of subrecipient risk analysis. Cause and Effect - The County’s controls were not adequate to ensure it followed its internal policies concerning subrecipient risk assessments. The lack of controls can result in the County not identifying risks timely. Recommendation - We recommend that the County evaluate whether its controls are adequate to ensure compliance with the Uniform Guidance and internal policies. Views of Responsible Officials and Planned Corrective Actions - Management has developed a new system of risk assessments that will be implemented to receive documentation prior to the execution of awards.

Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.

Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.201(a), the federal awarding agency or pass-through entity must decide on the appropriate instrument for the federal award (i.e., grant agreement, cooperative agreement, or contract) in accordance with the Federal Grant and Cooperative Agreement Act (31 U.S.C. 631-08). Per guidance within Treasury FAQs, recipients’ use of revenue loss funds does not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Condition - The County entered into intergovernmental agreements with local communities using the revenue loss provision of the County’s CSLFRF award. Those contracts contained subrecipient language/provisions. The County did not have adequate controls in place to ensure that the form and substance of these agreements were in compliance with the intended nature of the relationship and/or the requirements of the federal award. Questioned Costs - None Identification of How Questioned Costs Were Computed Not applicable, as there were no questioned costs identified Context - The County entered into agreements with local communities to fund various projects to benefit residents in these communities that amounted to approximately $71 million under the revenue loss provisions. During the fiscal year ended September 30, 2023, these communities spent and were reimbursed for approximately $6.7 million of costs under these agreements. The agreements included language that suggested Uniform Guidance applicability and that indicated the existence of a pass through/subrecipient relationship between the County and the local communities. Cause and Effect - The County provided funding to the communities via an intergovernmental agreement that included subrecipient language/provisions. Without further communication to the communities about the intended nature of the relationship, communities may improperly conclude they are subject to certain compliance requirements, including but not limited to incorrectly concluding that they are required to report expenditures incurred under the agreements on their schedule of expenditures of federal awards, which could further lead to those communities to incorrectly concluding that they are subject to the requirement to obtain a single audit and/or to incorrect major program determinations being made in conjunction with their single audit engagements. Recommendation - We recommend the County evaluate its controls to ensure the substance and form of each agreement. We further recommend the County evaluate whether additional guidance needs to be provided to recipients. Views of Responsible Officials and Planned Corrective Actions - Management does not agree with this finding. As noted in the Condition of this finding itself, the agreements in question are intergovernmental agreements , clearly labeled as such. They specifically state they are funding each project with SLFRF funds under the Revenue Replacement Category (Category 6.1). Section 4.01 states “Project Funds must be used for eligible activities for revenue replacement funds as described in the SLFRF final rules, regulations, and guidance.” As Management informed the auditor before auditor edited its preliminary finding to reflect this, “as described in the SLFRF final rules, regulations, and guidance” under 6.1 there are no subrecipients by definition as the County itself is the beneficiary. The County is being "made whole" for calculated revenue loss due to the pandemic under this category; therefore, once the funds are obligated and spent by the County the purpose has been satisfied. The entity receiving those funds would not have subrecipient obligations. FAQ 13.14 confirms this understanding. The communities enter into subrecipient agreements on an annual basis with the County and are very familiar with the format of such agreements. Those agreements always state clearly that they are subrecipient agreements in the title and the introductory paragraph. The communities also enter into intergovernmental agreements with the County on an annual basis. Therefore, they are aware that these two types of agreement are distinct. In this case the agreements are clearly labeled as intergovernmental agreements in the title and the introductory paragraph and there is no mention of subrecipient status in the body of the agreement. In fact, Section 4.05, Relationship of Parties, states “Relationship of the Community to the County is, and will continue to be, that of an independent contractor.” In the subrecipient agreements the County enters into with these communities on an annual basis this clause says the relationship is that of a subrecipient. Therefore, the agreement is clear on the relationship and the communities would know to consult the County if there is any question of compliance requirements. Any language requiring compliance with provisions applicable to subrecipients was paired with the qualifier "applicable." For example Article IX requires compliance with laws only “as applicable”. This is catch-all language and is good legal practice to include for contingencies. In this case, the program being a new federal program, the County intentionally included this catch-all language referencing compliance with 2 CFR 200 (Uniform Guidance) “as applicable” and required the community to “provide any disclosures required by law.” to allow itself the ability to enforce should the laws, rules, or regulations be interpreted in a certain manner to be applicable or even changed. This is based on experience with programs such as the Neighborhood Stabilization Program through HUD where such occurrences were noted. Consequently; the County believes it would actually be irresponsible not to include such language. As far as the recommendation of increased guidance to contracted communities, given the increased guidance available now the County has provided such guidance as needed. Auditor seems to indicate that the communities “may improperly conclude they are subject to certain compliance requirements, including but not limited to incorrectly concluding they are required to report expenditures incurred under the agreements on their schedule of expenditures of federal awards, which could further lead to those communities incorrectly concluding they are subject to the requirement to obtain a single audit and/or incorrect major program determinations being made in conjunction with their single audit engagements.” The finding is essentially noting that if these communities conclude that they have a subrecipient relationship and that the Uniform Guidance is applicable to them as subrecipients it is an improper conclusion. Given the wide availability of FAQs and guidance on this topic, Management agrees it would be an improper conclusion.

