Audit 412518

Finding Reference: 2025-002 Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Condition: Preliminary Financial reports and programs financial information was prepared by external consultant and were available on June 3, 2025, to prepare the Single Audit Reporting Package. Criteria: 2 CFR part 75.512, the Uniform Guidance established the audit must be completed nine months after the end of audit period and the Single Audit Reporting package and Data Collection Form (SF-SAC) Federal Audit Clearing House, must be submitted within the earlier 30 calendar days after receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Cause: Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. 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 Cost: $0.00 (None) Recommendation: To prepare a calendar responsibility of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. The governing body must create an Audit and Finance Committee to revise monthly financial statements. Management response: The Municipality acknowledges the finding regarding the late submission of the Single Audit reporting package to the Federal Audit Clearinghouse. This delay was the direct result of extraordinary and unforeseeable circumstances. Midway through the engagement, the lead auditor unexpectedly passed away. This tragic event disrupted the audit process and necessitated the immediate termination and procurement process to engage a new independent public accounting firm to complete the Single Audit. Selecting, contracting, and onboarding the new audit firm alongside and re-evaluating financial documentation created a significant administrative and operational delay beyond the control of management. Municipal management remains fully committed to regulatory compliance and timely financial reporting. The engagement with the new audit firm is now fully operational, and the audit completion process is actively underway. Management has implemented internal monitoring controls and timeline tracking to ensure that all future Single Audit packages are completed and submitted to the Federal Audit Clearinghouse within the prescribed federal deadlines.

Finding Reference: 2025-003 Type of Finding: Material Noncompliance Reporting and Material Weakness Condition: The Municipality did not submit the required Financial Reports to the US Housing and Urban Development for the fiscal year ending June 30, 2024, during the required period. The unaudited Financial Report was not submitted on or before August 30, 2024, also, the audited Financial Report was not submitted on or before March 31, 2025 Criteria: 22 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 a n annual basis, except as required more 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 the 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 (d) (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. Cause: Control procedures were not established to provide on time finance information to prepare the required financial reports of the Housing and Urban Development. Effect: The Municipality did not comply with the submission date required for the Financial Reports to the US Housing and Urban Development; this could affect the continuance and new approvals of federal program funds. Questioned Cost: $0.00 (None) Recommendation: We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurately and in a timely manner. In addition, the Municipality needs to implement adequate internal controls procedures I order to assure that the supporting documentation is available on a timely manner. Also, proper training in the accounting system should be obtained by the personnel in charge of preparing the Federal Financial Reports required by HUD. Management Response: The Municipality acknowledges the finding regarding the HUD REAC reporting requirements. To address this matter directly and strengthen compliance oversight, the Municipality contracted a specialized REAC consultant who has been actively assisting our team since last year. Through this partnership, significant progress has been made, and municipal REAC reporting is now nearly up to date, despite unforeseen administrative delays caused by past government shutdowns and operational closures. Management remains fully dedicated to maintaining compliance with all federal housing program standards. With the specialist's ongoing technical assistance and established reporting timelines, the Municipality expects to have all outstanding REAC submissions fully updated and all future reports filed in a timely manner for calendar year 2026.