DETROIT WAYNE INTEGRATED HEALTH NETWORKNon-Profit

Assistance Listing, Federal Agency, and Program Name ALN 93.982, U.S. Department of Health and Human Services, Mental Health Disaster Assistance and Emergency Mental Health Regular Services Program Wayne County Strong Federal Award Identification Number and Year 20255313 00, 2025 Pass through Entity Michigan Department of Health and Human Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 DWIHN’s internal controls were not sufficiently designed and/or operating effectively to prevent the submission of unallowable costs for reimbursement under the federal award. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed Not applicable Context DWIHN submitted unallowable costs for reimbursement to the funding agency, including unallowable indirect costs and a duplicate invoice from one vendor. While DWIHN had a detective control in place to review expenditures included in reimbursement requests, the control was performed after the expenditures had been paid and included in reimbursement submissions. Due to the timing of this review, the detective control did not prevent DWIHN from paying the unallowable costs and subsequently requesting reimbursement for those costs. Upon identification of the unallowable expenditures, DWIHN took prompt corrective action, including recoupment of the funds from the applicable sources and repayment to the funding agency for the disallowed amounts. Ultimately, the grant was properly accounted for at the end of the grant period. Cause and Effect Although DWIHN had preventive and detective controls in place related to reimbursement requests, those controls did not operate effectively as designed for this grant program. As a result, unallowable costs were reimbursed to DWIHN by the granting agency prior to being identified and remediated. Recommendation We recommend that DWIHN strengthen and timely execute its review procedures over reimbursement requests and supporting documentation to ensure that all expenditures submitted for reimbursement comply with the terms and conditions of the grant award. This may include enhancing preventive controls or adjusting the timing of existing reviews to ensure unallowable or duplicate costs are identified and excluded prior to submission to the funding agency. Views of Responsible Officials and Corrective Action Plan DWIHN concurs with the finding. However, it should be noted that it is customary and standard practice to charge the indirect de minimis rate to federal grants in accordance with 2 CFR 200.414(f) Indirect Costs and the Department of Health & Human Services Grants Policy Statement section 2.3.4.6. Indirect Cost Rates. In addition, one (1) out of the seven (7) contracted vendors submitted FSR’s with indirect costs to the project; six (6) providers submitted the FSR’s without indirect cost thus adhering to the instructions. Further, the unallowed costs and duplicate payment were identified, corrected, and remediated by the finance staff prior to submission of the final reports, closeout of the grant and audit fieldwork. Finally, program and finance staff responsible for the approving and processing of FSR’s have been informed of the need to review FSR’s in greater detail before they are submitted, approved, and payment occurs. A more detailed review of the FSR’s as adherence to established policies and procedures, will eliminate the risk of errors and omissions.

Assistance Listing Number, Federal Agency, and Program Name - 14.267 - U.S. Department of Housing and Urban Development (HUD) - Continuum of Care Program Federal Award Identification Number and Year - Fiscal years 2019, 2018, and 2017 Pass-through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 24 CFR 578.103(a), the recipient and its subrecipients must establish and maintain standard operating procedures for ensuring that Continuum of Care program funds are used in accordance with the requirements of this part and must establish and maintain sufficient records to enable HUD to determine whether the recipient and its subrecipients are meeting the requirements of this part. Condition - During the fiscal year ended September 30, 2021, Detroit Wayne Integrated Health Network's (DWIHN) Continuum of Care program was subject to a monitoring visit by HUD's Detroit field office related to grant programs spanning the period from fiscal year 2017 to fiscal year 2019. Among the outcomes of the review conducted was a finding related to DWIHN?s staff reimbursing one subrecipient for certain costs with insufficient payment supporting documentation, which resulted in funds being misappropriated by an individual who was employed by the subrecipient. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - The subrecipient has replenished the funds, such that this did not result in ineligible cost activity as part of this grant program; however, it did raise awareness about the risk and opportunity for misappropriation of funds to occur when certain controls are not in place. Cause and Effect - The subrecipient for this grant program was not required to provide proof of payment prior to reimbursement, resulting in DWIHN reimbursing the subrecipient for costs that were not actually incurred for the program and creating the opportunity for those funds to be used for invalid expenses unrelated to the grant program. The subrecipient has since replenished these costs toward eligible activities, thereby eliminating any questioned costs. Recommendation - It is our understanding that DWIHN has since modified its procedures and policies to require that canceled checks be included in the subrecipient?s billing submission. It will be important to continue to internally monitor all such program activity periodically to ensure that controls over such disbursements continue to remain in place and are effective going forward. Views of Responsible Officials and Corrective Action Plan - DWIHN concurs with the finding and now requires canceled checks prior to reimbursing the provider.

Assistance Listing Number, Federal Agency, and Program Name - 93.788 - U.S. Department of Health and Human Services - State Opioid Targeted Response and State Opioid Response II Federal Award Identification Number and Year - Fiscal year 2021 Pass-through Entity - The University of Michigan Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - No Criteria - Pursuant to DWIHN's grant agreement with the Michigan Department of Health and Human Services (MDHHS), Financial Status Reports (FSR) must be submitted on a monthly basis no later than 30 days after the close of each calendar month. The monthly FSRs must reflect total actual program expenditures up to the total agreement amount. Condition - MDHHS conducted a virtual financial site visit (i.e., desk review) for the quarter ended December 31, 2020. As part of that visit, MDHHS reviewed expenses reported by DWIHN on the FSR for the State Opioid Targeted Response and State Opioid Response II programs. MDHHS' report included several findings related to the FSRs not being completed properly as it relates to reporting indirect costs, including indirect costs being incorrectly categorized as salaries and wages, fringe benefits, and supplies and materials. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - All expenses reported were eligible costs of the grant program, were supported by appropriate records, and were reconciled to the expenses in the accounting records. The finding is solely a reporting finding, as it is specific to the accuracy of how certain program expenses were reported on the FSR. Cause and Effect - The classification of expenses and, therefore, how they are reported can vary based on whether third-party recipients of the grant funds are considered vendors versus subrecipients. Based on discussions with management, it is our understanding that the reporting errors identified during the desk review resulted from DWIHN continuing to work with MDHHS regarding its provider network relationships and how that impacts the FSR reporting. Recommendation - It is our understanding that the final DWIHN budget was amended to allocate all indirect costs to the appropriate category and that reporting of indirect costs on the FSR was adjusted beginning in August 2021. As of the date of this report, DWIHN has fully rectified the FSR reporting matter with MDHHS and does not expect a recurrence going forward. Relative to the timing for filing monthly FSRs, we encourage DWIHN to ensure the reports are completed within the 30-day requirement going forward.

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