Assistance Listing Number, Federal Agency, and Program Name - 10.557, U.S. Department of Agriculture - WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Award Identification Number and Year - E20233245-00 and E20234077-00 Pass-through Entity - Michigan Department of Health and Human Services Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes; 2022-011 Criteria - Per 2 CFR 200.501(g), federal award compliance requirements normally do not pass through to contractors. However, the grant recipient is responsible for ensuring compliance for procurement transactions, which are structured such that the contractor is responsible for program compliance or the contractor’s records must be reviewed to determine program compliance. Condition - Controls in place were not adequate to ensure the County maintained responsibility for compliance with eligibility standards when eligibility determinations are made by the contractor. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - During eligibility testing, we noted 31 out of 60 eligibility samples where employees of the contractor performed both the intake and the certification and review function, with no further review by a county representative. Cause and Effect - The County is subject to the MI-WIC Policy issued by the Michigan Department of Health and Human Services, which stresses the importance of maintaining appropriate separation of duties when performing the intake and certification of eligible program participants. While the County has designed its controls in conjunction with the MI-WIC Policy guidance, these controls are not adequate to ensure compliance with the Uniform Guidance, which requires the County have controls in place to ensure that a representative of the County performs a review of eligibility intake and certification performed by contractor employees. Recommendation - We recommend the County implement a process by which a county representative performs a review of contractor eligibility determinations. Views of Responsible Officials and Corrective Action Plan - Management has fully implemented a process, as of January 2024, by which a county representative performs a review of contractor eligibility determinations.

Assistance Listing Number, Federal Agency, and Program Name - 14.218 - U.S. Department of Housing and Urban Development (HUD) - CDBG - Entitlement Grants Cluster - Community Development Block Grants/Entitlement Grants 93.563 - Title IV D, U.S. Department of Health and Human Service - Child Support Enforcement (CSE) 10.557, U.S. Department of Agriculture - WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Award Identification Number and Year - CDBG - B-21-UC-26-0003 and B-22-UC-26-0003 CSE - CSCOM-17-82003 WIC - E20233245-00 and E20234077-00 Pass-through Entity - CDBG - N/A, direct funded CSE - Michigan Department of Health and Human Services WIC - Michigan Department of Health and Human Services Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2022-014 Criteria - 2 CFR Appendix V to Part 200 requires each major local government, defined as a local government that receives more than $100 million in direct federal awards, to submit annually to its federal cognizant agency a cost allocation plan whereby central service costs can be identified and assigned to benefited activities on a reasonable and consistent basis. Condition - Controls in place were not adequate to ensure compliance with 2 CFR 200 Appendix V submission requirements for the County’s self-insurance cost allocation process and annual chargeback plan. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs Context - During our review of the County’s process for allocating self insurance costs across the various departments and the annual chargeback plan, we noted the County did not submit its plan for self insurance costs or its annual chargeback plan used to allocate expenditures to the federal grants identified above for the fiscal year ended September 30, 2023 prior to the allocation of these costs. The underlying costs and the allocation methodology were allowable and reasonable, as supported by documentation, thus creating no questioned costs. Beginning in 2020 with the influx of COVID-19 funding, the County received direct funded awards in excess of $100 million, therefore becoming a major local government. Prior to 2020, the County was only required to develop a cost allocation plan in accordance with 2 CFR 200 and maintain the plan and related supporting documentation for audit. Cause and Effect - Procedures and controls in place were not adequate to identify that the County became a major local government, requiring different documentation and submission requirements for self insurance cost allocation process and annual chargeback plan. As a result, no plans were submitted to the cognizant agency for approval. Recommendation - We recommend the County review 2 CFR 200, including the applicable appendixes, to assess the submission and documentation requirements for all cost allocation methodologies. Additionally, we recommend that the County document its methodology for allocating self insurance costs and annual chargeback costs across the various departments, including formalizing its documentation surrounding procedures and controls. Further, we recommend the County implement a process for ensuring these plans are submitted to a federal cognizant agency for approval. Views of Responsible Officials and Planned Corrective Actions - Management communicated with the cognizant agency which confirmed in November 2021, OMB issued guidance relating to CARES Act funding and its effect on indirect cost. Part of this guidance stated that “CARES Act funding should not be included toward the threshold amount for indirect cost submission required in 2 C.F.R. part 200, Appendix VII, paragraph D.1.b”. Therefore, County governments that met the $100 million threshold as a result of CARES Act funding are not required to submit their Central Service Cost Allocation Plan for approval. The CARES Act funding would have increased the County’s funding in excess of $100 million, which should not have been a part of the determination for the original finding. However, since CSLFRF funds were also received increasing the County’s funding in excess of $100 million the annual chargeback plans were submitted to the cognizant agency and U.S. Treasury in 2023 for implementation in FY 24 and will continue to submit subsequent plans to federal cognizant agency, as required by 2 CFR 200 Appendix V.

Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development (HUD), CDBG - Entitlement Grants Cluster - Community Development Block Grants/Entitlement Grants, COVID-19 CDBG - Entitlement Grants Cluster - Community Development Block Grants/Entitlement Grants (CDBG-CV) Federal Award Identification Number and Year - B-16-UC-26-0003, B-17-UC-26-0003, B-18-UC-26-0003, B-19-UC-26-0003, B-20-UC-26-0003, B-21-UC-26-0003, B-22-UC-26-0003, and COVID-19-CDBG-CV Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 24 CFR 91.520, a grantee's Consolidated Annual Performance and Evaluation Report (CAPER) is due 90 days after the close of a jurisdiction's program year. Condition - The County did not have adequate controls in place to submit the Consolidated Annual Performance and Evaluation Report for the program year ended June 30, 2023 within 90 days after the close of the program year. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - The County is required to file the CAPER annually, and the report is due to HUD within 90 days after the end of the program year. The CAPER for the program year ended June 30, 2023 was due to HUD on October 1, 2023, but the County filed the CAPER on October 6, 2023. Cause and Effect - The County was aware of the CAPER due date; however, certain clarifications were requested from HUD regarding certain portions of the CAPER, which caused a delay in filing the CAPER. Recommendation - We recommend the County build a timeline for preparation and completion of the CAPER to ensure timely filing. Views of Responsible Officials and Planned Corrective Actions - Management agrees with the finding. Prior to submitting the CAPER, it was brought to the attention of staff that the CDBG Financial Summary Report had to be completed and attached to the CAPER. Staff held discussions with HUD during an MSHDA conference in September 2022 to obtain assistance in completing the report. It was suggested that a meeting would be necessary to provide technical assistance for the report. Staff met with HUD on October 4 to discuss the report and provide further guidance. The CAPER was completed and submitted on October 6. The CDBG Financial Summary Report was completed as part of the CAPER. Management will ensure the CAPER is submitted prior to the deadline moving forward.

Assistance Listing Number, Federal Agency, and Program Name – 14.218, Department of Housing and Urban Development (HUD), CDBG – Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants Federal Award Identification Number and Year – B-22-UC-26-0003 Pass-through Entity – N/A Finding Type – Material noncompliance and significant deficiency Repeat Finding - No Criteria – The Federal Funding Accountability and Transparency Act as amended by section 6202 of Pub L. No. 110-252 (“Transparency Act”) requires recipients of Federal awards to report data using the FFATA Subaward Reporting System (FSRS) Tool. The report is required to be filed no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition - The County filed the FFATA report seven months late. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable as there were no questioned costs identified. Context – During the fiscal year, the County was required to submit one FFATA report in July 2023 for an award of CDBG funds made in June 2023. The following table summarizes the transactions examined and the non-compliance identified: See the Notes to the SEFA for chart/table. Cause and Effect - The County tracks subaward obligation dates through the County’s contracting system on a monthly basis. FFATA reporting is completed when the subaward obligation is listed as fully approved in the contracting system. The subaward obligation was initially listed as ‘rejected’ and thus no action was taken by the County. The subaward obligation was later listed as ‘fully approved’ resulting in the County submitting the FFATA report in February 2024, subsequent to the due date of July 31, 2023. Recommendation - We recommend the County review its process for tracking subaward obligations to ensure that they are able to adhere to the FFATA filing requirement, i.e. no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made. We also recommend that the County evaluate whether additional fields, notifications, etc. are necessary to timely identify when FFATA reporting is required within the contracting system. Views of Responsible Officials and Corrective Action Plan - Management agrees with this finding. The County will implement a notification process to include communication to the grants division once grant contracts are approved. Subsequent FFATA reports will be filed of notification of approval no later than the last day of the month following the month in which the subaward/subaward amendment obligation.

