Audit 412453

Finding # 2025-001 Type: Material weakness over compliance with cash management Assisting Listing Number: 14.251 Federal Agency: Department of Housing and Urban Development Name of Federal Program: Economic Development Initiative Requirement: Cash management and federal draw downs are required to be reviewed and approved by supervisory personnel prior to draw down. Under the Uniform Guidance cash management requirements, recipients must maintain effective internal controls to ensure that federal funds are drawn down only for immediate cash needs and that draw requests are accurate, supported, and in compliance with federal requirements. Management review and approval controls should be implemented over cash drawdown requests before funds are requested through the federal payment system. Context: The Organization made one federal draw for the full grant amount during the year. Cause: Management had not established formal policies and procedures requiring review and approval of drawdown requests before funds were drawn from the federal payment system. Effect: Without an independent review of drawdown requests, the Organization is at increased risk of requesting federal funds in amounts that are inaccurate or not aligned with immediate cash needs. This could result in excess federal cash on hand, untimely requests for reimbursement, noncompliance with federal cash management requirements, or the need to return funds to the federal agency. Questioned Costs: None Recommendation: Management should establish and document procedures requiring all federal cash drawdown requests to be reviewed and approved by an individual independent of the preparer prior to submission. The review should include verification that the requested amount is supported by eligible expenditures incurred or immediate cash needs, as applicable under the terms of the federal award. Evidence of the review and approval should be retained with the drawdown documentation. Management’s Response: Management agrees with the finding and will implement a formal review and approval process for all federal drawdowns. All draw requests will be reviewed and approved by the Director of Finance or another designated member of management prior to submission through the federal payment system. Documentation of the review will be retained with the supporting drawdown records.

Finding # 2025-002 Type: Significant deficiency in internal controls over compliance with equipment and real property management Type: Immaterial noncompliance Assisting Listing Number: 14.251 Federal Agency: Department of Housing and Urban Development Name of Federal Program: Economic Development Initiative Requirement: The Uniform Guidance requires recipients to maintain effective control over and accountability for real property acquired with federal funds. Records should be maintained and include, among other information, a description of the property, source of funding, acquisition date, cost, location, condition, and disposition data. Condition: The Organization did not maintain a formal process to track and monitor equipment purchased with federal funds. Specifically, the Organization had not established a complete equipment inventory listing identifying assets acquired with federal awards. Context: During testing of property purchased with federal funds, the Organization was unable to provide a comprehensive property record demonstrating the tracking and monitoring of federally funded assets. Cause: Management had not implemented formal policies and procedures for maintaining equipment records and monitoring property acquired with federal funds. Effect: Without adequate controls over federally funded equipment, the Organization is at increased misuse, unauthorized disposition, or inaccurate reporting of property purchased with federal funds. Additionally, the Organization may be unable to demonstrate compliance with federal equipment management requirements. Questioned Costs: None Recommendation: Management should develop and implement formal procedures for tracking and monitoring property acquired with federal funds. At a minimum, the Organization should maintain detailed property records containing all information required by the Uniform Guidance, assign responsibility for maintaining the inventory, conduct and document periodic physical inventories, reconcile inventory results to the property records, and maintain documentation supporting the use and disposition of federally funded equipment. Management’s Response: Management agrees with the finding and will implement a formal property management process. The Organization will establish a centralized inventory of all equipment and property purchased with federal funds, perform periodic physical inventories, and implement management review procedures to ensure compliance with Uniform Guidance equipment management requirements. Responsibility for maintaining the inventory and monitoring compliance will be assigned to designated personnel.