Auditor General
Thomas H. McTavish, C.P.A.
Auditor General
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Auditor General Thomas H. McTavish, C.P.A. Auditor General |
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| INTRODUCTION | This report contains the results of our financial audit, including the provisions of the Single Audit Act, of the Department of Commerce and the Community Development Block Grant Program within the Michigan Jobs Commission for the period October 1, 1993 through September 30, 1995. |
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| AUDIT PURPOSE | This financial audit of the Department was conducted as part of the constitutional responsibility of the Office of the Auditor General and is required on a biennial basis by Act 251, P.A. 1986, to satisfy the requirements of the Single Audit Act of 1984 and Office of Management and Budget Circular A-128, Audits of State and Local Governments. |
| BACKGROUND | The Department of Commerce was created by the Executive Organization Act of 1965 (Act 380, P.A. 1965). The primary responsibility of the Department is to administer programs related to economic development and the regulation of certain industries. The Department's overall mission is to promote and maintain a healthy economy in the State and to protect the consumer and certain occupations, professions, and industries regulated by the Department.
The Department is divided into several organizational units that are organized by the functions which they control. Thefinancial and administrative operations of the Department are concentrated in the Finance and Administrative Services Bureau. Responsibilities related to administering the Department's federal grants are shared principally by the staffs of the Community Development Block Grant (CDBG) Program, Office of Federal Grants; Public Service Commission; and Michigan State Housing Development Authority (MSHDA). In addition, MSHDA has received separate federal grants which it administers as part of its programs. MSHDA receives an annual independent audit of its financial operations and a biennial Single Audit. During our audit period, the Governor issued Executive Orders transferring many Department functions, including the CDBG Program, to the Michigan Jobs Commission, and some other functions to the Department of Natural Resources. Our audit scope included these operations through the effective date of the transfers. However, during our audit period, the Department provided accounting and administrative support to the CDBG Program. This program is a major federal financial assistance program that was included in the scope of this audit. The Department's major source of financing for operations is the State General Fund. In addition, the Department administers the Liquor Purchase Revolving Fund, MSHDA funds, and Michigan Strategic Fund, which were audited and reported on separately. The Department also administers the Urban Land Assembly Loan Fund. The scope of this audit excluded this operation. For fiscal year 1994-95, the Department's General Fund expenditures and operating transfers were $197,657,519. As ofSeptember 30, 1995, the Department had 2,115 full-time equated employees. |
| AUDIT OBJECTIVES AND CONCLUSIONS | Audit Objective: To assess the adequacy of the Department's internal control structure, including applicable administrative controls related to the management of federal financial assistance programs.
Conclusion: Our assessment of the Department’s internal control structure did not disclose any material weaknesses. However, we did identify reportable conditions relating to maximizing charges of administrative costs and charging correct indirect costs to the CDBG Program (Findings 1 and 2). Also, our assessment indicated that the Department was in substantial compliance with the requirements set forth in Sections 18.1483 - 18.1488 of the Michigan Compiled Laws pertaining to its systems of internal accounting and administrative control. Audit Objective: To assess the Department's compliance with both State and federal laws and regulations that could have a material effect on either the Department's financial schedules or any of its major federal financial assistance programs. Conclusion: Our assessment of the Department's compliance with laws and regulations did not disclose any instances of noncompliance that could have a material effect on the Department's financial schedules or any of its major federal financial assistance programs. Audit Objective: To audit the Department's financial schedules for the fiscal years ended September 30, 1995 and September 30, 1994. Conclusion: We expressed an unqualified opinion on the Department's financial schedules for the fiscal years ended September 30, 1995 and September 30, 1994. |
| AUDIT SCOPE AND METHODOLOGY | Our audit scope was to examine the financial and other records of the Department of Commerce and the Community Development Block Grant Program, Michigan Jobs Commission, for the period October 1, 1993 through September 30, 1995. Our audit was conducted in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances.
The following Department of Commerce operations were audited and reported on separately: Liquor Control Commission, Michigan State Housing Development Authority, and Michigan Strategic Fund. The scope of this audit excluded these operations. The Wurtsmith Base Conversion Authority was audited separately for fiscal year 1993-94, by the Defense Audit Agency, under contract from the Air Force Base Closure Authority. The Wurtsmith Base Conversion Authority was closed effective September 30, 1994. The questioned costs resulting from that audit are included in our schedule of questioned costs. Our audit objective for the assessment of the internal control structure included an evaluation of the Department's implementation of the requirements for establishing and maintaining systems of internal accounting and administrative control, as set forth in Sections 18.1483 - 18.1488 of the Michigan Compiled Laws |
| AGENCY RESPONSES AND PRIOR AUDIT FOLLOW-UP | Our report includes 2 findings and recommendations. The Michigan Jobs Commission's preliminary response indicated that it agreed with our recommendations and has taken steps to implement the recommendations.
The Department complied with 11 of the 12 recommendations in our prior Single Audit report. The other recommendation was rewritten and directed to the Michigan Jobs Commission for implementation. |
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