Assistance Listing Number, Federal Agency, and Program Name - 10.557, U.S. Department of Agriculture ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Award Identification Number and Year E2022241300; E20223664-00 Pass through Entity - Michigan Department of Health and Human Services Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.501(g), Federal award compliance requirements normally do not pass through to the contractors. However, the grant recipient is responsible for ensuring compliance for procurement transactions which are structured such that the contractor is responsible for program compliance or the contractor's records must be reviewed to determine program compliance. Condition - Controls in place were not adequate to ensure the County maintained responsibility for compliance with eligibility standards when eligibility determinations are made by the contractor. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs. Context - During eligibility testing, we noted 16 out of 40 eligibility samples whereby employers of the contractor performed both the intake and the certification and review function, with no further review by a County representative. Cause and Effect - The County is subject to the MI-WIC Policy issued by the Michigan Department of Health and Human Services, which stresses the importance of maintaining appropriate separation of duties when performing the intake and certification of eligible program participants. While the County has designed its controls in conjunction with the MI-WIC Policy guidance, these controls are not adequate to ensure compliance with Unifor m Guidance, which requires the County have controls in place to ensure that a representative of the County performs a review of eligibility intake and certification performed by contractor employees. Recommendation - We recommend the County implement a process by which a County representative performs a review of contractor eligibility determinations. Views of Responsible Officials and Corrective Action Plan - Management will implement and follow a process of reviewing of eligibility intake and certification performed by contractor employees by internal County representative. This will be completed by the internal county WIC Compliance Manager or designee and will utilize the audit tools provided by the state that includes monitoring of eligibility intake and certification. The WIC Compliance Manager will request contractors to complete audit reporting templates monthly and flag any items in need of further investigation with the contractor.

Assistance Listing Number, Federal Agency, and Program Name - 93.224, Department of Health and Human Services, Health Center Cluster, including COVID-19 Federal Award Identification Number and Year - H80CS24135 08 03; 1 H8FCS41413-01-00; Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Health Centers must prepare and apply a sliding fee discount schedule so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient's ability to pay as follows : a. Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the FPG, or the health center applies only a nominal charge; b. A full discount is applied to fees for the health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; c. Fees for health center services are discounted based on gradations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and d.No sliding fee discount is applied to fees for health center services provided to individuals and families with annual incomes above 200 percent of the FPG. Condition - The County has a sliding fee discount policy that is based on income and family size and schedule in place; however, it was not followed for all patients during the year. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - For 4 of a sample of 40 patients during the year, the sliding fee discount applied was not in accordance with the County's approved sliding fee discount schedule in place. Cause and Effect - Inaccurate date input by intake staff was the identified cause for 3 of the errors and an incorrect calculation by the electronic health record system that was not detected was the cause for 1 error. The result was the patients were not charged the correct amount for services based on the sliding fee discount which they qualified for based on supporting documentation provided by the patient. Recommendation - We recommend a process be implemented to ensure the sliding fee discount provided to the patients is reviewed within the electronic health record system for inconsistency with the patient provided support for the discount. Views of Responsible Officials and Planned Corrective Actions - Management will implement and follow a process of reviewing accuracy of intake data and application of sliding fee calculations performed by co-applicant employees by internal County representative.

Assistance Listing Number, Federal Agency, and Program Name - 21.023, Department of the Treasury, COVID-19 Emergency Rental Assistance Program Federal Award Identification Number and Year - ERA2-0476 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per the 2022 Compliance Supplement for ALN 21.023, financial assistance for eligible households may include payment of rent, rent arrears, utilities and home energy costs, utilities and home energy costs arrears, and any other expenses related to housing. Condition - The County did not have adequate controls in place to ensure that payments to beneficiaries were calculated correctly. Questioned Costs - $21,529 Identification of How Questioned Costs Were Computed - Questioned costs were computed based on the difference between the rental assistance payment disbursed and the rental assistance payment calculated in accordance with the U.S. Treasury guidance. Context - Out of a sample of 60 assistance cases selected for testing, 6 samples were not calculated in accordance with the U.S. Treasury guidance. The inaccurate calculation caused an overpayment in rental assistance charged to the program and paid to the beneficiary. In three of the six instances, the County did not consider partial rent payments made by the beneficiaries. In the other instances, the County did not have adequate documentation to support an amount included in the calculation of benefits. Cause and Effect - While the County has procedures in place to review the rental assistance calculations, management's review did not prevent an inaccurate assistance payment. As a result, the County disbursed an amount that was not calculated in accordance with the U.S. Treasury guidance. Recommendation - We recommend that the County review its controls specific to the calculation of benefits to ensure that inputs used in the calculation are supported by adequate documentation. We also recommend that the County assess whether the reviewer should be required to recalculate the benefit payment. Views of Responsible Officials and Planned Corrective Actions - Management will implement and follow a process of reviewing of consultant administered activity for accuracy by internal County representative.

