2022-003 The City?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.Assistance Listing Number and Title: 14.231 ? COVID-19 Emergency Solutions Grant ProgramFederal Grantor Name: U.S. Department of Housing and Urban DevelopmentFederal Award/Contract Number: E20MW530005Pass-through Entity Name: N/APass-through Award/ContractNumber: N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: N/ABackgroundThe Emergency Solutions Grant Program (ESG) provides grants to states,metropolitan cities, urban counties, and territories for the rehabilitation orconversion of buildings for use as emergency shelter for the homeless, the paymentof certain expenses related to operating emergency shelters, essential servicesrelated to emergency shelters and street outreach for the homeless, andhomelessness prevention and rapid re-housing assistance. The City spent$6,384,986 in Emergency Solutions Grant Program (ESG) award funds in 2022.Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.Federal requirements prohibit grant recipients from contracting with or purchasingfrom parties suspended or debarred from doing business with the federalgovernment. Whenever the City enters into contracts or purchases goods or servicesthat it expects to equal or exceed $25,000, and for all subawards, irrespective of award amount, paid all or in part with federal funds, it must verify the contractorsor subrecipients have not been suspended, debarred or otherwise excluded. The Citymay accomplish this verification by collecting a written certification from thecontractor or subrecipient, adding a clause or condition into the contract that statesthe contractor or subrecipient is not suspended or debarred, or checking forexclusion records in the U.S. General Services Administration?s System for AwardManagement at SAM.gov. The City must perform this verification before enteringinto the contract or making the subaward, and it must maintain documentationdemonstrating compliance with this federal requirement.Description of ConditionOur audit found the City?s internal controls were inadequate for ensuring staffverified the suspension and debarment status of subrecipients, paid all or in partwith federal funds. Specifically, the City did not verify one subrecipient was notsuspended or debarred from participating in federal programs before entering intoa contract. The City paid this subrecipient $662,249 in 2022.We consider this deficiency in internal controls to be a material weakness that ledto material noncompliance.Cause of ConditionThe Office of Housing received a grant that was new to the Office of Housing andstaff were not aware of the requirement to verify suspension and debarment forcontractors and subrecipients.Effect of ConditionThe City did not obtain a written certification, insert a clause into the contract, orcheck SAM.gov to verify the subrecipient was not suspended or debarred beforeentering into the subaward agreement. Without this verification, the City increasesits risk of awarding federal funds to parties that are excluded from participating infederal programs. Any payments the City made to an ineligible party would beunallowable, and the federal grantor could potentially recover them.The City subsequently verified the contractor was not suspended or debarred.Therefore, we are not questioning costs. RecommendationWe recommend the City strengthen internal controls to ensure all subrecipients andcontractors it expects to pay $25,000 or more, all or in part with federal funds, arenot suspended or debarred from participating in federal programs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding noting internal controls were inadequate for ensuring staff verifiedthe suspension and debarment status of sub-recipients within the Office of Housing.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to the verification and the documenting of thesuspension and debarment status of sub-recipients is clear, consistent, and alignedwith federal and state regulations. HSD will also assure staff responsible foradministering CBDG funds and other federal funds are oriented to the importanceof adhering to the debarment verification requirements outlined in the MOAs. HSDwill encourage its city partners receiving these funds to work with other citypartners to adopt standardized procedures for the verification and documentationof sub-recipient suspension and debarment status.Office of Housing Response:The Office of Housing will implement and communicate the following procedures:For all contracts expected to receive $25,000 or more in federal funds, the programstaff person initiating the contract will first search the SAM website to verify that:the agency is registered, the agency?s registration status is active, and the agencydoes not have any active exclusions such as debarment or suspension. This statuswill be double-checked by the future Senior Contracts Specialist position beforeany contract is finalized.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit. Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 180, OMB Guidelines to Agencies on GovernmentwideDebarment and Suspension (Nonprocurement), establishes nonprocurementdebarment and suspension regulations implementing Executive Orders 12549 and12689.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-003 The City?