Finding Number: 2025-001 Program: Community Development Block Grant (CDBG) ALN #: 14.218 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Performance Reporting Type of finding: Material weakness and noncompliance Criteria Special Reporting for Federal Funding Accountability and Transparency Act Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, herein referred to as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City’s Community Development Department (CDBG) did not report awards granted to subrecipients for the CDBG program by the end of the month following the month in which the City awarded the subrecipient award. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited: 1. Subawardee name 2. Subawardee DUNS/UEI number 3. Amount of subaward 4. Subaward obligation/action date 5. Date of report submission 6. Subaward number 7. Subaward project description 8. Subawardee names and compensation of highly compensated officers During our testing, we noted that the City did not establish control procedures to submit FFATA reports for all subawards as required by federal regulations. Cause The condition found was due to the City not reporting amounts passed through to subrecipients for the period from July 2024 to June 2025 within the required time after the award is granted to the subrecipient. Proper perspective During our testing of the three selected subawards, we noted reporting exceptions as subawards were not reported within the one month following the month that the City awarded the subrecipient contract. Additionally, there was a control exception to ensure that the data submitted is complete and accurate.Possible asserted effect Failure to submit subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government. Questioned costs None noted Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-002 Recommendation We recommend that the City continue to review and enhance their policies, procedures, and internal controls to ensure that all amounts passed through to subrecipients under subawards, as defined in 2 CFR 200.1 are reported in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation date for FFATA reporting. Views of responsible officials and corrective actions The City will continue strengthening its policies, procedures, and internal controls to ensure all subawards are reported in full compliance with FFATA. The City reported subawards using the subaward obligation date, which is the date the agreement is fully executed, rather than the July 1 performance start date. As a result, obligation dates varied depending on when each agreement is signed.
Finding Number: 2025-002 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024 – June 30, 2025 Compliance Requirement: Subrecipient Monitoring Type of finding: Material weakness and material noncompliance Criteria The 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. According to 2 CFR 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City has not implemented the designed controls and procedures to ensure compliance with the following requirements: • Each subrecipients risk of noncompliance is appropriately evaluated and level of monitoring is determined. • Appropriate monitoring and review of the subrecipient based on their risk of noncompliance. • Ensure that subrecipients are not suspended or debarred prior to entering into a contract with the City. Cause The City does not have formal written policies, procedures, and internal controls in place to ensure that all required subrecipient monitoring procedures are performed.Proper perspective During our audit, we noted that four of the four subrecipients selected for testing did not have a completed risk assessment to determine their risk of noncompliance. As such, we were unable to determine that the proper level of monitoring was completed throughout the fiscal year over the contracted subrecipient. Additionally, there was no evidence that the City ensured the subrecipient was not suspended or debarred from working under a federal engagement prior to entering into the contract. Possible asserted effect Lack of effective controls over subrecipient monitoring could result in the City’s noncompliance with program requirements. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-003 Recommendation We recommend the City establish a checklist or formal documentation to assess each subrecipient and their risk of non compliance prior to entering into a formal contract. The City should then use this risk assessment to determine the level of monitoring that is required throughout the term of the contract. Views of responsible officials and corrective actions The City has established a Risk Assessment tool that rates each HOPWA subrecipient across nine factors: 1) award amount, 2) timeliness of reporting, 3) timeliness of invoicing, 4) quality of reporting, 5) program complexity, 6) staff capacity, 7) staff turnover, 8) management changes, and 9) grantee history. The City will use this tool to determine the appropriate level and frequency of monitoring for each subrecipient.
Finding Number: 2025-003 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Reporting Type of finding: Material weakness and noncompliance Criteria Special Reporting for Federal Funding Accountability and Transparency Act Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, herein referred to as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City’s Community Development Department did not report awards granted to subrecipients for the HOPWA program by the end of the month following the month in which the City awarded the subrecipient award. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited: 1. Subawardee name 2. Subawardee DUNS/UEI number 3. Amount of subaward 4. Subaward obligation/action date 5. Date of report submission 6. Subaward number 7. Subaward project description 8. Subawardee names and compensation of highly compensated officers During our testing, we noted that the City did not establish control procedures to submit FFATA reports for all subawards as required by federal regulations. Cause The condition found was due to the City not reporting amounts passed through to subrecipients for the period from July 2024 to June 2025 within the required time after the award is granted to the subrecipient. Proper perspective During our testing of four selected subawards, we noted reporting exceptions as subawards were not reported within the one month following the month that the City awarded the subrecipient contract. Additionally, there was a control exception to ensure that the data submitted is complete and accurate. Possible asserted effect Failure to submit subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-004 Recommendation We recommend that the City continue to review and enhance their policies, procedures, and internal controls to ensure that all amounts passed through to subrecipients under subawards, as defined in 2 CFR 200.1 are reported in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation date for FFATA reporting. Views of responsible officials and corrective actions The City will continue strengthening its policies, procedures, and internal controls to ensure all subawards are reported in full compliance with FFATA. The City reported subawards using the subaward obligation date, which is the date the agreement is fully executed, rather than the July 1 performance start date. As a result, obligation dates var depending on when each agreement is signed.
