Audit 369522

Information on the Federal Program: United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Program Name: CDBG – Entitlement Grants Cluster Pass-through Awards under the Uniform Guidance Requirements: Pass-through Entity Award Number Award Period City of Cleveland Multiple Multiple Cuyahoga County Multiple Multiple Type of Finding: Significant Deficiency Criteria: In accordance with §200.303, Internal Controls, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our internal controls over compliance testing of non-payroll disbursements, we noted instances where management was unable to locate approved payment request forms with evidence of approval prior to being submitted for reimbursement. We tested 60 transactions noting 2 internal control exceptions relating to internal controls over allowable costs/cost principles. Cause: Management could not provide support for the proper review of payment requests prior to submission for reimbursement due to personnel changes in the accounting department. Effect or Potential Effect: An ineffective control system related to internal controls over compliance can lead to noncompliance with laws and regulations and loss of funding for the related program. Questioned Costs: None Context: This is a condition based on testing of the Organization’s internal controls over compliance with specified requirements using a non-statistical method. The prevalence of these findings is detailed in the conditions section above. Repeat Finding: Repeat finding of 2023-001 Recommendation: We recommend the Organization review, and revise as needed, its controls over review of the reimbursement packets. The Organization should maintain documentation of the review of the reimbursement packet in a designated location and retain such documentation in accordance with the relevant requirements. Views of Responsible Officials: The Organization’s management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the significant deficiency identified.

Information on the Federal Program: United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Program Name: CDBG – Entitlement Grants Cluster Pass-through Awards under the Uniform Guidance Requirements: Pass-through Entity Award Number Award Period City of Cleveland Multiple Multiple Cuyahoga County Multiple Multiple Type of Finding: Significant Deficiency Criteria: In accordance with §200.303, Internal Controls, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our internal controls over compliance and compliance testing relating to payroll disbursements, we noted the following: • 3 instances where the approved timecards did not match the hours reported in the reimbursement submission. • 3 instances where the timecards did not agree to the ADP payroll report. • 1 instance where the timecard was not approved prior to submission for reimbursement. Cause: The internal controls established did not operate as designed due to personnel changes in the accounting department responsible for gathering such information. Effect or Potential Effect: An ineffective control system related to internal controls over compliance can lead to noncompliance with laws and regulations and loss of funding for the related program. Questioned Costs: None Context: This is a condition based on testing of the Organization’s internal controls over compliance and compliance with specified requirements using a non-statistical method. The prevalence of these findings is detailed in the conditions section above. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization review, and revise as needed, its controls over review of the payroll disbursement support prior to submission for reimbursement to ensure all information agrees and is properly reviewed and approved. Views of Responsible Officials: The Organization’s management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the significant deficiency identified.