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.Assistance Listing Number and Title: 14.231 ? COVID-19 Emergency Solutions Grant ProgramFederal Grantor Name: U.S. Department of Housing and Urban DevelopmentFederal Award/Contract Number: E20MW530005Pass-through Entity Name: N/APass-through Award/ContractNumber: N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: N/ABackgroundThe Emergency Solutions Grant Program (ESG) provides grants to states,metropolitan cities, urban counties, and territories for the rehabilitation orconversion of buildings for use as emergency shelter for the homeless, the paymentof certain expenses related to operating emergency shelters, essential servicesrelated to emergency shelters and street outreach for the homeless, andhomelessness prevention and rapid re-housing assistance. The City spent$6,384,986 in Emergency Solutions Grant Program (ESG) award funds in 2022.Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.Federal requirements prohibit grant recipients from contracting with or purchasingfrom parties suspended or debarred from doing business with the federalgovernment. Whenever the City enters into contracts or purchases goods or servicesthat it expects to equal or exceed $25,000, and for all subawards, irrespective of award amount, paid all or in part with federal funds, it must verify the contractorsor subrecipients have not been suspended, debarred or otherwise excluded. The Citymay accomplish this verification by collecting a written certification from thecontractor or subrecipient, adding a clause or condition into the contract that statesthe contractor or subrecipient is not suspended or debarred, or checking forexclusion records in the U.S. General Services Administration?s System for AwardManagement at SAM.gov. The City must perform this verification before enteringinto the contract or making the subaward, and it must maintain documentationdemonstrating compliance with this federal requirement.Description of ConditionOur audit found the City?s internal controls were inadequate for ensuring staffverified the suspension and debarment status of subrecipients, paid all or in partwith federal funds. Specifically, the City did not verify one subrecipient was notsuspended or debarred from participating in federal programs before entering intoa contract. The City paid this subrecipient $662,249 in 2022.We consider this deficiency in internal controls to be a material weakness that ledto material noncompliance.Cause of ConditionThe Office of Housing received a grant that was new to the Office of Housing andstaff were not aware of the requirement to verify suspension and debarment forcontractors and subrecipients.Effect of ConditionThe City did not obtain a written certification, insert a clause into the contract, orcheck SAM.gov to verify the subrecipient was not suspended or debarred beforeentering into the subaward agreement. Without this verification, the City increasesits risk of awarding federal funds to parties that are excluded from participating infederal programs. Any payments the City made to an ineligible party would beunallowable, and the federal grantor could potentially recover them.The City subsequently verified the contractor was not suspended or debarred.Therefore, we are not questioning costs. RecommendationWe recommend the City strengthen internal controls to ensure all subrecipients andcontractors it expects to pay $25,000 or more, all or in part with federal funds, arenot suspended or debarred from participating in federal programs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding noting internal controls were inadequate for ensuring staff verifiedthe suspension and debarment status of sub-recipients within the Office of Housing.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to the verification and the documenting of thesuspension and debarment status of sub-recipients is clear, consistent, and alignedwith federal and state regulations. HSD will also assure staff responsible foradministering CBDG funds and other federal funds are oriented to the importanceof adhering to the debarment verification requirements outlined in the MOAs. HSDwill encourage its city partners receiving these funds to work with other citypartners to adopt standardized procedures for the verification and documentationof sub-recipient suspension and debarment status.Office of Housing Response:The Office of Housing will implement and communicate the following procedures:For all contracts expected to receive $25,000 or more in federal funds, the programstaff person initiating the contract will first search the SAM website to verify that:the agency is registered, the agency?s registration status is active, and the agencydoes not have any active exclusions such as debarment or suspension. This statuswill be double-checked by the future Senior Contracts Specialist position beforeany contract is finalized.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit. Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 180, OMB Guidelines to Agencies on GovernmentwideDebarment and Suspension (Nonprocurement), establishes nonprocurementdebarment and suspension regulations implementing Executive Orders 12549 and12689.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-003 The City?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.Assistance Listing Number and Title: 14.231 ? COVID-19 Emergency Solutions Grant ProgramFederal Grantor Name: U.S. Department of Housing and Urban DevelopmentFederal Award/Contract Number: E20MW530005Pass-through Entity Name: N/APass-through Award/ContractNumber: N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: N/ABackgroundThe Emergency Solutions Grant Program (ESG) provides grants to states,metropolitan cities, urban counties, and territories for the rehabilitation orconversion of buildings for use as emergency shelter for the homeless, the paymentof certain expenses related to operating emergency shelters, essential servicesrelated to emergency shelters and street outreach for the homeless, andhomelessness prevention and rapid re-housing assistance. The City spent$6,384,986 in Emergency Solutions Grant Program (ESG) award funds in 2022.Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.Federal requirements prohibit grant recipients from contracting with or purchasingfrom parties suspended or debarred from doing business with the federalgovernment. Whenever the City enters into contracts or purchases goods or servicesthat it expects to equal or exceed $25,000, and for all subawards, irrespective of award amount, paid all or in part with federal funds, it must verify the contractorsor subrecipients have not been suspended, debarred or otherwise excluded. The Citymay accomplish this verification by collecting a written certification from thecontractor or subrecipient, adding a clause or condition into the contract that statesthe contractor or subrecipient is not suspended or debarred, or checking forexclusion records in the U.S. General Services Administration?s System for AwardManagement at SAM.gov. The City must perform this verification before enteringinto the contract or making the subaward, and it must maintain documentationdemonstrating compliance with this federal requirement.Description of ConditionOur audit found the City?s internal controls were inadequate for ensuring staffverified the suspension and debarment status of subrecipients, paid all or in partwith federal funds. Specifically, the City did not verify one subrecipient was notsuspended or debarred from participating in federal programs before entering intoa contract. The City paid this subrecipient $662,249 in 2022.We consider this deficiency in internal controls to be a material weakness that ledto material noncompliance.Cause of ConditionThe Office of Housing received a grant that was new to the Office of Housing andstaff were not aware of the requirement to verify suspension and debarment forcontractors and subrecipients.Effect of ConditionThe City did not obtain a written certification, insert a clause into the contract, orcheck SAM.gov to verify the subrecipient was not suspended or debarred beforeentering into the subaward agreement. Without this verification, the City increasesits risk of awarding federal funds to parties that are excluded from participating infederal programs. Any payments the City made to an ineligible party would beunallowable, and the federal grantor could potentially recover them.The City subsequently verified the contractor was not suspended or debarred.Therefore, we are not questioning costs. RecommendationWe recommend the City strengthen internal controls to ensure all subrecipients andcontractors it expects to pay $25,000 or more, all or in part with federal funds, arenot suspended or debarred from participating in federal programs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding noting internal controls were inadequate for ensuring staff verifiedthe suspension and debarment status of sub-recipients within the Office of Housing.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to the verification and the documenting of thesuspension and debarment status of sub-recipients is clear, consistent, and alignedwith federal and state regulations. HSD will also assure staff responsible foradministering CBDG funds and other federal funds are oriented to the importanceof adhering to the debarment verification requirements outlined in the MOAs. HSDwill encourage its city partners receiving these funds to work with other citypartners to adopt standardized procedures for the verification and documentationof sub-recipient suspension and debarment status.Office of Housing Response:The Office of Housing will implement and communicate the following procedures:For all contracts expected to receive $25,000 or more in federal funds, the programstaff person initiating the contract will first search the SAM website to verify that:the agency is registered, the agency?s registration status is active, and the agencydoes not have any active exclusions such as debarment or suspension. This statuswill be double-checked by the future Senior Contracts Specialist position beforeany contract is finalized.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit. Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 180, OMB Guidelines to Agencies on GovernmentwideDebarment and Suspension (Nonprocurement), establishes nonprocurementdebarment and suspension regulations implementing Executive Orders 12549 and12689.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-003 The City?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.Assistance Listing Number and Title: 14.231 ? COVID-19 Emergency Solutions Grant ProgramFederal Grantor Name: U.S. Department of Housing and Urban DevelopmentFederal Award/Contract Number: E20MW530005Pass-through Entity Name: N/APass-through Award/ContractNumber: N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: N/ABackgroundThe Emergency Solutions Grant Program (ESG) provides grants to states,metropolitan cities, urban counties, and territories for the rehabilitation orconversion of buildings for use as emergency shelter for the homeless, the paymentof certain expenses related to operating emergency shelters, essential servicesrelated to emergency shelters and street outreach for the homeless, andhomelessness prevention and rapid re-housing assistance. The City spent$6,384,986 in Emergency Solutions Grant Program (ESG) award funds in 2022.Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.Federal requirements prohibit grant recipients from contracting with or purchasingfrom parties suspended or debarred from doing business with the federalgovernment. Whenever the City enters into contracts or purchases goods or servicesthat it expects to equal or exceed $25,000, and for all subawards, irrespective of award amount, paid all or in part with federal funds, it must verify the contractorsor subrecipients have not been suspended, debarred or otherwise excluded. The Citymay accomplish this verification by collecting a written certification from thecontractor or subrecipient, adding a clause or condition into the contract that statesthe contractor or subrecipient is not suspended or debarred, or checking forexclusion records in the U.S. General Services Administration?s System for AwardManagement at SAM.gov. The City must perform this verification before enteringinto the contract or making the subaward, and it must maintain documentationdemonstrating compliance with this federal requirement.Description of ConditionOur audit found the City?s internal controls were inadequate for ensuring staffverified the suspension and debarment status of subrecipients, paid all or in partwith federal funds. Specifically, the City did not verify one subrecipient was notsuspended or debarred from participating in federal programs before entering intoa contract. The City paid this subrecipient $662,249 in 2022.We consider this deficiency in internal controls to be a material weakness that ledto material noncompliance.Cause of ConditionThe Office of Housing received a grant that was new to the Office of Housing andstaff were not aware of the requirement to verify suspension and debarment forcontractors and subrecipients.Effect of ConditionThe City did not obtain a written certification, insert a clause into the contract, orcheck SAM.gov to verify the subrecipient was not suspended or debarred beforeentering into the subaward agreement. Without this verification, the City increasesits risk of awarding federal funds to parties that are excluded from participating infederal programs. Any payments the City made to an ineligible party would beunallowable, and the federal grantor could potentially recover them.The City subsequently verified the contractor was not suspended or debarred.Therefore, we are not questioning costs. RecommendationWe recommend the City strengthen internal controls to ensure all subrecipients andcontractors it expects to pay $25,000 or more, all or in part with federal funds, arenot suspended or debarred from participating in federal programs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding noting internal controls were inadequate for ensuring staff verifiedthe suspension and debarment status of sub-recipients within the Office of Housing.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to the verification and the documenting of thesuspension and debarment status of sub-recipients is clear, consistent, and alignedwith federal and state regulations. HSD will also assure staff responsible foradministering CBDG funds and other federal funds are oriented to the importanceof adhering to the debarment verification requirements outlined in the MOAs. HSDwill encourage its city partners receiving these funds to work with other citypartners to adopt standardized procedures for the verification and documentationof sub-recipient suspension and debarment status.Office of Housing Response:The Office of Housing will implement and communicate the following procedures:For all contracts expected to receive $25,000 or more in federal funds, the programstaff person initiating the contract will first search the SAM website to verify that:the agency is registered, the agency?s registration status is active, and the agencydoes not have any active exclusions such as debarment or suspension. This statuswill be double-checked by the future Senior Contracts Specialist position beforeany contract is finalized.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit. Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 180, OMB Guidelines to Agencies on GovernmentwideDebarment and Suspension (Nonprocurement), establishes nonprocurementdebarment and suspension regulations implementing Executive Orders 12549 and12689.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).
2022-002 The City?s internal controls were inadequate for ensuring compliance with federal reporting requirements.Assistance Listing Number and Title: 14.218 Community Development Block Grants /Entitlement Grants14.218 ? COVID-19 Community Development Block Grants /Entitlement GrantsFederal Grantor Name: U.S Department of Housing and Urban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005, B20MC530005, B21MC530005, B22MC530005, B20MW530005 COVID-19 1153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: Yes, Finding 2021-002Description of ConditionThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. Of that amount, the City passed through $1,101,720to nine subrecipients. The purpose of the CDBG program is to help provide decentand affordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.To comply with federal reporting requirements, the City must submit certainfinancial and special reports to the U.S. Department of Housing and UrbanDevelopment (HUD). Financial reporting requirements require CDBG fundingrecipients to submit the Financial Summary Report (PR26), Cash on HandQuarterly Report (PR29) and special reporting requirements require FederalFunding Accountability and Transparency Act (FFATA) reports.Financial Summary ReportThe City must accurately prepare and submit the Financial Summary Reports(PR26 and PR26-CV) to