Finding Number: 2025-014 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Immunization Cooperative Agreements ALN: 93.268 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” Condition – During our testwork over nonpayroll transactions for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that for one (1) out of forty-two (42) samples, the transaction was charged twice to the program. Total amount of nonpayroll transactions is $11,925,998, and the amount of exception is $95,827. Questioned Costs – Known amount is $95,827. Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $6,817,550. Effect – Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause – DC Health does not have adequate controls in place to ensure that only allowable costs are charged to the program. Recommendation – We recommend that DC Health strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. The expenditure in question was an allowable cost journalized to the grant. The error occurred when the journal was duplicated. To correct the issue, other allowable expenditures were journalized from the grant to local and therefore prevented a duplicate drawdown in PMS. Also note that the vendor did not receive duplicate payment. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-015 Prior Year Finding Number: 2024-016 Compliance Requirement: Eligibility; Special Tests and Provisions – Income Eligibility and Verification Sytem Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. For TANF, per 45 CFR Section 205.60 (a), “The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under Section 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance.” Per 45 CFR Section 205.56(a)(1)(i), “The State agency shall review and compare the information obtained from each data exchange against information contained in the case record to determine whether it affects the applicant’s or the recipient’s eligibility or the amount of assistance.” Per 45 CFR Section 205.60 (a), “The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under Section 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance.” Condition – During our testing over beneficiary eligibility compliance requirements of the Temporary Assistance for Needy Families (TANF) program, we selected a sample of sixty (60) beneficiaries in fiscal year 2025 to test DHS’ compliance with TANF eligibility requirements. There were a total of 56,211 payments in the population, with a total dollar amount of $43,036,388. We noted the following: • For three (3) out of sixty (60) samples, DHS was unable to provide support that would allow us to test that cash assistance was not provided to an individual during the 10-year period that began on the date the individual was convicted in Federal or State court of having made a fraudulent statement or representation with respect to place of residence. In addition, for these three (3) samples, DHS was unable to locate the customer's application that was submitted prior to the sample month tested. • For three (3) out of sixty (60) samples, DHS was unable to provide the most recent application form that was submitted by the customer prior to the month tested. We were therefore unable to determine whether cash assistance was provided to an individual who was deemed eligible to receive TANF benefits prior to the approval of the application by the Social Service Representatives (SSR). • For all six (6) of these samples above, we noted that the SSR did not ensure that all required information was received prior to approving the application. These exceptions happened due to inadequate review of the application for cash assistance by the SSR. The questioned costs for the above issues amounted to $44,618, which represents 10.50% of the total TANF federal benefits paid to the 60 sampled items of $425,045. In addition, while testing the same sixty (60) samples for the Special Tests and Provisions – Income Eligibility and Verification System compliance requirement, although all evidence provided supported the use of the Bendex system during the eligibility process, for one (1) of sixty (60) the application, which included an adult in the case, was not provided. Questioned Costs – Known amount is $44,618. Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample. Effect – Without properly maintaining documentation to support eligibility determinations, ineligible beneficiaries may receive benefits under the TANF grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Cause – DHS did not consistently adhere to its established policies and procedures requiring it to maintain documentation supporting participant eligibility. Recommendation - We recommend that DHS strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – The Division of Program Operations (DPO) of DHS acknowledges and agrees with the audit findings and related observations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-016 Prior Year Finding Number: 2024-017 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to Title IV-A, Section 411 of the Social Security Act (the Act), 45 CFR 265.3, and the American Recovery and Reinvestment Act (ARRA) of 2009, (Public Law 111-5), each State must file an annual report containing information on the TANF program and the State’s maintenance-of-effort (MOE) program(s) for that year, including strategies to implement the Family Violence Option, State diversion programs, and other program characteristics. States are required to submit the ACF-196R report quarterly, beginning in Federal Fiscal Year (FFY) 2015, in lieu of the SF-425, Federal Financial Report (financial status). Each State files quarterly expenditure data on the State’s use of Federal TANF funds, State TANF MOE expenditures, and State expenditures of MOE funds in separate State programs. If a State is expending Federal TANF funds received in prior fiscal years, it must file a separate quarterly TANF Financial Report for each fiscal year that provides information on the expenditures of that year’s TANF funds. This form must be used for reporting regular TANF grant funds, Contingency Funds, and ARRA-Emergency Fund for TANF State Programs funds. See TANF-ACF-PI-2014-02, available at http://www.acf.hhs.gov/programs/ofa/resource/tanf-acf-pi-2014-02, for more information. Condition – During our test work over the quarterly ACF-196R report, we noted for Grant Identifying number 2501DCTANF/2501DCTAN3, the ACF-196R filed for the 4th quarter in fiscal year 2025 showed a variance of $164,659, between the cumulative amount reported on the ACF-196R amounting to $67,867,001, and the sum of federal and contingency funds as reported in the SEFA detail amounting to $67,702,342. DHS was unable to provide support for the variance. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure that correct amounts were reported and were properly reviewed, DHS may report incorrect amounts on the quarterly ACF-196R reports. Cause – Management did not have proper internal controls and policies and procedures in place to ensure that the amounts on the ACF-196R were properly reported, and the reports were properly reviewed and approved. Recommendation - We recommend that DHS implement policies, procedures and controls that will enable accurate reconciliation between the data sources used in the preparation of the ACF-196R reports to ensure proper reporting of TANF expenditures. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The SEFA submitted was correct, but the amount reported on the ACR-196 was incorrect because there was an undetected change in a formula in the workbook. This resulted in an error not being detected. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-017 Prior Year Finding Number: 2024-018 Compliance Requirement: Reporting; Special Tests and Provisions – Penalty for Failure to Comply with Work Verification Plan Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Human Services (DHS)/ Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR Section 261.60 (a), “A State must report the actual hours that an individual participates in an activity, subject to the qualifications in paragraphs (b) and (c) of this section and Section 261.61(c). It is not sufficient to report the hours an individual is scheduled to participate in an activity. (b) For the purposes of calculating the work participation rates for a month, actual hours may include the hours for which an individual was paid, including paid holidays and sick leave. For participation in unpaid work activities, it may include excused absences for hours missed due to a maximum of 10 holidays in the preceding 12-month period and up to 80 hours of additional excused absences in the preceding 12-month period, no more than 16 of which may occur in a month, for each work-eligible individual. Each State must designate the days that it wishes to count as holidays for those in unpaid activities in its Work Verification Plan. It may designate no more than 10 such days. In order to count an excused absence as actual hours of participation, the individual must have been scheduled to participate in a countable work activity for the period of the absence that the State reports as participation. A State must describe its excused absence policies and definitions as part of its Work Verification Plan, specified at Section 261.62. (c) For unsubsidized employment, subsidized employment, and OJT, a State may report projected actual hours of employment participation for up to six months based on current, documented actual hours of work. Any time a State receives information that the client's actual hours of work have changed, or no later than the end of any six-month period, the State must re-verify the client's current actual average hours of work, and may report these projected actual hours of participation for another six-month period. (d) A State may not count more hours toward the participation rate for a self-employed individual than the number derived by dividing the individual's self-employment income (gross income less business expenses) by the Federal minimum wage. A State may propose an alternative method of determining self-employment hours as part of its Work Verification Plan. (e) A State may count supervised homework time and up to one hour of unsupervised homework time for each hour of class time. Total homework time counted for participation cannot exceed the hours required or advised by a particular educational program.” Per 45 CFR Section 261.61 (a), “A State must support each individual’s hours of participation with documentation in the case file. In accordance with Section 261.62, a State must describe in its Work Verification Plan the documentation it uses to verify hours of participation in each