Audit 411534

Condition The Municipality did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse for the fiscal year ended June 30, 2025, within the required time frame. The submission was due no later than March 31, 2026, nine months after the end of the fiscal year. Criteria 2 CFR § 200.512 Report Submission, (a) (1) The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Context The Municipality was unable to provide timely the financial statements and related supporting documentation in order to apply required audit procedures. Cause Management did not have adequate procedures in place to ensure the timely filing of the single audit reporting package and data collection form to the Federal Audit Clearinghouse. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Questioned costs None Recommendation We recommend the Municipality to maintain adequate accounting records related to the non-federal and federal funds in order to properly prepare the financial statements accurate and in a timely manner. In addition, the Municipality needs to implement adequate internal controls procedures in order to assure that the supporting documentation is available in a timely manner.

Condition The Municipality did not submit the audited financial report for the fiscal year ending June 30, 2025 on or before 9 months after fiscal year ended, as required. Criteria 24 CFR § 5.801 Uniform financial reporting standards, (b) (1) Entities (or individuals) to which this subpart is applicable must provide to HUD such financial information as required by HUD. Such information must be provided on an annual basis, except as required more frequently under paragraph (c)(4) of this section. This information must be: (1) Prepared in accordance with Generally Accepted Accounting Principles as further defined by HUD in supplementary guidance; (2) Submitted electronically to HUD through the internet, or in such other electronic format designated by HUD, or in such non-electronic format as HUD may allow if the burden or cost of electronic reporting is determined by HUD to be excessive; and (3) Submitted in such form and substance as prescribed by HUD. Also, on Section (c) (1) the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 60 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. In addition, on Section (4) (1) states that unaudited financial statements will be required 60 days after the PHA's fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA's fiscal year end, in accordance with the Single Audit Act and 2 CFR Part 200, Subpart F. Context The Municipality was unable to provide timely the financial statements and related supporting documentation in order to apply required audit procedures. Effect The Municipality did not comply with the submission date required for the Financial Report to the US Housing and Urban Development, this could affect the continuance and new approvals of federal program funds. Cause The Municipal Housing Office of the Municipality has been in personal changes process and reviewing accounting process that delay the process to analyses the financial information and submit on time or into the period permitted. Questioned costs None Recommendation We recommend the Municipality to maintain adequate accounting records related to the federal funds in order to properly prepare the financial statements accurately and in a timely manner.

Condition The Municipality could not provide sufficient and appropriate supporting documentation to substantiate the final use of $666,000 in Federal funds transferred from the Municipality’s FEMA program bank account to other municipal bank accounts. The Municipality was unable to provide adequate documentation identifying the specific purpose of the transfers or tracing the transferred Federal funds to their subsequent use. Therefore, based on the documentation available during the audit, the final use and disposition of the $666,000 could not be substantiated. Context During the fiscal year ended June 30, 2025, the Municipality transferred $666,000 from its FEMA program bank account to other municipal bank accounts through electronic bank transfers. Although the transfers represented a movement of Federal funds between accounts controlled by the Municipality, the records provided did not contain sufficient supporting documentation to identify the specific purpose of the transfers or to trace the funds to their subsequent use. The Municipality did not provide sufficient evidence to substantiate the final disposition of the transferred funds, including the related FEMA disaster, project, subaward, or subsequent program expenditures, as applicable. Program requirements require recipients and subrecipients to maintain sufficient records and supporting documentation to identify and trace Federal funds and demonstrate their use in accordance with applicable Federal requirements and the terms and conditions of the Federal award. Criteria Uniform Guidance, 2 CFR § 200.403, provides that costs charged to a Federal award must, among other requirements, be necessary and reasonable for the performance of the Federal award, allocable to the award, consistent with applicable policies and procedures, and adequately documented. Additionally, 2 CFR § 200.302 requires a non-Federal entity’s financial management system to provide for the identification and tracing of Federal awards to an adequate level of expenditures and to maintain records sufficient to demonstrate that Federal funds have been used in accordance with applicable Federal statutes, regulations, and the terms and conditions of the Federal award. Under 44 CFR §§ 206.201 and 206.203, the Public Assistance Program provides Federal assistance for eligible Emergency Work and Permanent Work, subject to applicable program requirements. Cause The Municipality did not have adequate controls and procedures to ensure that Federal funds transferred from the FEMA program bank account to other municipal accounts were properly documented, identified, and subsequently traced to their final use. Effect As a result, the Municipality could not substantiate the final use and disposition of $666,000 in Federal funds transferred from the FEMA program bank account based on the documentation provided during the audit. The lack of sufficient supporting documentation limited our ability to verify the relationship between the transferred Federal funds and the related FEMA program activities, projects, or expenditures. Questioned Cost $666,000 Recommendation We recommend that the Municipality strengthen its internal controls over Federal funds by establishing procedures to ensure that all transfers from FEMA program bank accounts to other municipal accounts are adequately documented and remain fully traceable to their final use.