Audit 414768

Finding 2025-002 – Significant Deficiency/Reporting Noncompliance CDBG – Entitlement Grants Cluster – ALN 14.218 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Criteria: The U.S. Department of Housing and Urban Development (HUD) established reporting requirements for local governments. These requirements established methods for reporting Federal Funding Accountability and Transparency Act (FFATA) information. Condition: We performed tests to determine if the City was in compliance with reporting requirements for the federal program. The City is required to report specific data about subrecipients and subawards in the subaward reporting system. Context: The City did not report any subrecipients (subaward) information during 2025.Cause: There was a misunderstanding by the City’s program management. Program management did not file FFATA reports because HUD did not conduct monitoring of this requirement and program management thought this meant the requirement was not applicable to the City. Effect: The City was not in compliance with reporting requirements in 2025. Recommendation: We recommend the City enhance its internal control over the reporting requirements of the CDBG program by reviewing the U.S. Department of Housing and Urban Development’s federal guidance for reporting. Views of Responsible Officials: Management concurs. See corrective action plan.

Finding 2025-003 – Significant Deficiency/Wage Rate Requirements CDBG – Entitlement Grants Cluster – ALN 14.218 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Criteria: Federal and state prevailing wage requirements require contractors and subcontractors working on applicable projects to submit certified payroll reports on a weekly basis. As the awarding entity, the City is responsible for monitoring compliance and maintaining documentation demonstrating that required certified payroll reports have been received and reviewed. Condition: During testing, we noted that the City did not have an adequate process in place to monitor contracts and projects subject to prevailing wage requirements. Specifically, the City did not maintain a comprehensive method for tracking applicable contracts and ensuring that weekly certified payroll reports were submitted timely by prime contractors and subcontractors for review. Context: The City did not receive two of the six required certified payroll reports tested. Cause: The City has not established formal procedures or internal controls to identify all prevailing wage projects and monitor the timely receipt and review of required certified payroll reports. Effect: The City was not in compliance with wage rate requirements in 2025. Recommendation: We recommend the City establish and implement a formal tracking system and related internal controls for all contracts and projects subject to prevailing wage requirements, including CDBG-funded projects. The system should identify all applicable prime contractors and subcontractors and ensure that weekly certified payroll reports are submitted and reviewed timely in accordance with prevailing wage requirements. Views of Responsible Officials: Management concurs. See corrective action plan.