Assistance Listing Number, Federal Agency, and Program Name - 14.218 ? U.S. Department of Housing and Urban Development (HUD) ? Community Development Block Grant (CDBG) ? Entitlement Grants Cluster 14.239 - U.S. Department of Housing and Urban Development (HUD) ? HOME Investment Partnership (HOME) 93.563 ? Title IV D, U.S. Department of Health and Human Service - Child Support Enforcement (CSE) Federal Award Identification Number and Year - CDBG ? B-20-UC-26-0003 and B-21-UC-26-0003 HOME ? M-21-DC260213 CSE ? CSCOM-17-82003 Pass through Entity - HOME and CDBG ? N/A, direct funded CSE - Michigan Department of Health and Human Services Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR Appendix V to Part 200 requires each major local government, defined as a local government that receives more than $100 million in direct Federal awards, to submit annually to its Federal cognizant agency a cost allocation plan whereby central service costs can be identified and assigned to benefited activities on a reasonable and consistent basis. Condition - Controls in place were not adequate to ensure compliance with 2 CFR 200 Appendix V submission requirements for the County's self insurance cost allocation process and annual chargeback plan. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs Context - During our review of the County?s process for allocating self insurance costs across the various departments as well as the annual chargeback plan, we noted the County did not submit its plan for self insurance costs nor its annual action plan to its Federal cognizant agency for approval. The underlying costs and the allocation methodology were allowable and reasonable, as supported by documentation, thus creating no questioned costs. Beginning in 2020 with the influx of COVID funding, the County received direct funded awards in excess of $100 million, therefore becoming a "major local government." Prior to 2020 the County was only required to develop a cost allocation plan in accordance with 2 CFR 200 and maintain the plan and related supporting documentation for audit. Cause and Effect - Procedures and controls in place were not adequate to identify that the County became a major local government requiring different documentation and submission requirements for the self insurance cost allocation process and annual chargeback plan. As a result, these plans were not submitted to the cognizant agency for approval. Recommendation - We recommend the County review 2 CFR 200, including the applicable Appendixes, to assess the submission and documentation requirements for all cost allocation methodologies. Additionally, we recommend that the County document its methodology for allocating self insurance costs and annual chargeback costs across the various departments, including formalizing its documentation surrounding procedures and controls. Further, we recommend the County implement a process for ensuring these plans are submitted to a Federal cognizant agency for approval. Views of Responsible Officials and Planned Corrective Actions - Management agrees and will submit subsequent plans to federal cognizant agency as required by 2 CFR 200.

Assistance Listing Number, Federal Agency, and Program Name 14.218 U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) Entitlement Grants Cluster Federal Award Identification Number and Year Contract numbers: B 16 UC 26 0003, B 17 UC 26 0003, B 18 UC 26 0003, B 19 UC 26 0003, B 20 UC 26 0003, and COVID 19 CDBG CV Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes, 2020 011 Criteria 24 CFR 135.90 requires each recipient administering covered public housing assistance in excess of $200,000 in a program year to submit an annual Section 3 Summary Report to HUD. If the program providing the Section 3 covered assistance does not require an annual performance report, the Section 3 report is to be submitted by January 10 each year or within 10 days of the project completion, whichever is earlier. Condition The County did not submit the required Section 3 Summary Report for the program year ended June 30, 2021. Questioned Costs None Identification of How Questioned Costs Were Computed Not applicable, as there are no questioned costs Context The County is required to file the HUD 6002, Section 3 Summary Report for CDBG. Cause and Effect Procedures and controls in place were not adequate to ensure the Section 3 Summary Report was filed, as required by HUD. Recommendation We recommend the County implement a methodology, such as a checklist or calendar reminders, to ensure that the required Section 3 report is completed and submitted annually. Additionally, the County should retain documentation used to compile the data for the report. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding. The data was collected, and entry is anticipated in the current fiscal year. The Community Development Division of Economic Development is onboarding an employee responsible for this task who will be certified in the Section 3 reporting system, a tracking system to log and review program requirements and retain documentation.

Assistance Listing Number, Federal Agency, and Program Name 14.218 U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) Entitlement Grants Cluster Federal Award Identification Number and Year Contract number B 19 UC 26 0003 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 24 CFR, Part 58.1, projects must have an environmental review unless they meet criteria specified in the regulations that would exempt or exclude them from this requirement (24 CFR, Part 58.34). Condition Controls in place were not adequate to ensure documentation was available to demonstrate that environmental reviews were performed or exempt from being performed. Questioned Costs N/A Identification of How Questioned Costs Were Computed N/A Context The County incurred expenses related to projects that were allowable under the terms of the grant and were reimbursed by HUD for this activity. For 5 of the 18 projects tested and subject to environmental review, the County was unable to produce documentation that an environmental review had been performed. Cause and Effect Procedures and controls in place were not adequate to ensure environmental reviews were performed on those projects not deemed to be exempt, as required by HUD. Recommendation We recommend the County implement a methodology, such as a checklist or other tracking mechanism, to ensure that projects needing an environmental review are logged and the required environmental reviews are performed. Additionally, the County should retain documentation as evidence that environmental reviews have been performed as needed. Views of Responsible Officials and Planned Corrective Actions Management agrees with this finding and plans to implement a tracking system to log and review required environmental requirements and retain documentation.