include information on overall low-to-moderate incomebenefit compliance, percent of funds obligated to the public services, and percentof funds obligated to the planning and administrative activities during the programyear. We found the City?s internal controls were ineffective for ensuring itaccurately prepared these reports based on supporting records.The City did not submit accurate information on the PR26 and PR26-CV reports in2022.Cash on Hand Quarterly ReportThe City must accurately prepare and submit the Cash on Hand Quarterly Reports(PR29 and PR29-CV) to include information such as cash on hand, program incomeand revolving funds. We found the City?s internal controls were ineffective forensuring it accurately prepared these reports based on supporting records.The City did not submit accurate information in one of the required quarterly PR29reports and the four required quarterly PR29-CV reports submitted in 2022.Specifically, the PR29-CV reports did not report any activity even though the Cityhad CDBG-CV funds.FFATA ReportingThe FFATA requires direct recipients that make first-tier subawards of $30,000 ormore to report them in the FFATA Subaward Reporting System (FSRS). The Citymust report subawards by the end of the month following the month in which itmade the subaward or subaward amendment. We found the City?s internal controlswere ineffective for ensuring it reported nine subawards obligated in 2022 in theFSRS, as federal regulations require. We consider these internal control deficiencies to be material weaknesses, whichled to material noncompliance.Cause of ConditionFinancial Summary Report and Cash on Hand Quarterly ReportThe person responsible for these reporting activities retired at the end of 2022. Thecurrent employee performing this duty was not able to identify the cause of thevariances and was unable to locate documentation demonstrating the amountsreported were correct.FFATAThe Department was facing staffing challenges and did not have an individual withtime to complete the requirement in addition to their regular duties. Also, due toturnover, none of the Department employees had access to the FSRS.Effect of ConditionFinancial Summary ReportThe PR26 and PR26-CV reports document that the City is in compliance with theprimary objective of the Housing and Community Development Act of 1974(HCDA) which is to ensure that CDBG funds are primarily used for the benefit oflow and moderate income persons. Just as importantly, the report is also used todetermine if the entitlement grantee has remained in compliance with thelimitations placed on planning and administrative costs and public service costs.The reports include funding data that HUD then reports to Congress and is used tomonitor grantees. Failing to submit accurate information to HUD diminishes thefederal government?s ability to ensure proper monitoring of grantees and impairsthe accuracy of information reported to Congress.Cash on Hand Quarterly ReportThe PR29 and PR29-CV reports document a grantee?s compliance with the low tomoderate income benefit requirement, the amount obligated and expended forpublic services, and the amount obligated for planning and administration for theselected program year. The reports include funding data that HUD then reports toCongress and is used to monitor grantees. Failing to submit accurate information toHUD diminishes the federal government?s ability to ensure proper monitoring ofgrantees and impairs the accuracy of information reported to Congress. FFATAFailing to submit the required reports on time with accurate information diminishesthe federal government?s ability to ensure accountability and transparency offederal spending.Below is a summary of the missing reports we identified.See Schedule of Findings and Questioned Costs for chart/table.RecommendationWe recommend the City strengthen its internal controls over federal reportingrequirements to ensure its Financial Summary Report, Cash on Hand QuarterlyReports and FFATA reports are accurate.City?s ResponseHSD hired a consultant service (TDA) in response to prior SAO feedback, whichwill strengthen our internal controls over federal reporting requirements to ensureour Cash on Hand Quarterly Reports and FFATA reports are accurate andsubmitted timely moving forward. HSD will continue to clarify roles andresponsibilities for reporting and central reporting and archiving of confirmationreports to increase internal control of this function.TDA consulting will add capacity to HSD?s Federal Grants Management Unit toclear its 2022 FFATA reporting backlog while HSD addresses current staffingshortages. In addition to clearing the reporting backlog, HSD?s contractor isassisting with the development of policies and procedures to better facilitate theconducting of data quality reviews to address accuracy issues identified with Cashon Hand Quarterly Reports (PR29 and PR29-CV) to better report information suchas cash on hand, program income and revolving fund funding levels.As part of its scope of work, TDA has developed a workplan focusing on theestablishment of a staffing plan recommendation, the associated role assignmentsfor the future staffing structure and documenting reporting procedures to assurereporting compliance moving forward. Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting,establishes requirements for recipients? financial information.Title 2 CFR Part 170, Reporting Subaward and Executive CompensationInformation, establishes the Federal Funding Accountability and Transparency Act(FFATA) requirements of reporting the subaward information through the FFATASubaward Reporting System (FSRS).