activity.” According to the DC State Verification Plan, the D.C. Department of Human Services (DHS), Department of Human Services Monitoring Unit reviews and audits all documentation submitted by vendors reflecting the activities of recipients in TANF Employment program. This documentation includes time sheets, activity logs, school records, pay stubs, and verification of employment, work experience and on-the-job training. The Monitoring Unit completes this audit process to determine if sufficient documentation exists to substantiate reported time and attendance data, to warrant a payment to TANF Employment program vendors, and submission of countable hours for federal reporting purposes. The District projects hours of participation in unsubsidized, self-employment for six months or until the recipient's next scheduled recertification, whichever is sooner. Per 45 CFR Section 265.7 (a)-(c), “Each State’s quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), and the SSP-MOE Data Report) must be complete and accurate and filed by the due date.” For disaggregated data report, ‘a complete and accurate report’ means that: (1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems, and include correction of the quarterly data by the end of the fiscal year reporting period; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data for all required elements (i.e., no data are missing); (4)(i) The State provides data on all families; or (ii) if the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and (5) Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates. For an aggregated data report, “a complete and accurate report” means that: (1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data on all applicable elements; and (4) Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts).” 45 CFR Section 265.7 (g) states that “States must maintain records to adequately support any report, in accordance with 2 CFR Section 200.334 through 200.338.” Condition – During our test work over a sample of sixty (60) out of 5,549 participants for Special Tests and Provisions - Penalty for Failure to Comply with Work Verification Plan and Reporting, we noted: • For seven (7) instances, we noted that although the hours reported on the ACF-199 report met or exceeded the required hours, the hours reported did not agree with the average hours reported in CATCH, or were not supported by documentation (audited timesheets or work documentation). In addition, for three (3) of these instances, the supported hours did not meet the required hours. • For four (4) instances, we noted that the hours reported in the ACF-199 were less than the hours required; however, we noted that the customer was not sanctioned for work requirement non-compliance. In addition, for one (1) of these instances, the hours reported were not supported. • For thirteen (13) instances, we noted that the average hours reported in the ACF-199 were not properly supported. In addition, for eight (8) of these instances, the customer was not sanctioned for work requirement non-compliance. We further noted that for one (1) of these instances, additional support was provided but it was related to four (4) months after the sample selected and was not valid for the month being tested. • For two (2) instances, we noted that although participant work activity was adequately documented and properly supported by audited timesheets or work documentation support, the participant did not meet the work participation weekly hours requirement. In addition, for these samples, we noted that the hours reported on the ACF-199 report do not agree with the average hours in CATCH. • For four (4) instances, we noted that for a customer with unsubsidized employment, although the reported hours and the support met or exceeded the required hours, the reported hours on the ACF-199 report do not agree with the documentation provided (hours reported were less than actual support). • For one (1) instance, this customer was not found in CATCH, therefore there were no required hours included in CATCH. We reviewed the timesheet provided for one week during the month tested. We noted that the reported hours were not supported. • For one (1) instance, the hours reported for the Week 1 timesheet covered a two-week period that crossed two months. However, all the hours on the timesheet were improperly allocated to Week 1 of the month being tested instead of being allocated to the two weeks. We noted that the average hours reported on the ACF-199 report do not agree with the hours approved in CATCH, however, the average hours calculated using the correct hours agree with what was reported on the ACF-199 report. BDO noted that the approved hours for Week 1 in CATCH appear to be incorrect but the reported hours for the month appear to be correct. • For one (1) instance, the hours reported for one week did not agree with the hours on the approved hardcopy timesheet. As a result of the variance in the hours for that week, the hours reported did not agree with the recalculated hours, and the required hours were not met. The information tested in our sample represents the underlying data used in Reporting for the 1st and 4th quarters of fiscal year 2025. Consequently, DHS incorrectly reported data in the ACF-199 report for the 1st and 4th quarters of fiscal year 2025. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample. Effect – Data within the ACF-199 report may not be complete and accurate. Specifically, if the work participation data is not substantiated, or inconsistencies are noted, it may result in inaccurate data being reported and may lead to an incorrect ACF-199 report and could result in an incorrect allocation of Federal Funds to the state. Cause – Controls are not operating effectively over the documentation of work participation data to ensure that adequate evidence of the work participation is maintained. Recommendation - We recommend that DHS enforce existing policies and procedures and implement additional controls to ensure that adequate documentation is maintained to substantiate the work participation data reported in the ACF-199 report in accordance with the District of Columbia Work Verification Plan. We also recommend that DHS implement policies, procedures and controls that will enable an accurate reconciliation between the data sources used in the preparation of the ACF-199 report to ensure proper reporting of data elements. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the findings and will work with the DC Access System (DCAS) and Division of Innovation and Change Management (DICM) teams to mitigate the causes of the findings. These findings are mostly residual issues with the tables in DHS/ESA DCAS system. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-018 Prior Year Finding Number: 2024-019 Compliance Requirement: Special Tests and Provisions – Child Support Non-Cooperation Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR Section 264.30 (a) (1) The State agency must refer all appropriate individuals in the family of a child, for whom paternity has not been established or for whom a child support order needs to be established, modified or enforced, to the child support enforcement agency (i.e., the IV-D agency). (2) Referred individuals must cooperate in establishing paternity and in establishing, modifying, or enforcing a support order with respect to the child. Per 45 CFR Section 264.30 (c) The IV-A agency must then take appropriate action by: (1) Deducting from the assistance that would otherwise be provided to the family of the individual an amount equal to not less than 25 percent of the amount of such assistance; or (2) Denying the family any assistance under the program. Per the Code of the District of Columbia - Section 4–205.55. (a) The Mayor shall give timely and adequate notice in cases of intended action to discontinue, withhold, terminate, suspend, reduce assistance, or make assistance subject to additional conditions, or to change the manner or form of payment to a protective, vendor, or 2-party payment. (1) “Timely” means that the notice is postmarked at least 15 days before the date upon which the action would become effective, except as provided in Section 4-205.54(d). (2) “Adequate” means that the written notice includes a statement of what action the Mayor intends to take, the reasons for the intended action, the specific law and regulations supporting the action, an explanation of the individual’s right to request a hearing, and the circumstances under which assistance will be continued if a hearing is requested. Condition – During our compliance test work for the Special Tests and Provisions – Child Support Non-Cooperation compliance requirement, we tested sixty (60) out of a population of 534 child support cases referred by the Child Support Enforcement Division (CSED) within the DC Office of the Attorney General to the TANF program as having not cooperated with Child Support. We noted the following: • For ten (10) cases, we reviewed the customer's file noting that the customer was not sanctioned although requested by the DC Office of the Attorney General. We reviewed the customer's file and noted insufficient documentation explaining why customer was not sanctioned. DHS was unable to provide support to explain why the individual was not sanctioned. • For two (2) cases, we reviewed the District of Columbia Access System (DCAS) noting the amount the customer was sanctioned was 25% of the eligible amount. However, the letter sent to the customer in September 2025 did not reflect the upcoming Cost of Living Adjustment for the period starting October 2025; therefore, the benefit amount that was included in the letter was incorrect. • For one (1) case, we reviewed DCAS noting the amount the customer was sanctioned was 25% of the eligible amount. However, the letter sent to the customer did not reflect the correct sanction amount. • For one (1) case, we reviewed the sanction letter in DCAS noting that the action taken was accurate but not timely, by comparing the date the notice was printed and the date the sanction was effective to the Case Action Date submitted by CSED. We noted that the customer was sanctioned as requested by the DC Office of the Attorney General, but DHS - ESA was unable to locate documentation to explain why the customer was not sanctioned for the month of May 2025. The sanction started in June 2025. