Program: HOME Investment Partnerships Program Federal Financial Assistance Listing Number: 14.239 Federal Grantor: U.S. Department of Housing and Urban Development Award Number and Year: M16-MC060227; M17-MC060227; M20-MC060227; M21-MC060227; M23-MC060227; M24-MC060227 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: The 2025 OMB Compliance Supplement requires that participating jurisdictions administering the HOME Investment Partnerships Program establish and implement procedures to ensure compliance with Housing Quality Standards (HQS). This includes performing initial and periodic inspections of assisted units and maintaining adequate monitoring procedures to ensure that all properties meet HQS requirements throughout the affordability period. Condition: During our audit procedures, we noted that the City had not established formal monitoring procedures as of fiscal year 2025 to ensure compliance with Housing Quality Standards (HQS) requirements across all projects under the HOME program. Based on inquiry with program personnel, the City indicated that it is currently working with a consultant to develop and implement appropriate monitoring procedures. Cause: The City has not yet developed and implemented formal policies and procedures for monitoring Housing Quality Standards compliance across all applicable HOME-funded projects. Effect: The absence of established monitoring procedures increases the risk that properties may not meet Housing Quality Standards requirements and that noncompliance may not be identified or corrected in a timely manner. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Our procedures included inquiry of program personnel and review of the City’s documented policies and procedures related to HQS monitoring. No sampling was performed. Repeat Finding from Prior Year: No. Recommendation: The City should develop and implement formal written policies and procedures for monitoring compliance with Housing Quality Standards across all HOME-funded projects. These procedures should include requirements for initial and periodic inspections, documentation standards, and timely follow-up on identified deficiencies. Views of Responsible Officials and Planned Corrective Action: Management agrees. See separately issued Corrective Action Plan.
Program: HOME Investment Partnerships Program Federal Financial Assistance Listing Number: 14.239 Federal Grantor: U.S. Department of Housing and Urban Development Award Number and Year: M16-MC060227; M17-MC060227; M20-MC060227; M21-MC060227; M23-MC060227; M24-MC060227 Compliance Requirement: Special Tests and Provisions – Wage Rate Requirements Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) 40 USC 3141–3144, 3146, and 3147. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326. 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This includes internal controls over maintaining records of the receipt and review of certified payrolls. Condition: During our audit procedures, we noted that the City was unable to provide a schedule of weeks of performance for construction projects active during fiscal year 2025. As a result, we were unable to determine the applicable periods subject to Davis-Bacon requirements. Additionally, the City was unable to provide certified payroll reports for the project selected for testing. As such, we were unable to verify that contractors complied with applicable prevailing wage rate requirements. Cause: The City has not established and implemented adequate procedures to track construction project activity and maintain required documentation, including certified payroll reports, to support compliance with Davis-Bacon wage rate requirements. Effect: The lack of documentation and monitoring procedures increases the risk that contractors may not comply with prevailing wage requirements and that noncompliance would not be identified or corrected in a timely manner. Additionally, the absence of sufficient audit evidence resulted in a scope limitation over compliance with wage rate requirements. Questioned Costs: None identified. However, due to the lack of supporting documentation, we were unable to determine whether questioned costs may exist. Context/Sampling: Our procedures included selecting one construction project subject to Davis-Bacon requirements for testing. We requested supporting documentation, including a schedule of weeks of performance and certified payroll reports. However, the City was unable to provide the requested documentation. Repeat Finding from Prior Year: No. Recommendation: The City should implement formal written policies and procedures to ensure compliance with Davis-Bacon wage rate requirements. This should include maintaining a complete schedule of construction project activity, obtaining and retaining certified payroll reports, and performing documented reviews to verify compliance with prevailing wage requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees. See separately issued Corrective Action Plan.
Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds / HOME Investment Partnership Program Federal Financial Assistance Listing Number.: 21.027 / 14.239 Federal Grantor: U.S. Department of the Treasury / U.S. Department of Housing and Urban Development Award Number and Year: Affects all grant awards included under assistance listing 14.239 and 21.027 on the Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal awards Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the City) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. §200.331 of the Uniform Guidance states the City is responsible for making case-by-case determinations to determine whether the entity receiving the Federal funds is a subrecipient. In addition, §200.303 of the Uniform Guidance states that the City must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA we noted the following: • The City did not properly identify the amount expended for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL No. 21.027. The expenditures reported by the City were understated by $176,324. • The City did not properly identify the amount of Federal funding passed through to subrecipients for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL No. 21.027. The amount passed through to subrecipients reported by the City was understated by $418,183. • The City did not properly identify the amount of Federal funding passed through to subrecipients for the Home Investment Partnerships Program, AL No. 14.239. The amount passed through to subrecipients reported by the City was overstated by $2,591,181. Cause: As a result, the City lacked adequate internal controls to ensure the SEFA is completely and accurately stated. Specifically, the City’s processes for recording and tracking expenditures of Federal awards are not designed so that expenditures are identified when incurred. In addition, the City’s processes for identifying and reporting subrecipients are not designed to ensure appropriate reporting on the SEFA. Effect: Adjustments to the SEFA were required. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Program expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Finding from Prior Year: No. Recommendation: The City, including all its reporting departments, should follow existing policies, procedures and internal controls to ensure all expenditures and amounts passed through to subrecipients are accurately tracked and reported on the SEFA. Personnel knowledgeable of federal expenditures should review amounts coded to federal programs for completeness and accuracy. The SEFA should be prepared and reviewed in a timely manner and reconciled to underlying records as well as the basic financial statements. Views of Responsible Officials and Planned Corrective Action: See separate corrective action plan.
Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing Number: 21.027 Federal Grantor: U.S. Department of the Treasury Award Number and Year: 2021 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: 2 CFR section 200.303(a), Internal Controls, states that 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. Title 2 CFR Section 200.214 of the Uniform Guidance states that the City must comply with 2 CFR part 180, which implements Executive Orders 12549 and 12689. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Per 2 CFR Section 180.300, when a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/SAM/, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. 2 CFR 200.327 Contract provisions. The recipient's or subrecipient's contracts must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions for Non-Federal Entity Contracts Under Federal Awards. Condition: During our testing of the City’s provisions for procurement requirements, we noted the following: • For seven (7) out of seven (7) contracts selected for testing, the City did not include the applicable provisions described in 2 CFR 200 Appendix II. • For seven (7) out of seven (7) contracts tested, we noted that there was no evidence that the City verified that the contracted entities were not suspended or debarred or otherwise excluded from participating in federal programs prior to entering the contract. Cause: The City did not follow their policy to verify the information described in the conditions prior to entering the transactions. The City’s policy does not include the requirement to include each of the applicable provisions identified in 2 CFR 200 Appendix II in its contracts or purchase orders. Effect: Failure to implement and maintain a proper control process could result in payments to vendors that are suspended or debarred or improper awarding of contracts under the procurement guidance. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of seven (7) out of fifteen (15) procurement contracts were tested. This represented a total of $23,361,562 in contracted services under the grant. Repeat Finding from Prior Year: No. Recommendation: We recommend the City strengthen its policies and procedures to ensure that the verification of the debarment and suspension is documented and retained and that contracts include all applicable provisions of 2 CFR 200 Appendix II. Views of Responsible Officials and Planned Corrective Action: Management agrees. See separately issued Corrective Action Plan.
Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing Number: 21.027 Federal Grantor: U.S. Department of the Treasury Award Number and Year: 2021 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: In accordance with Title 2 U.S. Code of Federal Regulations (CFR) 200.332, pass-through entities must comply with the following: • 2 CFR Part 200.332(a), Requirements for Pass-Through Entities, states that all passthrough entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. • 2 CFR 200.332(b) – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. This evaluation of risk may include consideration of such factors listed in 2 CFR 200.332(b)(1) through (4). • 2 CFR 200.332(d)- Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include the information at 2 CFR 200.332(d)(1) through (4). • 2 CFR 200.332(f) – Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. • 2 CFR section 200.303(a), Internal Controls, states that 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: We noted for three (3) of three (3) subrecipients selected for testwork, the City did not perform any of the required subrecipient monitoring procedures as required under 2 CFR 200.332 (a. through i.). As a result, we were unable to perform audit procedures over Subrecipient Monitoring compliance requirements. Cause: The City did not have adequate policies and procedures in place to monitor subrecipient in accordance with 2 CFR 200.332. Effect: The City did not have procedures in place requiring compliance with the Subrecipient Monitoring requirements in 2 CFR 200.332 and as such did not comply with subrecipient monitoring requirements related to the program. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of three (3) of three (3) subrecipients were sampled. Repeat Finding from Prior Year: No. Recommendation: The City should implement policies and procedures to ensure that subrecipients are properly identified at the time of award and accurately reported on the SEFA. Additionally, the City should establish and perform ongoing subrecipient monitoring procedures in accordance with Federal requirements, including risk assessments and documentation of monitoring activities. Views of Responsible Officials and Planned Corrective Action: Management agrees. See separately issued Corrective Action Plan.