Finding Number: 2025-004 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Performance Reporting Type of finding: Material weakness and material noncompliance Criteria Performance Reporting for the HOPWA Consolidated Annual Performance and Evaluation Report Per HUD, the Consolidated Annual Performance and Evaluation Report (CAPER) provides annual performance reporting on client outputs and outcomes that enables an assessment of grantee performance in achieving the housing stability outcome measure. The CAPER fulfills statutory and regulatory program reporting requirements and provides the grantee and HUD with the necessary information to assess the overall program performance and accomplishments against planned goals and objectives. Both HOPWA formula and competitive grantees submitting reports after January 1, 2023, must complete and submit the HUD-4155 “Consolidated APR/CAPER” (OMB number 2506-0133). HOPWA Formula Grantees that accept the supplemental funding authorized under the CARES Act should report on the use of supplemental grant funds in the same performance report as their use of entitlement funds. Both formula and competitive grantees are required to submit their completed HUD-4155 no later than 90 days after the close of their program or operating year. Competitive grantees have 120 days after the end of their grant’s last period of performance to submit the final HUD-4155. Grantees should be able to demonstrate that funds disbursed through federal financial systems are traceable in local accounts and accurately reported in Key Line Items in the HUD-4155. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Condition The City does not have properly designed controls and documented procedures in place to ensure compliance with the following requirements: • CAPER report is submitted to HUD within 90 days of the end of the 12-month program year. • Review of subrecipient’s CAPER to ensure complete and accurate reporting over key line items. Cause Subrecipients are required to submit their individual CAPER reports to the City prior to the City submitting its report to HUD. The City has had difficulty in getting the subrecipients to comply with the CAPER reporting, which is primarily due to staffing issues at the subrecipients. As a result, the City did not submit its CAPER to HUD within the required time-frame. Proper perspective The City failed to submit the CAPER that covers the period from July 1, 2023 to June 30, 2024 to HUD by the September 30, 2024 deadline. The City ultimately submitted the CAPER on February 28, 2025. Additionally, for four of four subrecipients selected for testing, the City was unable to provide documentation that the subrecipients’ CAPER reconciled to the Integrated Disbursement and Information System (IDIS) or the City’s general ledger system. Possible asserted effect Incomplete or inaccurate information from its subrecipients has resulted in the City’s inability to properly comply with HUD’s CAPER reporting requirements. Questioned costs Not determinable Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-005 Recommendation We recommend that the City establish policies, procedures, and internal controls to ensure that all subrecipient CAPER reports are reconciled to the IDIS system and submitted to HUD within 90 days of year-end. Views of responsible officials and corrective actions The Audit, while investigating FY25 programs and activities, assessed the FY24 HOPWA CAPER, which was delivered to HUD past its due date. For the FY25 CAPER, a submission by nature of general reporting timelines occurs in FY26, was completed by the grantees on time and submitted to the City on time, including certain specific revisions and corrections, and was delivered to and accepted by HUD by the required submission deadline. The City expects future CAPERs to be submitted in a timely manner as grantees successfully adapted to the new Excel based reporting format.
Finding Number: 2025-005 Program: Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A- Direct Award Federal Agency: U.S. Department of Treasury Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Subrecipient Monitoring Type of finding: Material weakness and material noncompliance Criteria The 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. According to 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City does not have effective controls in place to ensure compliance with the following requirements: • Each subrecipients risk of noncompliance is appropriately evaluated and level of monitoring is determined. • Verification and review that subrecipients are audited as required when they are expected to exceed the threshold for having a single audit. • All required elements of the subrecipient contracts are included during execution. Cause The City’s lack of effective internal controls which caused the following noncompliance and control exceptions.Proper perspective During the audit, we noted that six of the nine subrecipient selections did not contain all the required elements of the contract. Additionally, for nine of the nine selections, the City did not complete a risk assessment or conclude on the subrecipient's risk of noncompliance. We also noted that for two of the subrecipients that required a single audit, there was no evidence to support the nature and extent of the City's review of those audit reports. Therefore, we were unable to determine, based on the subrecipient's risk assessment and single audit reports, the proper level of monitoring procedures to be performed. Possible asserted effect Lack of effective controls over subrecipient monitoring could result in the City’s noncompliance with program requirements. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding Yes, 2024-009 Recommendation We recommend the City establish a checklist or formal documentation requirements for both risk assessments and review of single audit report procedures. Employees can complete these checklists when obtaining and reviewing the documentation. The City should then conclude on and document the subrecipient’s risk of noncompliance based on the checklist to ensure the proper level of monitoring occurs throughout the year. Views of responsible officials and corrective actions The city already established a well-designed internal control manual of policies and procedures over the ARPA grant's full cycle grant management, as well as various templates to evaluate the subrecipients' risks and monitoring their performances. In FY26, the city will implement its internal control by conducting timely subrecipient monitoring activities with signed documents