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample. Effect – Without properly maintaining documentation to support not imposing sanctions to individuals may result to noncompliance with TANF Child Support Non-Cooperation compliance requirements. Cause – DHS did not consistently adhere to its established policies and procedures requiring it to maintain documentation supporting compliance with TANF Child Support Non-Cooperation compliance requirements. Recommendation - We recommend that DHS strengthen its existing policies and procedures over enforcement of sanctions and maintenance of appropriate documentation to ensure compliance with TANF Child Support Non-Cooperation compliance requirements. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS/ESA agree with the auditor’s findings regarding the lack of completion of requests from the Child Support Enforcement (CSE) to the TANF program to impose a child support on parents who have not cooperated with child support compliance requirements. The incomplete work was due to staff transitions occurring during the review period which impacted the oversight and productivity of DHS/ESA staff working on the child support sanction process. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-019 Prior Year Finding Number: 2024-020 Compliance Requirement: Special Tests and Provisions – Penalty for Refusal to Work Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR Section 261.14 (a) and (b) “(a) If an individual refuses to engage in work required under section 407 of the Act, the State must reduce or terminate the amount of assistance payable to the family, subject to any good cause or other exceptions the State may establish. Such a reduction is governed by the provisions of Section 261.16. The State must, at a minimum, reduce the amount of assistance otherwise payable to the family pro rata with respect to any period during the month in which the individual refuses to work. The State may impose a greater reduction, including terminating assistance.” Condition – During our testing of Special Tests and Provisions – Penalty for Refusal to Work, we selected a sample of sixty (60) cases in fiscal year 2025 to test DHS’ compliance with specified requirements. Total population is comprised of 5,911 case numbers for individuals that received payments for months where they did not meet the work requirements. We noted that a customer must have four weeks of noncompliance, mandated communication from the TANF Employment and Education Program provider, and be given at least 15 days’ notice before a sanction could be imposed. Total dollar amount is $27,545,791. We noted the following: • For one (1) instance, there were no hours reported in CATCH for October 2024 through June 2025 and August to September 2025. Per review of DCAS the customer had hours recorded for July 2025 only. However, there was no sanction for this customer in DCAS for December 2024 to June 2025 and October 2025 going forward for the hours not worked in August to September 2025. DHS indicated that no action was taken after Sanction flag. DHS was unable to provide support to explain why the customer was not sanctioned. • For one (1) instance, there were no hours reported in CATCH for May 2025 through July 2025. Per review of DCAS there was no documentation to explain why there was no sanction for the month of July 2025. DHS was unable to provide support to explain why the customer was not sanctioned. • For one (1) instance, there were no hours reported in CATCH for February to April 2025 and no sanction imposed in April 2025. Per response from DHS-ESA/OPM "Customer was assigned to CATCH 3.0 (JP)". However, DHS was unable to provide support to explain why the customer was not sanctioned. Total payments made to these three (3) individuals during the periods in question was $25,151. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample. Effect – Without properly maintaining documentation to support exemptions or justifications for not imposing sanctions to individuals, individuals may be given full benefits instead of reduced federal benefits under the TANF program. In addition, miscoding of hours or amounts paid may result to providing inappropriate benefits to individuals. Cause – DHS did not consistently adhere to its established policies and procedures requiring it to maintain documentation to support exemptions or justifications for individuals who refuse to fulfill the minimum working requirements to receive or maintain benefits under the TANF program. In addition, controls are not operating effectively over the supervisory review of transactions posted in DCAS to ensure accuracy. Recommendation - We recommend that DHS enforce existing policies and procedures over review and maintenance of appropriate documentation to ensure compliance with Penalty for Refusal to Work compliance requirements. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the findings and will work within the Division of Customer Workforce Employment and Training (DCWET) team to mitigate the causes of the findings. These findings are mostly caused by inconsistency of caseload management practices. Another mitigating factor is attributable to glitches in information technology around the sanction process. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-020 Prior Year Finding Number: 2024-023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Foster Care – Title IV-E ALN: 93.658 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Child and Family Services Agency (CFSA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.405, a cost is allocable to a Federal award if it is assignable to that award in accordance with the relative benefits received. In addition, under 2 CFR Section 200.403, allowable costs must be adequately documented. Per 2 CFR Section 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the recipient or subrecipient. The regulation also allows certain alternative approaches when properly documented and approved by the appropriate Federal agency or cognizant agency, as applicable. Based on CFSA’s Human Resources Administration Issuance: HR-06-1 dated May 12, 2006, staff must seek and receive advance written approval prior to working overtime. It also indicates that in emergency situations requiring an immediate response, the employee shall make every reasonable attempt to obtain advance approval by an appropriate manager or supervisor. Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must: 1. Submit a request in advance to use annual leave to their manager or supervisor. 2. Receive approval from the manager or supervisor; and 3. Record the approved leave taken on their timesheet in PeopleSoft. Per CFSA’s guidelines dated May 15, 2021, employees must file a written request within agency’s prescribed time limits to use sick leave. Employees should consult their agency for specific guidelines on how to request sick leave. If no specific guidelines exist, employees should submit their leave requests through PeopleSoft. For doctor’s appointment, employees must make sick leave requests at least 24 hours in advance for medical, dental, or eye examinations or treatments. Employees should also be prepared to submit supporting evidence of the appointment according to their agency’s policy. CFSA uses a Random Moment Study (RMS) to allocate the administrative costs to the Foster Care program. The study entails selecting a sample of social workers on a quarterly basis to participate in the RMS study where the social workers are required to notate what they were doing at the sample moment. Subsequently, the supervisors of these social workers review and validate their responses. Validation of the responses adds an extra layer of reliability to the data collected. It ensures that the information provided by social workers is accurate and reflective of their actual activities. This validation process helps maintain the integrity of the study and ensures that the results are trustworthy in making decisions when determining the RMS percentage utilization in the allocation of the administrative costs. Condition – The following issues were observed: 1. During our review of the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that CFSA was unable to provide sufficient supporting documentation to substantiate the allocation methodology for three (3) of the sixty (60) non-payroll expenditure samples selected for testing. 2. During our review of the payroll process regarding the review and approval of time and attendance, we noted the following in our sample of sixty (60) payroll items: • For two (2) samples, CFSA failed to provide documentation evidencing the approval of overtime paid. • For thirteen (13) samples, CFSA failed to provide documentation evidencing the approval of scheduled sick leave and annual leave taken. In addition one (1) of the thirteen (13) samples was coded as scheduled sick leave; however, per documentation provided, it was indicated that the timesheet should have coded the time as military leave. BDO did not receive documentation showing approval for either military leave or scheduled sick leave. • For two (2) samples, the employee's response to the RMS moment sample was not validated by the supervisor. Questioned Costs – Not determinable. Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample. Effect – Without sufficient documentation to support the cost allocation methodology, CFSA cannot demonstrate that costs charged to the Foster Care program were allowable and properly allocated, increasing the risk of unallowable costs being charged to the federal award. Additionally, without adequate internal controls and procedures for record maintenance, there is a risk of disputes between the agency and its employees regarding the accuracy of pay, leave and overtime. Furthermore, supervisor validation was not completed and documented for two of the moments selected for testing. Although CFSA’s control of over-assigning moments mitigates the risk of not meeting the aggregate 10% validation requirement, the two deviations noted reduce assurance that the 10% validation requirement was met. Cause – CFSA did not have proper internal controls and policies and procedures in place to ensure that documentation supporting the cost allocation methodology was retained and readily available for review. Additionally, CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime, scheduled sick leave and annual leave were maintained. Furthermore, although CFSA maintains an established validation process, supervisor validation was not completed for two of the moments selected for testing. Recommendation - We recommend that CFSA strengthen its policies, procedures, and controls to ensure that costs are accurately reported and claimed, and that documentation supporting the cost allocation methodology is maintained and readily available to substantiate the amounts allocated to the Foster Care program. We also recommend that pre-authorization of overtime, scheduled sick leave and annual leave is maintained. Furthermore, we recommend that CFSA ensure that the validation control is consistently performed for all moments selected for validation. