CITY OF LIVONIA, MICHIGANLocal Government

Assistance Listing, Federal Agency, and Program Name - 14.251, U.S. Department of Housing and Urban Development, Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Federal Award Identification Number and Year - B-24-CP-MI-1192 and B-22-CP-MI-0444 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - The City must establish and maintain effective internal controls to ensure compliance with federal requirements including written procedures for processing of federal payments as outlined in 2 CFR 200.305. Condition - The City did not have established written cash management procedures for processing of federal payments. 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 - During the year, the City received cash payments from federal sources and had no written procedures to ensure compliance with the requirements of federal payments. Although the written procedures were not established, there was no noncompliance identified with cash management requirements. Cause and Effect - The City did not have a control in place to ensure the required written cash management proecedures for processing federal payment are in place. Recommendation - Written procedures for processing of federal payments should be established, as required by 2 CFR 200.305. Views of Responsible Officials and Corrective Action Plan - The City will develop and implement written cash management procedures for processing federal payments.

Assistance Listing, Federal Agency, and Program Name COVID 19 21.027, U.S. Department of Treasury, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year N/A 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 The City must establish and maintain effective internal controls to ensure compliance with federal requirements including period of performance as outlined in 2 CFR 200.303. Condition The City lacked adequate controls to verify that expenditures charged to the grant were incurred within the proper period of performance. Transactions were processed without sufficient review or procedures around the period of performance, resulting in expenditures being charged from outside the allowable timeframe. 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 During the year, the City requested reimbursement for $151,621 of expenditures that were not within the period of performance. Cause and Effect The City's control for identifying whether expenditures charged to the grant was not effective as it relied on the date of the vendor's invoice and not the period in which the services were performed. As a result, reports and reimbursement requests improperly included $64,109 of expenditures incurred prior to the period of performance. The City identified the error after year end and appropriately excluded the expenditures from the final SEFA. Later, it was discovered that an additional $87,512 was improperly included on the SEFA. The City removed the additional expenditures discovered from the SEFA as well, thus creating no questioned costs. Recommendation Internal controls should be strengthened to ensure expenditures are being properly reviewed for period of performance before submitting for reimbursement. Views of Responsible Officials and Corrective Action Plan The CIty concurs with this finding and has already implemented controls to look specifically at service period of expenditures when reviewing invoices and submitting reports and reimbursement requests.

Assistance Listing, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) Federal Award Identification Number and Year - B-22-MC-26-0008/B-23-MC-26-0008 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 24 CFR Part 58 requires enivronmental review procedures for entities assuming HUD environmental responsibilities. Condition - Tiered environmental reviews were not completed for the City’s emergency and minor home rehabilitation activities. The environmental review for major rehabilitation activities was incomplete and was not submitted in HEROS. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During a monitoring visit by HUD in March 2023, it was noted that environmental reviews were incomplete or not completed. These findings related to program year 2022. The environmental reviews were subsequently completed and the finding was closed out by HUD in March 2024. Cause and Effect - Certain activities did not have environmental reviews conducted or the reviews were incomplete. Federal funds were spent prior to ensuring that the activity did not cause an adverse effect on the environment. Recommendation - Internal controls should be implemented to ensure environmental reviews are completed for all applicable activities. Views of Responsible Officials and Corrective Action Plan - This finding was partly due to the staff members' need for more training. HUD mandated that staff undergo training on HEROS as part of the resolution. The extra training enabled staff to revisit and finalize previous environmental reviews, ensuring compliance with environmental review regulations. After a follow up with HUD, the agency considers the issue resolved. Going forward, environmental reviews will be conducted once every five years, which is in compliance with HUD regulations. Tiered reviews will be added as projects are completed. Our rehab specialist will be responsible for entries in HEROS, and the division director will be responsible for public notices and hearings.

CFDA Number, Federal Agency, and Program Name - 14.239, U.S Department of Housing and Urban Development, HOME Investment Partnership Program; Federal Award Identification Number and Year - M-18-HOME 2018; Pass-through Entity - Wayne County; Finding Type - Significant deficiency; Repeat Finding - No; Criteria - Per 2 CFR 200.508(b), an auditee must prepare appropriate financial statements, including the schedule of expenditures of federal awards (SEFA), in accordance with ?200.510 financial statements. Per 2 CFR 200.510(b), the auditee must also prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements, which must include the total federal awards expended, as determined in accordance with ?200.502 basis for determining federal awards expended. Condition - The total amount of expenditures originally reported on the SEFA excluded $124,084 of expenditures that related to the current year. Questioned Costs - None; Identification of How Questioned Costs Were Computed - N/A; Context - The adjustment to total expenditures reported on the SEFA did not change the Type A or Type B thresholds, nor did it result in a change in major program determination. Although the SEFA was originally incorrect, the SEFA was corrected after this error was noted by the auditor. Cause and Effect - Internal control procedures over determining the correct amount of expenditures to record on the SEFA did not operate effectively. This resulted in an adjustment to the schedule of expenditures of federal awards. Recommendation - Internal control procedures should continue to be enforced to ensure the proper expenditures are reported on the schedule of expenditures of federal awards. Views of Responsible Officials and Corrective Action Plan - Prior to issuance of a final SEFA, the accounting department will verify that the amounts reported on the SEFA represent expenditures of all federal awards incurred during the fiscal year.