Audit 415411

Reporting Federal Agency: U.S. Department of Housing & Urban Development Federal Program Name: Community Planning and Development Office of Economic Development - Congressional Grants Division Assistance Listing Number: 14.251 Federal Award Identification Number and Year: B-22-CP-IL-0326; 2022 Award Period: July 18, 2022 to August 31, 2030 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: U.S. Department of Housing and Urban Development (HUD) requires recipients to submit complete, accurate, and timely performance reports through the Disaster Recovery Grant Reporting (DRGR) system. Required reporting includes activity-level progress narratives, financial information that agrees to the grantee's accounting records, and submission of reports by established deadlines. Recipients are required to submit complete and timely performance reports in accordance with the terms and conditions of the federal award and HUD’s Disaster Recovery Grant Reporting (DRGR) reporting requirements. Chapter 19 of the DRGR User Manual requires the grantee to complete an overall progress narrative; report activity-level accomplishments, as applicable; review pre-populated financial information for accuracy; enter total funds expended for each activity; and provide a narrative describing the progress and status of each activity. Performance reports are required to be submitted to HUD by the applicable submission deadline. Condition: During our testing of performance reports for Award B-22-CP-IL-0326, we identified the following: • Total funds expended were not entered for any of the activities included in the reports tested. • For the performance report covering January 1 through December 31, 2025, the activity progress narratives were incomplete for all four activities reported. • One activity was excluded from each applicable report. Although no current-period activity was reported for the excluded activity, cumulative information related to the activity was included in the overall project summary, and other activities without current-period activity were included in the reports. • The performance reports were not submitted by the required deadlines. • Amounts reported as expenditures in DRGR and the related Federal Financial Reports did not agree to the grantee's accounting records. Management reported expenditure amounts based on reimbursement vouchers submitted through DRGR during the reporting period rather than actual expenditures incurred and paid as recorded in the general ledger. Questioned costs: None. Context: We reviewed 2 of 2 financial reports and 2 of 2 performance report covering the period January 1, 2025 through December 31, 2025. Activity progress narratives were incomplete for four of four activities reported. Additionally, the report was submitted after the required due date. Per review of the GRDR System, the reports were submitted between 37 and 42 days late. Additionally, Reported expenditure amounts did not reconcile to the grant expenditures recorded in the general ledger because amounts were derived from reimbursement requests submitted through DRGR rather than expenditures incurred and paid during the reporting period. Cause: The grantee had not established or consistently performed an effective review process to ensure that all required activities, expenditure information, narratives, and submission deadlines were addressed before the financial and performance reports were submitted. Effect: Incomplete, inaccurate, and untimely reporting may impair HUD's ability to monitor grant performance and financial activity. Failure to reconcile reported expenditures to the accounting records increases the risk that federal reporting information is inaccurate and may result in management decisions being based on incomplete or incorrect information. Repeat finding: No. Recommendation: We recommend the grantee strengthen internal controls over federal reporting by: • Establishing a reporting calendar with assigned responsibilities and submission deadlines. • Developing a standardized DRGR preparation and review checklist. • Requiring reconciliation of all financial information reported in DRGR to the general ledger before submission. • Performing and documenting supervisory review of all reports prior to submission. • Providing training to personnel responsible for federal grant reporting requirements. Views of responsible officials: There is no disagreement with the audit finding.