Audit 36734

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: 14.889 - Choice Neighborhoods Implementation Grants Federal Award Year: 2022 Name of Pass-Through Entity: Cuyahoga Metropolitan Housing Authority; City of Detroit Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, which must, among other things: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and (iv) Support the distribution of the employee's salary or wages among specific activities. Condition: The Community Builders, Inc. and Subsidiaries (the ?Company?) used grant budgets as the only support for the salaries and wages charged to the grants under the Choice Neighborhoods Implementation Grants program, which is specifically disallowed per Paragraph (i)(1)(viii) of 2 CFR 200.430. Cause: Management did not implement internal control procedures to comply with the regulations for documentation of personnel expenses. Effect: Salary and wage costs may be charged to the program that are inaccurate, unallowable, or not properly allocated. Questioned Costs: The questioned costs relate to six employees whose salaries and wages charged to the program are allocated at less than 100%. The total charges for these employees were calculated as $73,804. Context: The audit finding is prevalent because it relates to payroll charges allocated on a bi-weekly basis and to requests for reimbursement processed monthly for the City of Detroit grant and periodically for the Cuyahoga Metropolitan Housing Authority (?CMHA?) grant and is not an isolated instance as it relates to the Company not implementing appropriate and complete record keeping procedures for the federal program to comply with the regulations for documentation of personnel expenses. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The Company should establish a system of internal controls to provide reasonable assurance that salary and wage costs are accurate, allowable, and properly allocated by basing salaries and wages charged to federal awards on underlying records that accurately reflect all work performed on a daily basis in accordance with 2 CFR 200, Subpart E, Subsection 430.

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: 14.889 - Choice Neighborhoods Implementation Grants Federal Award Year: 2022 Name of Pass-Through Entity: Cuyahoga Metropolitan Housing Authority; City of Detroit Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, which must, among other things: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and (iv) Support the distribution of the employee's salary or wages among specific activities. Condition: The Community Builders, Inc. and Subsidiaries (the ?Company?) used grant budgets as the only support for the salaries and wages charged to the grants under the Choice Neighborhoods Implementation Grants program, which is specifically disallowed per Paragraph (i)(1)(viii) of 2 CFR 200.430. Cause: Management did not implement internal control procedures to comply with the regulations for documentation of personnel expenses. Effect: Salary and wage costs may be charged to the program that are inaccurate, unallowable, or not properly allocated. Questioned Costs: The questioned costs relate to six employees whose salaries and wages charged to the program are allocated at less than 100%. The total charges for these employees were calculated as $73,804. Context: The audit finding is prevalent because it relates to payroll charges allocated on a bi-weekly basis and to requests for reimbursement processed monthly for the City of Detroit grant and periodically for the Cuyahoga Metropolitan Housing Authority (?CMHA?) grant and is not an isolated instance as it relates to the Company not implementing appropriate and complete record keeping procedures for the federal program to comply with the regulations for documentation of personnel expenses. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The Company should establish a system of internal controls to provide reasonable assurance that salary and wage costs are accurate, allowable, and properly allocated by basing salaries and wages charged to federal awards on underlying records that accurately reflect all work performed on a daily basis in accordance with 2 CFR 200, Subpart E, Subsection 430.

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: 14.889 - Choice Neighborhoods Implementation Grants Federal Award Year: 2022 Name of Pass-Through Entity: Cuyahoga Metropolitan Housing Authority; City of Detroit Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, which must, among other things: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and (iv) Support the distribution of the employee's salary or wages among specific activities. Condition: The Community Builders, Inc. and Subsidiaries (the ?Company?) used grant budgets as the only support for the salaries and wages charged to the grants under the Choice Neighborhoods Implementation Grants program, which is specifically disallowed per Paragraph (i)(1)(viii) of 2 CFR 200.430. Cause: Management did not implement internal control procedures to comply with the regulations for documentation of personnel expenses. Effect: Salary and wage costs may be charged to the program that are inaccurate, unallowable, or not properly allocated. Questioned Costs: The questioned costs relate to six employees whose salaries and wages charged to the program are allocated at less than 100%. The total charges for these employees were calculated as $73,804. Context: The audit finding is prevalent because it relates to payroll charges allocated on a bi-weekly basis and to requests for reimbursement processed monthly for the City of Detroit grant and periodically for the Cuyahoga Metropolitan Housing Authority (?CMHA?) grant and is not an isolated instance as it relates to the Company not implementing appropriate and complete record keeping procedures for the federal program to comply with the regulations for documentation of personnel expenses. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The Company should establish a system of internal controls to provide reasonable assurance that salary and wage costs are accurate, allowable, and properly allocated by basing salaries and wages charged to federal awards on underlying records that accurately reflect all work performed on a daily basis in accordance with 2 CFR 200, Subpart E, Subsection 430.

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: 14.889 - Choice Neighborhoods Implementation Grants Federal Award Year: 2022 Name of Pass-Through Entity: Cuyahoga Metropolitan Housing Authority; City of Detroit Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, which must, among other things: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and (iv) Support the distribution of the employee's salary or wages among specific activities. Condition: The Community Builders, Inc. and Subsidiaries (the ?Company?) used grant budgets as the only support for the salaries and wages charged to the grants under the Choice Neighborhoods Implementation Grants program, which is specifically disallowed per Paragraph (i)(1)(viii) of 2 CFR 200.430. Cause: Management did not implement internal control procedures to comply with the regulations for documentation of personnel expenses. Effect: Salary and wage costs may be charged to the program that are inaccurate, unallowable, or not properly allocated. Questioned Costs: The questioned costs relate to six employees whose salaries and wages charged to the program are allocated at less than 100%. The total charges for these employees were calculated as $73,804. Context: The audit finding is prevalent because it relates to payroll charges allocated on a bi-weekly basis and to requests for reimbursement processed monthly for the City of Detroit grant and periodically for the Cuyahoga Metropolitan Housing Authority (?CMHA?) grant and is not an isolated instance as it relates to the Company not implementing appropriate and complete record keeping procedures for the federal program to comply with the regulations for documentation of personnel expenses. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The Company should establish a system of internal controls to provide reasonable assurance that salary and wage costs are accurate, allowable, and properly allocated by basing salaries and wages charged to federal awards on underlying records that accurately reflect all work performed on a daily basis in accordance with 2 CFR 200, Subpart E, Subsection 430.