Assistance Listing Number, Federal Agency, and Program Name 21.019 U.S. Department of the Treasury COVID 19 Coronavirus Relief Funds (CRF or the "Fund") Federal Award Identification Number and Year SLR 2004142378 and 82 0000 CRLGG Pass through Entity 82 0000 CRLGG State of Michigan SLR 2004142378 N/A, Direct Award Finding Type Material weakness Repeat Finding No Criteria Per the Federal Register, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides that payments from the Coronavirus Relief Fund may only be used to cover costs that: 1. are necessary expenditures incurred due to the public health emergency with respect to the coronavirus disease 2019 (COVID 19) 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. In addition, CRF recipients are required to adhere to the Uniform Guidance internal control regulations within 2 CFR 200.303 and additional requirements stipulating allowable uses prescribed by the U.S. Department of the Treasury within the Federal Register. Condition Internal controls were not adequate to ensure that costs charged to the Fund were incurred within the prescribed period of performance (March 1, 2020 to December 31, 2021) and adhered to the guidance on allowable uses as prescribed by the U.S. Department of the Treasury within the Federal Register. Questioned Costs None Identification of How Questioned Costs Were Computed Refer to context below. Context While testing the gross population of payroll costs charged to the Fund, audit procedures identified 3 of 65 transactions, which approximated $138,000, that were incurred outside of the prescribed period of performance. One of these transactions, totaling approximately $123,000 was also not in accordance with U.S. Treasury guidance on allowable uses of the Fund. The pool of gross payroll costs identified by the County for allocation to the Fund, which included the costs described in the preceding paragraph, totaled approximately $69.0 million. However, the County only allocated approximately $50.0 million of these gross payroll costs to CRF. The payroll costs ultimately allocated to the Fund excluded approximately $2.5 million of gross payroll costs specifically identified as having been charged to other grant programs. The County further reduced the payroll costs allocated to the Fund by approximately $6.5 million by establishing an allowance for conservatism, which allocated only a portion of the gross payroll not charged to other grant programs. Lastly, the remaining population of payroll costs to be allocated to the Fund was reduced by an additional amount of approximately $10.0 million to align with the budgeted use of the funds for the fiscal period. The County did not specifically identify which transactions within the payroll cost population were not ultimately allocated to the Fund as a result of this $10.0 million reduction. The aforementioned reductions were in excess of the costs identified as having been incurred outside of the prescribed period of performance; therefore, no known unallowable costs were allocated to the Fund. Additional testing procedures performed indicate that the population of gross payroll transactions from which the testing sample was selected contains likely unallowable costs totaling less than the $10.0 million reduction to the population. The County?s internal controls procedures did not include a verification process to ensure that the $6.5 million allowance or the $10.0 million reduction of costs allocated to align with the budget were adequate to cover potential unallowable costs. In addition, the County?s internal controls were not adequate to ensure that unallowable costs, including those incurred outside of the period of performance, were not included in the pool of gross payroll costs initially identified for allocation to the Fund. Cause and Effect The County aggregated a population of payroll costs that were used to allocate costs to CRF. Instead of specifically removing unallowable costs, e.g., those not within the period of performance, the County applied a reduction factor to the preliminarily determined payroll population, as noted above. As a result, Plante & Moran, PLLC was unable to conclude whether the transactions identified as outside of the period of performance were included or excluded from the amount of charges ultimately applied to CRF. Without the actual identification of costs included in the reduction factor, unallowable costs may have been charged to the grant. Recommendation We recommend that the County specifically identify payroll cost included in the population that should be excluded based on Treasury guidance and verify it does not exceed the reduction factors noted above. Views of Responsible Officials and Planned Corrective Actions Management does not agree with this finding because the planned control was effective. The expenditures were considered incurred when they became due during the period of performance, rather than time of accrual. The payroll codes utilized to separate functions were identified to represent substantially dedicated employees and any other eligible classification for covered benefits. The U.S. Department of Treasury guidance provides for all (100 percent) payroll and covered benefits costs for public health and public safety employees. In an effort to reduce noise about which benefits are covered and which are not, since the list provided by the federal guidance was not exhaustive the County only counted 95 percent of payroll and benefits based on total cost category budgeted and exhaustive review and selections of approved payroll codes. Presumably, if benefits that may come into question do not exceed 5 percent of the overall total of the payroll expense there is a sufficient reduction factor to cover all Wayne County expenses provided in the budget. These three of sixty six transactions questioned in the sampling regarding period of performance or appropriate coding fell within the reduction factor and warranted no further action and represents a functional control rather than significant system deficiencies. At the onset of the reporting period and then performed quarterly, Management and Budget (M&B) Consultants would obtain a detailed list of payroll transactions that occurred in the quarter to review and include in its model to ensure that costs it charged to the Fund were incurred and adhered to the guidance on allowable uses as prescribed by Treasury. The team would obtain the transactions from the general ledger and review the transactions individually and in the aggregate for any unusual or material transactions that may change the County?s methodology and approach of applying its allowance for conservatism which allocated only a portion of the gross payroll costs to the Fund. During its virtual management review including Guidehouse consultants and M&B, the County identified no transactions individually or in the aggregate that were material to justify a change in its methodology that has been consistently applied for the period that began on March 1, 2020 and ended on December 31, 2021. The payroll codes were reviewed in detail during 2020 and approved for inclusion into the calculation. Any new codes added during 2021 were excluded from the calculation and only the approved codes were used for the calculation on an ongoing basis.