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the findings of Condition 1 and Condition 2. For Condition 1, although CFSA provided documents (including invoices) requested by and provided by the Office of the Chief Information Officer (OCTO) for the sampled items referenced, OCTO was unable to provide the specific documentation requested by the auditors documenting the allocation methodology of the expenditures assigned to CFSA and used for Title IV-E claiming purposes. For Condition 2, bullet 3, CFSA would simply note that, as is denoted in our federally approved cost allocation plan, CFSA adheres to HHS’ requirements for statistical significance in its entire RMS operation. The standard for supervisor validation of random moments is 10% of all accepted moments. CFSA’s internal controls involve oversampling moments requiring validation, and it consistently hits the 10% validation requirement in the aggregate. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-021 Prior Year Finding Number: 2024-024 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Foster Care – Title IV-E ALN: 93.658 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Child and Family Services Agency (CFSA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 29 CFR Section 97.20(b)(2), Accounting records. “Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.” Per 45 CFR Section 1356.30(b), “The Title IV-E agency may not approve or license any prospective foster or adoptive parent, nor may the Title IV-E agency claim Federal Financial Participation (FFP) for any foster care maintenance or adoption assistance payment made on behalf of a child placed in a foster home operated under the auspices of a child placing agency or on behalf of a child placed in an adoptive home through a private adoption agency, if the Title IV-E agency finds that, based on a criminal records check conducted in accordance with paragraph (a) of this section, a court of competent jurisdiction has determined that the prospective foster or adoptive parent has been convicted of a felony involving: (1) Child abuse or neglect; (2) Spousal abuse; (3) A crime against a child or children (including child pornography); or, (4) A crime involving violence, including rape, sexual assault, or homicide, but not including other physical assault or battery.” Per 45 CFR Section 1356.30(f), "In order for a childcare institution to be eligible for Title IV-E funding, the licensing file for the institution must contain documentation which verifies that safety considerations with respect to the staff of the institution have been addressed.” Furthermore, per 45 CFR Section 1356.21(a), “Statutory and regulatory requirements of the Federal foster care program, To implement the foster care maintenance payments program provisions of the Title IV-E plan and to be eligible to receive FFP for foster care maintenance payments under this part, a Title IV-E agency must meet the requirements of this section, 45 CFR 1356.22, 45 CFR 1356.30, and Parts 472, 475(1), 475(4), 475(5), 475(6).” Per CFSA policy 6008.1, “As part of the home study process, an agency shall ensure that each applicant and any other person eighteen (18) years of age or older residing in the home comply with the requirements for a criminal records check established by the Adoption and Safe Families Amendment Act of 2000, effective June 27, 2000, D.C. Law 13-136.” Condition – For the fiscal year 2025, the Foster Care program had total disbursements of $3,094,192 for 3,280 maintenance payments. We selected a sample of sixty (60) participants representing disbursed federal funds totaling $60,436 and noted the following deficiencies: • For one (1) of sixty (60) samples, CFSA was unable to provide valid provider license as required by CFR 1356.30 (b). • For two (2) of sixty (60) samples, CFSA did not provide a copy of the registry check which is part of the criminal records check required by CFSA policy 6008.1. • For two (2) of sixty (60) samples, CFSA did not provide background checks such as criminal record checks and fingerprint-based checks from the national crime information databases or check registry for all adults in the household as required by the District as detailed in CFSA policy 6008.1. These deficiencies represent 1% of the total disbursements tested. Questioned Costs – Known amount is $825. Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample. Effect – CFSA was not in compliance with the eligibility requirements of the Foster Care program. Cause – CFSA does not have adequate controls in place to ensure that the required eligibility documentation is maintained to evidence compliance with eligibility requirements. Recommendation - We recommend CFSA reevaluate and strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements in accordance with the program. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the finding. CFSA notes that bullets 2 and 3 of the condition are federal “State Plan” and local regulatory requirements (respectively) and therefore are not subject to questioned costs. Bullet 1 involved a IV-E payment made to a provider with a lapsed license. It was processed through CFSA’s previous management information system, FACES. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-022 Prior Year Finding Number: 2024-026 Compliance Requirement: Special Tests and Provisions – Payment Rate Setting and Application Program: U.S. Department of Health and Human Services Foster Care – Title IV-E ALN: 93.658 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Child and Family Services Agency (CFSA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per CFSA’s internal policies and procedures, providers must submit quarterly reports within 45 days of the end of each Federal fiscal year quarter. Upon receipt of quarterly reports from the provider, the Business Services Administration Program Manager reviews each Expenditure Detail Spreadsheet for compliance, accuracy and reasonableness. Condition – Our assessment of the special tests and provisions requirement revealed that while the selected providers’ quarterly reports displayed no deficiencies, CFSA was unable to provide documentation evidencing the review and approval of the quarterly reports relating to all sixty (60) transactions that were tested. Questioned Costs – Not determinable. Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample. Effect – The absence of documentation specifying who reviews and approves the quarterly reports compromises accountability and creates ambiguity in identifying the responsible parties in instances of errors or discrepancies. Cause – CFSA does not have adequate controls in place to ensure that review and approval of provider’s quarterly reports are documented. Recommendation - We recommend CFSA strengthen its policies and procedures to address the review and approval process for the provider’s quarterly reports. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-023 Prior Year Finding Number: 2024-027 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.” Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.” In accordance with 42 CFR Section 435.912(c)(3), Timeliness and performance standard requirements - Standard for new applications and transferred accounts. Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed — (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 CFR Section 435.912 (c)(4) Standard for renewals. The redetermination of eligibility at a beneficiary's regularly scheduled renewal may not exceed the end of the beneficiary's eligibility period, except as provided in paragraphs (e) and (c)(4)(i) and (ii) of this section. (i) In the case of a beneficiary who returns a renewal form less than 30 calendar days prior to the end of the beneficiary's eligibility period, the redetermination of eligibility may not exceed the end of the month following the end of the beneficiary's eligibility period. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed— (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. 42 CFR Section 435.912 (c)(5) Standard for redeterminations based on changes in circumstances. Except as provided in paragraph (e) of this section, the redetermination of eligibility for a beneficiary based on a change in circumstances reported by the beneficiary or received from a third party may not exceed the end of the month that occurs — (i) 30 calendar days following the agency's receipt of information related to the change in circumstances, unless the agency needs to request additional information from the beneficiary; (ii) 60 calendar days following the agency's receipt of information related to the change in circumstances if the agency must request additional information from the beneficiary; or (iii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis — (A) 90 calendar days following the determination of ineligibility on the current basis, for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days following the determination of ineligibility on the current basis for all other beneficiaries. 42 CFR Section 435.912 (c)(6) Standard for redeterminations based on anticipated changes. The redetermination of eligibility for a beneficiary based on an anticipated change in circumstances may not exceed the end of the month in which the anticipated change occurs, except as provided in paragraphs (e) and (c)(6)(i) and (ii) of this section. (i) In the case of a beneficiary who returns information or documentation requested pursuant to Section 435.919(b)(6) less than 30 calendar days prior to the end of the month in which the anticipated change occurs, the redetermination of eligibility may not exceed the end of the month following the month in which the anticipated change occurs. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed — (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2025 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exceptions: • For four (4) participant files, ESA did not process the application within the required timeframe. The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision. Questioned Costs – Not determinable. Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample. Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program. Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations. Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-024 Prior Year Finding Number: 2024-030 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Years: 09/30/2022 – 09/29/2025 09/30/2024 – 09/29/2027 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025, onwards. FFATA reports are submitted no later than the month following the month in which this Federal award is made, and annually after that. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of the reporting compliance requirement, we noted the following: • FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were submitted late by the DBH program management due to staffing shortage. The FFATA reporting for all nine subawards selected for testing was submitted late, i.e., beyond the deadline of within 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: During our testing of the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, DBH incurred $12.4 million in subrecipient expenditures for this program and incorrectly reported $11.7 million subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure timely reporting and that correct amounts were reported and were properly reviewed as it relates to the Opioid STR program: • FFATA Reporting Compliance: Failure to submit FFATA reports within the deadline of 30 days of the subaward or subaward modification date results in noncompliance for the DBH program. • SEFA Reporting Compliance: The effect of the condition is that the SEFA was not accurately prepared. Cause – Management did not have proper internal controls and policies and procedures in place to ensure that FFATA reports were submitted timely and the amounts on the SEFA were properly reported. Recommendation – We recommend the following: • FFATA Reporting Compliance: We recommend DBH to strengthen its internal control and procedures to ensure submission of FFATA reports within the deadline of 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: We recommend DBH to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review existing policies and procedures for preparing the SEFA to ensure that it is complete and accurate. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-025 Prior Year Finding Number: N/A Compliance Requirement: Special Tests and Provisions – Key Employees Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Years: 09/30/2022 – 09/29/2025 09/30/2024 – 09/29/2027 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.508(d) says an auditee must “provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit required by this part.” The grant agreements provide that the State must maintain certain key personnel. Key personnel are organization staff members or consultants/subrecipients who must be part of the project regardless of whether they receive a salary or compensation from the project. These individuals must make a substantial contribution to the execution of the project. Key personnel for this program are the Project Director, Project Coordinator, and Data Coordinator. The Project Director, Project Coordinator, and Data Coordinator cannot be the same person. No more than two people can share a position. The Project Director is responsible for oversight of the entire project, including overseeing, monitoring, and managing the award, with a level of effort of 100% (1.0 FTE). The Project Coordinator is responsible for the day-to-day operations of the project, with a level of effort of 100% (1.0 FTE). The Data Coordinator is responsible for all aspects of data collection and reporting, ensuring complete, accurate, and timely data entry into SPARS and/or other data systems as directed by SAMHSA. The Data Coordinator is also responsible for monitoring client-level intake and follow-up rates, to ensure that recipients are meeting the target numbers reported in the application. The level of effort is 100% (1.0 FTE) for all awards $4 million and above, and 50% (0.5 FTE) for all awards less than $4 million. Any changes to key personnel, including level of effort involving separation from the project for more than three months or a 25 percent reduction in time dedicated to the project, requires prior approval, and must be submitted as a post-award amendment. Condition – During our testing of the key personnel requirement, we noted that for all four (4) samples selected for testing, we were unable to obtain and review documentation to support that the key personnel met the level of effort on the awards as required by the grant agreement. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Effect – There is a risk that employees are working on the program that are not approved by the granting agency. Cause – Management has not established internal control policies and procedures to ensure that key personnel met the level of effort on the awards as required by the grant agreement. Recommendation – We recommend that DBH develop and implement policies, procedures and controls to ensure proper documentation of the required and actual time and effort from key personnel in accordance with grant requirements. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls into place to resolve the issues. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-026 Prior Year Finding Number: 2024-036 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2025; 09/01/2021 – 09/30/2025; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025, onwards. FFATA reports are submitted no later than the month following the month in which this Federal award is made, and annually after that. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of the reporting compliance requirement, we noted the following: • FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were submitted late by the DBH program management due to staffing shortage. The FFATA reporting for all four subawards selected for testing was submitted late, i.e., beyond the deadline of within 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: During our testing of the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, DBH incurred $1.2 million in subrecipient expenditures for this program and incorrectly reported $1.4 million subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure timely reporting and that correct amounts were reported and were properly reviewed as it relates to the Block Grants for Substance Use Prevention, Treatment, and Recovery Services program: • FFATA Reporting Compliance: Failure to submit FFATA reports within the deadline of 30 days of the subaward or subaward modification date results in noncompliance for the DBH program. • SEFA Reporting Compliance: The effect of the condition is that the SEFA was not accurately prepared. Cause – Management did not have proper internal controls and policies and procedures in place to ensure that FFATA reports were submitted timely and the amounts on the SEFA were properly reported. Recommendation – We recommend the following: • FFATA Reporting Compliance: We recommend DBH to strengthen its internal control and procedures to ensure submission of FFATA reports within the deadline of 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: We recommend DBH to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review existing policies and procedures for preparing the SEFA to ensure that it is complete and accurate. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2025-027 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Homeland Security COVID-19 – Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Homeland Security and Emergency Management Agency (HSEMA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 200.302(a), Financial Management, states that each state must expend and account for the federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state’s and the other non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of federal reporting and the Schedule of Expenditures of Federal Awards (SEFA), we noted that the cumulative federal expenditures reported on two (2) quarterly Federal Financial Report (SF-425) did not reconcile the total expenditures claimed on the SEFA for the life of the award. Specifically, the SF-425 submitted for the period ended September 30, 2025 reported a cumulative total of approximately $924 million, whereas the SEFA recorded lifetime expenditures of approximately $1.051 billion, resulting in an unreconciled variance of approximately $127 million. Additionally, during our testing of the SEFA, we noted that HSEMA incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, HSEMA had a negative $0.7 million in subrecipient expenditures for this program and incorrectly reported $37.9 million subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of HSEMA’s compliance with reporting requirements. Effect – Failure to properly review and present expenditures can result in noncompliance with reporting requirements. Cause – HSEMA did not comply with their policies and procedures to ensure accuracy of the SEFA and other reports necessary to meet compliance requirements. Recommendation – We recommend that HSEMA adheres to instituted policies and procedures to ensure the accuracy of the SF-425 and the SEFA. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – HSEMA agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Department of Treasury, State of Indiana Office of Community and Rural Affairs, Federal Financial Assistance Listing 21.029, AL192-23-NLC-23-103, AL192-23-NLC-25-104 A, AL192-23-NLC-25-104 B Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to Uniform Guidance standards in sections 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: • The Entity’s formally documented procurement policy was missing the required elements detailed under Uniform Guidance • Four instances where the Entity did not follow the procurement process and did not have any formal documentation in place with the vendors. • Four instances where the Entity entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: The Entity was not aware of the federal procurement requirements. Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Entity would be noncompliant with the compliance requirements outlined above. Additionally, the Entity may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 out of 10 vendors were selected for testing. Repeat Finding form Prior Year: No Recommendation: We recommend the Entity update their procurement policy to ensure it includes all the required elements in accordance with Uniform Guidance. In addition, we suggest that management implement procedures and control processes related to the review of procurement to ensure the procurement methods are being followed and documentation is retained to support compliance. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government prior to entering into a procurement transaction. Views of Responsible Officials: Management agrees with the finding.
