Audit 388951

Finding 2025-002 - Reporting - Significant Deficiency Name of Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: HS 2025-105, HS 2025-209, HS 2024-202. Program year is 2025. Name of Pass-through Entity (if applicable): City of Cambridge Department of Housing and Community Development Criteria: In accordance with §200.328, Financial Reporting, the recipient or subrecipient must submit financial reports as required by the Federal award. Additionally, in accordance with §200.329, Monitoring and Reporting Program Performance, the recipient or subrecipient must submit performance reports as required by the Federal award. Condition: The Agency did not have internal controls over its reporting compliance requirement under Uniform Guidance. Cause: The Agency did not have internal controls in place to ensure that reporting requirements were prepared, reviewed and submitted on a timely basis. Effect or Potential Effect: Failure to perform reporting procedures in accordance with the Uniform Guidance could result in the reports being inaccurate or not filed on a timely basis. Questioned Costs: Not applicable. Context: For 100% of reports selected (total of 4), management did not provide adequate supporting documentation of the controls in place for the preparation, review and timely submission of the reports. Identification as a Repeat Finding: This is a repeat finding (see prior year finding number: 2024-002) Recommendation: We recommend that the Agency establish internal controls over its reporting compliance requirements to ensure that the Agency is in compliance with Uniform Guidance. Views of Responsible Officials: Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2025. Management is in the process of implementing additional controls to ensure a stable control environment that supports accurate and timely financial reporting in future periods.

Finding 2025-003 - Procurement - Significant Deficiency Name of Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: HS 2025-105, HS 2025-209, HS 2024-202. Program year is 2025. Name of Pass-through Entity (if applicable): City of Cambridge Department of Housing and Community Development Criteria: In accordance with §200.318(a), General Procurement Standards, a nonfederal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the nonfederal entity must maintain records sufficient to detail the history of the procurement. Condition: During our testing, we noticed that the Agency did not have a written procurement policy that complied with federal requirements. The Agency could not provide adequate supporting documentation which was completed at the time of the procurement transaction. Cause: The Agency did not have adequate internal controls to ensure that they complied with federal procurement standards. Effect or Potential Effect: Failure to perform procurement procedures in accordance with a written policy that complies with the Uniform Guidance could result in the procurement being disallowed. Questioned Costs: Not applicable. Context: For 100% of the procurement population (total of 1), management could not provide supporting documentation which was completed at the time of the procurement transaction. Identification as a Repeat Finding: This is a repeat finding (see prior year finding number: 2024-003). Recommendation: We recommend that the Agency establish written procurement policies and internal controls around procurement. Views of Responsible Officials: Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2025. Management is in the process of implementing additional controls to ensure a stable control environment that complies with procurement requirements.

Finding 2025-004 - Cash Management and Special Tests and Provisions - Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for Persons with Disabilities Assistance Listing Number: 14.181 Federal Award Identification Number and Year: 023-HH-018, 023-EH-343, 023-HD-154, 023-HD-025. Program year is 2025. Name of Pass-through Entity (if applicable): Not applicable Criteria: In accordance with §891.400(e), Use of Project Funds, the owner shall maintain a separate interest bearing project fund account in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and shall deposit all tenant payments, charges, income and revenues arising from project operation or ownership to this account. All project funds are to be deposited in Federally insured accounts. Additionally in accordance with §891.405, Replacement Reserve, the owner shall make monthly deposits to the replacement reserve in an amount determined by HUD. Condition: During our testing, we noticed that the Agency did not have proper internal controls in place to review bank reconciliations timely. Additionally, during our testing, we noticed that the Agency did not deposit tenant payments into their separate interest bearing project fund account from the management agents account in a timely manner. Lastly, during our testing, we noticed that there were 7 months of replacement reserve deposits that were not made timely. Cause: The Agency did not have adequate internal controls to ensure that they complied with federal requirements. Effect or Potential Effect: Failure to deposit tenant payments and replacement reserve deposits into the designated bank account in a timely manner resulted in noncompliance with cash management and special tests and provisions requirements under Uniform Guidance. Questioned Costs: Not applicable. Context: 14 out of 25 of the population had deposits of tenant payments that were not timely. Additionally, 7 out of 12 months had replacement reserve deposits that were not timely. Lastly, 100% of the population did not have appropriate controls over bank reconciliations. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Agency establish proper internal controls around timely deposits and bank reconciliations. Views of Responsible Officials: Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2025. Management is in the process of implementing additional controls to ensure a stable control environment that supports compliance with cash management and special tests and provisions requirements.