Audit 410304

Reporting – Special Reports for FFATA and Subrecipient Monitoring Assistance Listing Number 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants U.S. Department of Housing and Urban Development (HUD) Federal Award Identification Number(s): B-22-CP-CO-0165 Award Year – 2022 Criteria or specific requirement(s): In accordance with the Federal Funding Accountability and Transparency Act (FFATA) and 2 CFR Part 170, recipients are required to report applicable first-tier subawards of $30,000 or more, including required data elements, in SAM.gov by the end of the month following the month in which the subaward obligation was made. Furthermore, pursuant to 2 CFR § 200.332(a), pass-through entities are required to clearly identify federal award information and communicate all applicable federal requirements, terms and conditions, and compliance requirements to subrecipients at the time of the subaward. Required information includes, among other items, the Assistance Listing number and name, federal award identification information, indirect cost rate and any additional requirements imposed by the pass-through entity so that subrecipients can properly administer the federal award and comply with applicable federal requirements. Condition: During testing of FFATA reporting requirements, we noted that the City had one applicable first-tier subrecipient; however, the City did not report the subaward information in SAM.gov. Additionally during testing of subrecipient monitoring, we noted the City did not communicate required federal award information or increase in funding to its sole subrecipient as required by 2 CFR § 200.332(a). Cause: The City experienced a delay in receiving the federal award and initially funded the subaward with nonfederal resources. After the federal award was received and the related expenditures were identified as federally funded, the City did not have a process to update the subaward, communicate the federal award information and funding increase to the subrecipient, or evaluate FFATA reporting requirements. As a result, the required subaward information was not reported in SAM.gov or communicated to the subrecipient. Effect or potential effect: Failure to report the applicable first-tier subaward in accordance with FFATA requirements resulted in noncompliance with federal reporting requirements and reduced transparency over the use of federal funds by preventing complete and accurate subaward information from being available through federal transparency reporting systems. In addition, failure to communicate required federal award information to the subrecipient increases the risk that the subrecipient would be unaware of applicable federal requirements and unable to properly administer the award in accordance with federal regulations and the terms and conditions of the subaward. Questioned costs: None Context: The City had one subrecipient during the audit period. The following testing was performed related to FFATA reporting: Transactions Tested -1 Subaward not reported -1 Report not timely -1 Subaward amount incorrect - Unable to test due to subaward no tbeing reported Subaward missing key elements -Unable to test due to subaward not being reported Dollar Amount of Tested Transactions - $1,045,014 Subaward not reported - $1,045,014 Report not timely - $ 1,045,014 Subaward amount incorrect -Unable to test due to subaward not being reported Subaward missing key elements - Unable to test due to subaward not being reported Additionally, we performed subrecipient monitoring testing over the sole subrecipient and identified the compliance exception described above. Identification as a repeat finding, if applicable: N/A Recommendation: We recommend the City submit any outstanding FFATA reporting information and formally notify the subrecipient of the increase in funding, applicable federal requirements, and terms and conditions of the award. We also recommend the City implement procedures to identify and assess compliance requirements when funding sources and award amounts change, including procedures to ensure required reporting, documentation, and subrecipient communications are updated timely and accurately. Views of responsible officials and planned corrective actions: Agree. See separate corrective action plan.

Reporting – Financial and Performance Assistance Listing Number 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants U.S. Department of Housing and Urban Development (HUD) Federal Award Identification Number(s): B-22-CP-CO-0165 and B-23-CP-CO-0280 Award Year – 2022 and 2023 Criteria or specific requirement: 2 CFR §§200.328 and 200.329 require recipients to submit timely financial and performance reports that are supported by underlying records and accurately reflect financial activity and program accomplishments. In addition, the grant agreement requires the grantee to submit a combined semiannual performance and financial report in the Disaster Recovery Grant Reporting (DRGR) system. The report must include a narrative describing accomplishments during the reporting period and must be submitted within 30 calendar days after the end of each six-month reporting period. Condition: During testing, we noted that the semiannual performance reports required to be submitted during calendar year 2025 were not submitted by the required deadlines. The reports, which were due in January 2025 and July 2025, were not submitted until September 2025. As a result, the Grantee did not submit required financial and performance reports within the timeframe prescribed by the grant agreement and 2 CFR §§ 200.328 and 200.329. Additionally, management could not provide evidence of review for one of the reports. Cause: Management was not aware of the semiannual reporting deadlines established by the grant agreement and did not maintain a process to track reporting due dates. As a result, required reports were not submitted within the prescribed timeframes. In addition, the documentation pertaining to the evidence of reviews and the evidence of report submission was not retained. Effect: Failure to submit required financial and performance reports timely reduced the ability of the federal awarding agency to monitor grant activities, evaluate program progress, and ensure compliance with award requirements. In addition, because the federal grant system does not permit drawdowns when required reports are overdue, the delayed submissions prevented the City from requesting reimbursement of eligible grant expenditures on a timely basis, which could adversely affect cash flow and delay project activities funded by the grant. The lack of retained review documentation prevents management from demonstrating that required reviews were performed and increases the risk that errors, omissions, or noncompliance may not be identified and corrected timely. Questioned Costs: None Context: We tested 2 of 4 required semiannual reports and found both were submitted late. A non-statistical sampling methodology was used to select the sample. Identification of a repeat finding, if applicable: N/A Recommendation: We recommend management establish and maintain a formal grant compliance tracking process that identifies all required financial and performance reports, their due dates, and responsible personnel. Management should monitor the tracking schedule throughout the year and implement reminder and review procedures to help ensure all required reports are submitted accurately and timely in accordance with federal requirements and the terms and conditions of the grant award. Additionally, management should retain documentation evidencing the review of reports and supporting records, including the reviewer and date of review, to demonstrate compliance with established review procedures. Views of responsible officials and planned corrective actions: Agree. See separate corrective action plan.