Assistance Listing Number, Federal Agency, and Program Name 21.019 U.S. Department of the Treasury COVID 19 Coronavirus Relief Fund Federal Award Identification Number and Year SLR 2004142378 Pass through Entity N/A Direct funded Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per the Federal Register, each prime recipient of the Fund shall provide a quarterly financial progress report that contains COVID 19 related costs incurred during the covered period (the period beginning March 1, 2020 and ending on December 31, 2021). The prime recipient's quarterly financial progress report submission should be supported by the data in the prime recipient's accounting system. Condition Controls in place were not adequate to ensure financial information reported to the Treasury was supported by the books and records. Questioned Costs None Identification of How Questioned Costs Were Computed Reporting matter only Context While testing one of four reports sampled, audit procedures identified that the report was overstated by $6 million. Cause and Effect The County's decision to ultimately not charge costs to the grant was made subsequent to reporting to the Treasury. Once the decision was made, the controls were not adequate to correct the report in a future period resulting in the financial progress report to the Treasury being overstated by $6 million. Recommendation We recommend that the County correct the amount reported to the Treasury during the close out process, given that the grant has ended. Views of Responsible Officials and Planned Corrective Actions Management agrees with this finding. The Treasury reporting structures anticipates and allows corrections cumulatively. The County has since submitted the updated quarterly report.

CFDA Number, Federal Agency, and Program Name - 14.218 ? Department of Housing and Urban Development - Community Development Block Grant (CDBG) - Entitlement Grants Cluster Federal Award Identification Number and Year - Contract numbers: B-16-UC-26-0003, B-17-UC-26-0003, B-18-UC-26-003, B-19-UC-26-0003, B-20-UC-26-0003 and COVID 19 ? CDBG CV Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2019-010 Criteria - 24 CFR 135.90 requires each recipient that administers covered public housing assistance in excess of $200,000 in a program year to submit an annual Section 3 Summary Report to HUD. If the program providing the Section 3 covered assistance does not require an annual performance report, the Section 3 report is to be submitted by January 10 each year or within 10 days of the project completion, whichever is earlier. Condition - The County did not submit the required Section 3 Summary Report for the program year ended June 30, 2020. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - The County is required to file the HUD 6002, Section 3 Summary Report for CDBG. Cause and Effect - Procedures and controls in place were not adequate to ensure the Section 3 Summary Report was filed as required by HUD. Recommendation - We recommend the County implement a methodology, such as a checklist or calendar reminders, to ensure that the required Section 3 report is completed and submitted annually. Additionally, the County should retain documentation used to compile the data for the report. Views of Responsible Officials and Planned Corrective Actions - The County worked on putting in the Section 3 information for program year 2018 as agreed to with HUD since there has been no reporting from Wayne County in many years. We are in the process of catching up with program year 2019 and program year 2020 now that we have gained entry to the federal reporting system and have one year of reporting accomplished. The recent changes made to the CDBG Program by the County starting in program year 2019 will make it easier to provide Section 3 information since the County is now the contracting entity for projects rather than the individual 34 participating jurisdiction communities. The County will now catch up on reporting and is moving forward on plans to report timely.