Finding 2025-001 MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE, MATERIAL NONCOMPLIANCE -REPORTING Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of Treasury Pass- Through Agencies: Various Assistance Listing Number: 21.027 Criteria: Management is required to submit various annual, quarterly, and monthly reports to the grantor in accordance with the grant agreement. Additionally, 2 CFR 200.303 requires management to have appropriate controls such that appropriate preparation, reviews, and evidence of those reviews are in place. Condition/Perspective: Based on the results of the testing we noted the following: • Out of a total of 4 Annual reports sampled, 3 did not have proof of submission or review. • Out of a total of 16 Quarterly reports sampled, 10 did not have proof of submission or review and 5 had proof of submission, but no proof of review. Of the 6 reports with proof of submission, 2 were submitted late. • Out of a total of 13 Monthly reports sampled, 1 did not have proof of submission or review. Of the reports with proof of submission 7 were submitted late. Cause: Management continued to experience high turnover during the fiscal year and the documentation pertaining to the evidence of reviews and the evidence of report submission was not retained. Effect: Without appropriate controls in place there is a risk that the Division could have submitted a report that is incomplete, contained inaccurate information, past the reporting requirement due date, or could have failed to submit the report entirely. Noncompliance with such grant requirements could result in a loss of funding. Questioned Cost: None. Repeat Finding: Yes. See 2024-001 in prior year report. Recommendation: Division management should review all applicable grant compliance requirements and ensure that the requirements are being met, including that reports are submitted on a timely basis. Additionally, the Division should continue to address and enhance their control procedures such that the appropriate individuals review all required reports in a timely manner prior to submission to the granting agency(ies); and, maintain documentation evidencing such reviews and submission dates. View of Responsible Officials: See Corrective Action Plan.
Finding 2025-003 SIGNIFICANT DEFICIENCY IN IN INTERNAL CONTROLS OVER COMPLIANCE – Allowable Costs and Cost Principles and Activities Allowed and Unallowed Federal Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: US Department of Health and Human Services Pass- Through Agencies: City & County of Denver Assistance Listing Number: 93.498 Criteria: In accordance with 2 CFR 200.303 the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Perspective: On a monthly basis management reviews costs for allowability and submits draw-down requests for reimbursement to the pass-through agency. From 3 selections of reimbursement requests, management could not provide documentation to evidence a review was performed prior to submission for 1 draw-down request. Cause: Documentation pertaining to the evidence of expenditure review was not retained as management was not aware that such documentation should be retained. Effect: Without appropriate review controls in place there is a risk that the Division could submit costs that are not allowed. Noncompliance with allowability criteria could result in the Division having to refund the granting agency or a loss of funding. Questioned Cost: None. Recommendation: The Division should enhance their control procedures such that documentation of review is retained. View of Responsible Officials: See Corrective Action Plan.
Item 2025-003: Material Weakness in Internal Control Over Compliance - Cash Management Federal agency: • U.S. Department of Agriculture • U.S. Department of Commerce Federal program: • Environmental Quality Incentives Program (ALN 10.912) • Habitat Conservation (ALN 11.463) Pass-through Entity: None Federal Award Year: Year ended September 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review of the reimbursement requests sampled for testing was not performed prior to submission. Cause: The Band does not have a procedure for a review of the reimbursement requests prior to submission for the identified programs. Currently, the same employee prepares and submits the reimbursement requests. Effect: Likelihood of inaccurate reimbursement requests is increased when they are not thoroughly reviewed. Questioned costs: None Context: • ALN 10.912 – The population of reimbursement requests subject to cash management requirements included one request. Our sample included one reimbursement request which did not have documentation showing it was reviewed. • ALN 11.463 – The population of reimbursement requests subject to cash management requirements included eight requests. Our sample included two reimbursement requests which did not have documentation showing they were reviewed. Repeat finding: No Recommendation: We recommend that the Band review their processes to ensure all reimbursement requests have review a process documented indicating that a secondary review was performed prior to submission. Views of responsible officials: The Band agrees with the above finding and its response is included in the corrective action plan.
Finding 2025-002: U.S. Department of the Treasury Federal Financial Assistance Listing 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Procurement, Suspension, and Debarment Type of Finding: Significant Deficiency in Internal Controls over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Per 31 CFR 19.300, prior to enter in subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR § 19.300. Condition: The County did not retain documentation of verifying that vendors were not suspended, debarred, or otherwise excluded prior to entering into a transaction with them. Cause: The County performed the verification but did not retain documentation, and we were unable to verify that it was performed prior to the transaction. Effect: Vendors could be suspended, debarred, or otherwise excluded, and the County would not be aware. Questioned Costs: None Context / Sampling: We tested four of 14 contracts subject to suspension and debarment in the SLFRF program. Repeat Finding from Prior Year: Yes, prior year finding 2024-003 Recommendation: The County should retain documentation of the review of all vendors. Views of Responsible Officials: Management agrees with the noted finding. Refer to Corrective Action Plan.
Finding No.: 2025-001 Federal Agency: U.S. Department of Education AL Program: 84.063/84.033/84.007 Student Financial Assistance Cluster Federal Award No.: Title IV HEA Program OPE ID 01034300 Area: Eligibility Questioned Costs: None Criteria: 2 CFR 200.303 (a) states the recipient and subrecipient of federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The College is required to establish internal control to ensure compliance with the following requirements: 34 CFR 676.20 (s) states that: Minimum and maximum Federal Supplemental Educational Opportunity Grants (FSEOG) awards requires: (a) An institution may award an FSEOG for an academic year in an amount it determines a student needs to continue his or her studies. However, except as provided in paragraph (c) of this section, an FSEOG may not be awarded for a full academic year that is— (1) Less than $100; or (2) More than $4,000. Condition: We noted that seven students were awarded amounts exceeding the maximum allowable limit of $4,000, while one student received an award below the minimum allowable amount of $100. Cause: The condition was primarily due to the College’s limited familiarity with FSEOG requirements, as this represents its first year administering the program. As a result, management did not have adequate procedures or guidance in place to ensure compliance with the minimum and maximum award limits prescribed under federal regulations. Effect or potential effect: The College is in noncompliance with applicable requirements. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management establish and implement formal policies and procedures for the administration of the FSEOG program, including clear guidance on the minimum and maximum award limits in accordance with federal regulations. Management should also provide adequate training to Financial Aid Office personnel on applicable federal requirements, perform supervisory reviews of award calculations prior to disbursement, and conduct periodic monitoring to ensure ongoing compliance with established limits. Views of responsible officials The College acknowledges the finding. Refer to corrective action plan.
2025-003 (Repeat Finding) Retaining Sliding Scale Determination Documentation Special Tests and Provisions ALN 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) US Department of Health and Human Services Contract Numbers H80CS30749-06 and H80CS30749-07 Contract Periods April 1, 2022 – March 31, 2023 and April 1, 2023 – March 31, 2024 Conditions and Criteria: The requirement under 45 CFR 75.361 provides requirements for the retention of records for grantees. In addition, 2 CFR 200.303 provides requirements to establish and maintain effective internal controls over Federal awards. Specifically, it states that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Health and Human Services awarding agency of pass-through entity in the case of a subrecipient. In the 2023 audit, for 5 out of 40 samples selected for testing, it was noted that OCHS did not retain the proper documents that the patients had submitted that included their income and family size or the documents completed by OCHS showing the sliding fee discount determination for these patients. Effect: The effect is that records that are required to be retained were not retained and evidence of how the sliding fee discount was determined could not be examined. Questioned Costs: Any likely questioned costs could not be determined since compliance testing was unable to be performed due to the lack of documentation. It should be noted that there were no exceptions for 35 samples that were able to be tested, and for 5 samples with insufficient documentation, 3 had partial documentation of income (i.e., pay stubs) and 2 had no documentation of income as it was not maintained. However, the sliding scale calculation was completed for all 40 samples. Cause: Determining the sliding fee discount level for each patient is reassessed on an annual basis. During the year, there was employee turnover in the compliance department. Although OCHS has a records retention policy, there was a lack of monitoring in place to ensure that the requirement under 45 CFR 75.361 was adhered to. Auditor Recommendation: A procedure should be put in place to monitor whether the record retention policy is followed. Current Status: During the current year, fiscal 2025 audit testing, no samples lacked support for the sliding fee scale determination. However, there is a three-year documentation retention requirement per 45 CFR 200.303. If asked to produce documentation for fiscal year 2023, OCHS would not be able to do so, therefore, the 2023 fiscal year finding was repeated. Planned Corrective Action: See the following Corrective Action Plan section for management’s planned corrective action.
