Audit 370908

Finding Type. Material Noncompliance; Material Weakness in Internal Controls over Compliance. (Reporting) Federal program(s). U.S. Department of Housing and Urban Development - Community Development Block Grants/Entitlement Grants Cluster; Assistance Listing Number 14.218; Direct award; All project numbers Criteria. Recipients of federal awards are required to report periodically on financial information, as specified by the grant agreement. Reported information should be supported by the entity’s accounting records and subjected to an independent review and approval prior to submission in order to detect and correct any errors or omissions. Additionally, the PR-26 financial summary reports are submitted as part of the Consolidated Annual Performance Evaluation Report (CAPER). This report should include all expenditures for the program year - including accrued expenditures. Condition. During our audit procedures over the County's PR 29 for CDBG, the CDBG - CV Cash on Hand Quarterly Reports, and the 2023-2024 CAPER, we noted that none of the reports were subject to an independent review and approval prior to submission in order to detect and correct potential errors or omissions. We also noted that the CAPER was submitted as required, but contained financial data that did not agree to the County's underlying accounting records for the reporting period as required. Cause. The County does not have the internal controls in place to ensure that financial reports are reviewed and approved prior to submission. In addition, the County does not have proper internal controls in place to ensure that the 2023-2024 CAPER agrees to accounting records. Effect. The County submitted inaccurate reporting in its CAPER that was inconsistent with other financial reports submitted and with the County's general ledger. The County is also exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the County's internal controls. Questioned Costs. None. Recommendation. We recommend that the County implement necessary internal controls to ensure that proper review and approval is documented and reports agree to accounting records. Financial information being submitted to outside entities should be reviewed and approved by the Financial Services department to ensure that it is in agreement with the County's general ledger and consistent with other required financial reporting. View of Responsible Officials. The Neighborhood and Housing department will prepare the CAPER in advance of the reporting deadline and provide a copy to the Fiscal Services Supervisor Senior – Grant Accounting each month for review by Fiscal Services. The CAPER will be supported by ledger detail reports to ensure that amounts reported reconcile to Workday. Responsible Official. Chief Financial Officer and Chief, Neighborhood and Housing Development Expected Completion Date. December 2025

Finding Type. Immaterial Noncompliance; Significant Deficiency in Internal Controls over Compliance. (Program Income) Federal program(s). U.S. Department of Housing and Urban Development - Community Development Block Grants/Entitlement Grants Cluster; Assistance Listing Number 14.218; Direct award; All project numbers Criteria. In accordance with 2 CFR § 200.307, program income must be used in accordance with the terms and conditions of the federal award and must be accounted for and reported accurately. Recipients are required to reconcile program income received and expended during the grant period to ensure it is used for allowable purposes and properly reflected in financial reports. Failure to reconcile program income may result in noncompliance with federal grant regulations and could impact the allowability of costs charged to the award. Condition. During program income testing, it was noted that the County did not track, monitor and reconcile program income within HUD’s Integrated Disbursement and Information System (IDIS) and the general ledger on timely manner. Reconciliation was only prepared upon request of the auditor at year-end and immaterial variances were still present in the reconciliation even after it was completed by the department. Cause. The County does not have the internal controls in place to ensure that program income is properly tracked, monitored and reconciled within HUD’s IDIS and the general ledger on timely manner. Effect. The County has a risk of inaccurately reporting program income to HUD. The County is also exposed to an increased risk noncompliance could occur and not be prevented or detected by the County's internal controls. Questioned Costs. None. Recommendation. We recommend the County establishes controls are in place to track and report program income in a timely manner, in both the general ledger and IDIS. Reconciliations should be completed monthly and reviewed by an individual with knowledge and understanding of both grant and general ledger reporting. View of Responsible Officials. The County will create a monthly reconciliation of program income for the grant. This reconciliation will ensure that amounts reported in the IDIS system agree to those amounts reported in Workday. The reconciliation will be reviewed by the department and a copy provided to the Fiscal Services Supervisor Senior – Grant Accounting each month for review by Fiscal Services. Responsible Official. Chief Financial Officer and Chief, Neighborhood and Housing Development Expected Completion Date. December 2025