Audit 395397

Finding: 2025-001 — Material Weakness: Controls Over Grant Accounting, Year End Closing, and Financial Reporting Condition: Controls over grant accounting and year-end closing were not designed or operating effectively, resulting in delayed reconciliations, and a prior-period error correction. Repeat finding: No. Criteria: Under Government Auditing Standards, entities must maintain effective internal control over financial reporting to prevent or detect material misstatements in a timely manner. Cause: Lack of a formal close process and delayed reconciliations of grant activity. Effect: Material misclassification required a prior-period error correction and caused audit delays. Perspective / Context: The deficiencies occurred across the entire year end process and were observed in multiple reconciliations, indicating a systemic weakness rather than isolated exceptions. Cross Reference to Federal Award Findings: This financial statement material weakness directly affects internal control over compliance for major federal programs and forms the basis of Finding 2025 003. Recommendation: Implement a documented closing calendar and perform timely reconciliations. Management Response: Management concurs and will implement improvements for FY 2026.

Finding 2025-002 — Significant Deficiency: Unique Entity Identifier (UEI) Discrepancy Condition: The UEI does not match the legal entity name. Repeat finding: Yes. Criteria: UEI information must match the legal name as registered in SAM.gov/GSA to ensure valid federal reporting and award administration. Cause: The discrepancy remains unresolved despite outreach to federal agencies. Effect: There is an increased risk of delays or rejections in federal submissions (including drawdowns, reporting, and award modifications). Perspective / Context: The UEI/legal name mismatch has persisted across reporting periods, making it a repeat issue and exposing the entity to continued administrative risk. Recommendation: Continue working with SAM.gov/GSA and implement periodic UEI verification. Management Response: Management acknowledges the issue and is pursuing resolution.

Finding 2025-003 — Material Weakness (Internal Control Over Compliance): Grant Accounting and Close Process Affecting Major Programs Condition: The deficiencies noted in Finding 2025-001 also affect internal control over compliance for major programs. Programs Affected: 1) ALN 14.872 – Public Housing Capital Fund and 2) ALN 97.036 – Disaster Grants – Public Assistance. Repeat finding: No. Criteria: 2 CFR 200.303 and 200.516(a) require effective internal control over compliance. Cause: Lack of a structured, documented month end and year end close process and delayed reconciliations of grant related activity. Effect: Increased risk of misclassification or reporting in the wrong period for federal awards. Questioned Costs: 1) Known questioned costs were $0 and 2) likely questioned costs were $0. Perspective / Context: The control deficiencies were observed across all grant related closing cycles reviewed for FY 2025, demonstrating a systemic process issue rather than isolated instances. Recommendation: Apply the corrective actions in Finding 2025-001, including: 1) establishing a documented monthly and year end closing calendar, 2) performing timely reconciliations of grant activity, 3) strengthening supervisory review points prior to SEFA preparation and reporting. Management Response: Management concurs and will implement the recommended improvements beginning FY 2026.