Finding 2025-001 Fixed Asset Reconciliations and Management of Federally Funded Equipment - Significant Deficiency in Financial Reporting and Internal Control over Equipment and Compliance Finding Federal Agency(ies): United States Agency for Global Media Federal Program(s): International Broadcasting Independent Grantee Organizations Assistance Listing Number(s): 90.500 Pass-through Entity (if applicable): N/A Award Identification Number and Year: MN01-25-GO-00001 (2025) Criteria or Specific Requirement: 2 CFR 200.313(d) requires recipients to maintain property records for equipment acquired with Federal funds. Such records should include, among other items, a description of the property, serial number or other identification number, source of funding, acquisition date, cost, location, use and condition, and ultimate disposition data. Additionally, recipients are required to conduct physical inventories of equipment and reconcile the results of those inventories to the property records. Further, 2 CFR 200.303 requires recipients to establish and maintain effective internal controls over Federal awards that provide reasonable assurance of compliance with applicable Federal requirements. Condition: MBN maintains equipment records in its accounting records and in its inventory management system (BarCloud). At the time of testing, MBN was completing a planned transition of those records from physical binder-based files to a centralized BarCloud system; a related inventory review and reconciliation was still in progress. Because the accounting fixed asset schedule consists of a combination of grouped asset additions and individual assets, while the inventory management system maintains records at the individual asset level, and because the inventory management system did not yet contain information necessary to reconcile inventory records to the accounting record (including asset classifications and in-service dates), the records maintained within the two systems are not yet fully reconciled. During audit testing performed while this reconciliation was ongoing, discrepancies were identified between the systems, including assets recorded in one system but not the other. Cause: The discrepancies noted relate primarily to the timing of audit testing in relation to the organization-wide reconciliation effort then already underway. During fiscal year 2025, MBN began a comprehensive reconciliation of equipment records, transitioning from manual, binder-based files maintained at field locations to a centralized BarCloud inventory management system and the fixed asset schedule. At the same time, the company was engaged in a detailed review and reconciliation of its property and equipment records, and had begun implementing more stringent controls over management of Federally funded equipment. This substantial undertaking was conducted during a period of reduced staffing within the finance and accounting function. Given the volume of records, the level of effort required, and the fact that records originating in prior years (especially those overseas where offices had been closed and access was limited) required significant enhancement before they could be reconciled, the reconciliation effort remained in progress at the time of audit testing, and additional time was needed to complete it.Effect or Potential Effect: Because management’s reconciliation effort was still in progress at the time of testing, there was a temporary, transitional risk that Federally funded equipment records maintained in the two systems were not yet fully aligned, and that some discrepancies between accounting and inventory records had not yet been identified and resolved. This risk is inherent to the period during which legacy binder-based records are consolidated into a centralized system and reconciled, and is expected to diminish as management completes its remediation efforts. Questioned Costs: None Context: As part of our testing of equipment management requirements, the Organization reviewed its equipment tracking processes and the records maintained within both the accounting system and the BarCloud inventory management system. Testing was performed during a period in which management was actively reconciling records - including records maintained at closed overseas locations - into BarCloud, while also reconciling the two systems. We noted that the systems maintained different levels of detail which, at the time of testing, had not yet been fully reconciled. Limited testing of vehicle records identified assets recorded in one system that were not reflected in the other, which is consistent with the transitional state of the records. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management continue establishing and implementing procedures to maintain equipment records in a manner permitting reconciliation between the accounting records and the inventory management system. The procedures should include the establishment of a common asset identification methodology, the reconciliation of equipment records between systems on a periodic basis, the investigation and resolution of any discrepancies, and the maintenance of documentation supporting the reconciliation process. Additionally, management should continue evaluating whether additional information should be maintained within the inventory management system to facilitate reconciliation and support compliance with Federal equipment management requirements.
Segregation of Duties Condition and criteria: During our audit of the Authority’s Financial Statements, we noted that the Authority does not have adequate segregation of duties in place. Specifically, the same individual is responsible for initiating and recording journal entries and disbursements and reconciling the bank accounts. In addition, in accordance with 2 CFR § 200.303(a), the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause and Effect: The Authority is a small entity with limited administrative and accounting staff, which makes it difficult to achieve a complete segregation of duties. Due to resource constraints, individual staff members are assigned multiple roles that overlap key financial processes. Without proper segregation of duties, there is an increased risk that errors or irregularities, including potential misappropriation of assets or fraud, could occur and remain undetected. This condition could lead to noncompliance with applicable grant requirements and inaccuracies in financial reporting. Auditor’s Recommendations: We recommend that the Authority assess the current structure and implement compensating controls where full segregation of duties is not feasible due to staffing limitations. These may include enhanced supervisory review, periodic oversight by the board or executive leadership, documentation of independent reviews, and rotation of duties when possible. Authority’s Response: The board reviews the reports monthly. A printed payroll report and checks written from meeting to meeting are provided and are approved and initialed. Also provided is a report of the bank statements for the board to review what has been received and what has been paid. Before any bills are paid they are approved at the meeting. If an error is made when inputting a deposit received into the software, the correction is printed and initialed approving the correction.
Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP02236 - 2025 Pass-Through Agency: Ramsey County Pass-Through Number: SLFRP0236 Award Period: March 3, 2021 – December 31, 2026 Type of Finding: Material Weakness over Internal Controls Criteria or specific requirement: 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document and maintain effective internal control over the federal awards that provides reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: The rental units supported by the grant can only be occupied by households whose annual income does not exceed certain thresholds. Annual income is documented for purposes of eligibility and applications are maintained supporting that tenants are eligible. From our discussions with management there are no documented internal controls surrounding the eligibility process. Context: No instances of non-eligible tenants were noted in our testing, and this finding relates only to implementation of a documented internal control process. Cause: The program was new during the fiscal year, and management was not aware of the requirement for a documented internal control process. Effect: Errors in the eligibility process could occur without a documented internal control process. No errors were noted in our testing. Repeat Finding: No Recommendation: We recommend the Organization implement a review process for eligibility determination for the program. Views of responsible officials: There is no disagreement with the audit finding.