CFDA Number, Federal Agency, and Program Name - 14.218 CDBG - Entitlement Grants Cluster (CDBG) Federal Award Identification Number and Year - "Various," B-16-UC-26-0003, B-17-UC-26-0003, B-18-UC-26-0003 Pass through Entity - Direct funded Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2018-009 Criteria - Per 24 CFR 570.504 (a), the receipt and expenditure of program income shall be recorded as part of the financial transactions of the grant program, and, per 24 CFR 570.504 (b), program income received before grant closeout may be retained by the recipient if the income is treated as additional CDBG funds subject to all applicable requirements governing the use of CDBG funds. Furthermore, when the recipient choses to retain program income or a subrecipient is allowed, by the pass through entity, to retain program income, it should be disbursed for eligible activities before additional cash withdrawals are made from the U.S. Treasury (24 CFR 570.504(b)(ii)). Condition - During fiscal year 2019, the County implemented a mechanism to track program income earned by subrecipients and to ensure that draw down of funds from the U.S. Department of Housing and Urban Development (HUD) were net of program income received by subrecipients. However, the County did not report the program income to HUD and also did not record program income and expenditures of program income in the County?s general ledger. Furthermore, the expenditures of program income were not reported on the schedule of expenditures of federal awards (SEFA). Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - The County's subrecipient agreements stipulate that subrecipients can retain program income with written permission from the County and must deduct that program income from the subsequent reimbursement request. In practice, the County has allowed subrecipients to retain program income without requiring written permission. During fiscal year 2019, it was noted that the County?s subrecipients earned and reported approximately $400,000 of program income. The County did not record the program income or expenditures of the program income within the general ledger. Cause and Effect - Controls in place did not enforce the proper recording and reporting of program income and expenditures of program income within the County?s general ledger. As a result, the SEFA for fiscal year ended September 30, 2019 is understated by approximately $400,000. Recommendation - In addition to tracking the program income earned and ensuring that expenditures are properly netted with program income before drawing funds from HUD, we also recommend the County implement controls to ensure the following: a. Program income is recorded in the County?s general ledger and reported to HUD b. The expenditures of program income are recorded in the County?s general ledger and reported on the SEFA. Views of Responsible Officials and Corrective Action Plan - The Wayne County Community Development Block Grant Program (CDBG) has made great strides in tracking program income generated by activities at the participating jurisdiction level. The CDBG Program has been centralized, and participating jurisdictions will be required to remit all program income generated from CDBG grant activities to the County, which will be entered in the general ledger and applied to subsequent voucher request. The program income will also be tracked in IDIS and proper support will be shared with the grants division for SEFA reporting.

CFDA Number, Federal Agency, and Program Name - 14.218 CDBG Entitlement Grants Cluster (CDBG) 14.239 HOME Investment Partnership Program (Home) Federal Award Identification Number and Year - CDBG Contract numbers: "Various," B-16-UC-26-0003, B-17-UC-26-0003, B-18-UC-26-0003, Home Contract Numbers: M-14-DC-26-0213, M-15-DC-26-0213, M-16-DC-26-0213, M-17-DC-26-0213, and M-18-DC-23-0213 Pass through Entity - Direct funded Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2018-012 Criteria - 24 CFR 135.90 requires each recipient that administers covered public housing assistance in excess of $200,000 in a program year to submit an annual Section 3 summary report to HUD. If the program providing the Section 3 covered assistance does not require an annual performance report, the Section 3 report is to be submitted by January 10 each year or within 10 days of the project completion, whichever is earlier. Condition - The County did not submit the required Section 3 summary report for the program year ended June 30, 2019. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - The County is required to file the HUD 6002, Section 3 summary report for CDBG and HOME. Cause and Effect - Procedures and controls in place were not adequate to ensure the Section 3 summary report was filed, as required by HUD. Recommendation - We recommend the County implement a methodology, such as a checklist or calendar reminders, to ensure that the required Section 3 report is completed and submitted annually. Additionally, the County should retain documentation used to compile the data for the report. Views of Responsible Officials and Planned Corrective Actions - Although the required Section 3 summary report was not submitted, the data was collected. All contracts subject to Section 3 were researched and letters obtained that stated that contractors did not have to do any hiring as a result of the CDBG or HOME award. Centralization of the CDBG Program will help with the tracking of Section 3, and the required report will be submitted. Data gathering is in progress to be entered into SPEARS to meet the upcoming Section 3 reporting requirement.

CFDA Number, Federal Agency, and Program Name - 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Federal Award Identification Number and Year - E20190773-00, E20191855-00 Pass through Entity - Michigan Department of Health and Human Services Finding Type - Significant deficiency Repeat Finding - No Criteria - Per Section 15.03 of the County?s subrecipient agreements, if the subrecipient requests reimbursement or payment for reimbursable expenses, the appropriate receipts must be attached to the reimbursement request. Condition - Our testing indicates that the County is not requiring subrecipients to provide the appropriate receipts in order to be reimbursed in practice. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A No questioned costs were identified. Context - Of 15 subrecipient payments tested for allowable costs, none of the subrecipient reimbursement requests included the appropriate receipts but were reimbursed by the County. The County was able to obtain the receipts or other supporting documentation from its subrecipients for the costs reimbursed, and, upon our review of that documentation, no unallowable costs were identified. Cause and Effect - The County's controls did not ensure that subrecipients were following the terms of the subrecipient agreement when requesting reimbursement from the County. Inadequate monitoring of subrecipient compliance with the terms of the agreement could result in noncompliance and questioned costs on the part of the subrecipients and the County. Recommendation - The County should review its subrecipient agreements to determine whether there are any essential terms that are not being followed in practice. If so, the County should evaluate whether the term/condition is in fact essential or whether the provisions require modifications. The County should design controls over subrecipient payments that would ensure all provisions of the subrecipient agreements are being monitored and met. Views of Responsible Officials and Planned Corrective Actions - Management agrees with this finding; however, this finding has been identified in the 2018 57 004 Auditor General?s engagement audit of the WIC program. The corrective action plan prepared for that engagement has been fully implemented.

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