Program Information: U.S. Department of the Interior Single Agreement – Assistance Listing #15.036 Award Number: A18AV00341 Award Period: 10/01/2024 – 9/30/2025 Criteria: Reporting requirements are contained in the following: Monitoring and reporting program performance, 2 CFR Section 200.329. • Per the award documents, the grantee shall prepare and provide an Annual Narrative Report. Per 2 CFR § 200.303, recipients must establish and maintain effective internal controls over federal awards to ensure compliance with applicable regulations. Condition/Context: NWIFC did not complete and obtain management approval of the FY25 Annual Narrative Report prior to the required submission date. As a result, the FY24 Annual Narrative Report was submitted to the funding agency in its place. [ X ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Internal controls were not sufficient to ensure the FY25 Annual Narrative Report was completed, reviewed, approved, and submitted in accordance with award requirements. Effect: Failure to comply with required reporting requirements may result in increased scrutiny by the funding agency and could adversely affect future funding decisions. Questioned Costs: N/A. This finding relates to reporting requirements and does not affect the allowability, support, or eligibility of program expenditures. Therefore, no questioned costs were identified. Repeat Finding: No. Recommendation: We recommend that NWIFC ensure required annual narrative reports are completed, reviewed, approved, and submitted timely, and that evidence of review and approval is maintained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Type: Significant deficiency in internal control over compliance and noncompliance. Criteria: The Uniform Guidance as described in 2 CFR, Part 200.303, non-federal entities receiving federal awards to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Road Commission did not have formal written federal policies and procedures that document the processes and controls used to administer federal awards, including procedures for compliance with applicable federal program requirements under Uniform Guidance (2 CFR, Part 200.303). Cause: The Road Commission has historically relied on state compliance requirements and MDOT oversight, and has not formalized Federal Uniform Guidance requirements into its written policies and procedures. Management was not fully aware that Uniform Guidance requires entity-specific documented procedures in addition to compliance with state procurement laws. Effect: Without written federal policies and procedures, there is an increased risk that federal award requirements may not be consistently applied, monitored, or retained as institutional knowledge, particularly during changes in personnel or program responsibilities. Perspective: As a condition of accepting a federal award, the Road Commission should have required policies and procedures in place. Questioned Costs: None noted. Initial Year of Finding: 2025 Recommendation: We recommend the Road Commission develop and implement written federal policies and procedures addressing the administration of federal awards to ensure compliance with Uniform Guidance (2 CFR, Part 200). The policies should address the following key compliance areas; allowable costs, cash management, procurement, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outlined in the Uniform Guidance. View of Responsible Officials and Planned Corrective Plan: See corrective action plan.
Item 2025-001 Reporting (Repeat 2024-002) Head Start and Early Head Start Assistance Listing #93.600 Head Start Grant No. 04CH0127807 U.S. Department of Health and Human Services Federal Award Year - 2025 Condition – Adequate controls were not in place to review and approve grant reports prior to their submission to the grantor. The Federal Financial Reports (SF-425) for the Head Start Cluster grants were not reviewed and approved prior to submission to the Payment Management System. Criteria – Grantees should have controls in place to ensure that grant reports are being reviewed and approved by management prior to being submitted to the grantor. 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause – Lack of sufficient controls over the review and approval of grant reports to ensure the accuracy and completeness of the report being submitted to the grantor. Questioned Costs – None noted. This finding is a deficiency in internal control over compliance for reporting that does not affect amounts expended or received from the Federal award. Effect – Lack of proper review and approval could result in improper reporting which could lead to disallowed costs. However, our audit disclosed no instances of unallowable costs. Recommendation – We recommend the implementation of controls to ensure there is evidence of review and approval of the quarterly grant reports prior to submission to the grantor. Management’s Response – The Agency will implement controls to ensure proper review and approval is obtained on required grant reports prior to submission to the grantor.
Finding 2025-003: Reporting Review Process Information on the Federal Programs: Assistance Listing Number 93.550 - Transitional Living Program, U.S. Department of Health and Human Services. Award Number: 90CX7428-03-00 Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria Uniform Guidance (2 CFR 200.303) requires non-Federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with reporting requirements. This includes controls to ensure required reports are prepared accurately, reviewed, approved by an authorized individual, and submitted timely. Condition The submission process for federal financial reports requires that report data be entered into the applicable federal reporting system and certified by an authorized individual who performs a final review prior to submission. During the audit, we noted that certain required SF-425 Federal Financial Reports had been prepared, but were not certified by an authorized signer and, as a result, were not submitted by the applicable due dates. The reports were subsequently reviewed, certified, and submitted. Cause During the year, the Organization experienced transitions in financial leadership and in personnel responsible for federal reporting. As a result of these transitions, the responsibility for certifying required federal financial reports was not formally reassigned, which contributed to the reports not being timely certified and submitted. Effect Reports were not certified or submitted in accordance with reporting requirements. Although subsequently corrected, this reflects a deficiency in internal control over compliance that increases the risk of noncompliance from delinquent or inaccurate reporting. Questioned Costs None. Recommendation The Organization should implement formal controls over federal reporting, including a documented review by a qualified individual independent of preparation prior to submission, and procedures to track and monitor reporting deadlines.
S3800-010 Finding Reference Number – 2025-004 S3800-011 Title and CFDA Number of Federal Program – Section 202 Supportive Housing for the Elderly, Capital Advance and Project Rental Assistance Contract, ALN 14.157 S3800-015 Type of Finding – Federal Award Finding; Other Matters S3800-016 Finding Resolution Status – Resolved S3800-017 Information on Universe Population Size The total population was all disbursements from the bank accounts, 155 checks or transfers totaling $205,900. S3800-018 Sample Size Information The sample size was 40 disbursements totaling $60,503. Errors were found on 5 out of the 40 disbursements tested totaling $1,425. S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Per 2 CFR sections 200.302 and 200.303 of the Uniform Guidance, an entity must establish and maintain effective internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. Allowable cost controls of Sessions Village 202 require the location and general ledger account coding to be written on each invoice to be reviewed by the Executive Director/ Administrator before the invoice is processed to be paid. In addition, all checks are required to have two signatures. S3800-030 Statement of Condition – During our audit, we noted four invoices whereby the amounts paid for by Sessions Village 202 did not match the split by location on the campus or the invoice was not for the business purpose of Sessions Village 202. This resulted in Sessions Village 202 paying for expenditures that were unrelated to the project. In addition, we noted one instance where the check only contained one signature. S3800-032 Cause – During the year ended September 30, 2025, there was turnover in the accounts payable position. As a result, errors were made during the cash disbursement process that were not caught by management’s review and monitoring procedures. S3800-033 Effect or Potential Effect – Failure to maintain effective internal controls over compliance with federal requirements increases the risk of unauthorized or unallowable transactions occurring. S3800-035 Auditor Non-Compliance Code –S (Internal Controls) S3800-037 FHA/Contract Number – 171-EE015 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Sessions Village 202 is in agreement with the findings, and the recommendations have been implemented. S3800-050 Context A sample of 40 checks totaling $60,503 was selected for audit from a population of 155 checks totaling $205,900. The test found 5 checks that were not in compliance with Sessions Village 202’s allowable cost controls totaling $1,425. Our sample was a statistically valid sample. S3800-080 Recommendation – We recommend the related parties reimburse Sessions Village 202 for the expenditures paid on their behalf. In addition, we recommend management review the disbursements made during the periods of turnover to confirm there were no other unallowable payments made. We also recommend management of Sessions Village 202 review their internal controls over the cash disbursement process with the necessary individuals involved in the process to ensure the controls are consistently performed going forward. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – The related parties reimbursed Sessions Village 202 for the expenditures paid on their behalf. Since the new accounts payable clerk started in the Summer of 2025, they have been reviewing all of the supporting documentation for disbursements made during the period of turnover, and accumulating any additional corrections that need to be made. They will continue this process for all disbursements from the period of turnover. The Executive Director/Administrator and Accountant at the management agent will review the process and procedures in place with the new accounts payable clerk, and implement controls to ensure the appropriate facility and general ledger account coding are made going forward. In addition, they will review the review and monitoring controls in place and revise as needed to ensure the proper checks are in place to catch errors. S3800-130 Response Indicator – Agree S3800-140 Completion Date – June 11, 2026 S3800-150 Response – The related parties reimbursed Sessions Village 202 for the expenditures paid on their behalf. Since the new accounts payable clerk started in the Summer of 2025, they have been reviewing all of the supporting documentation for disbursements made during the period of turnover, and accumulating any additional corrections that need to be made. They will continue this process for all disbursements from the period of turnover. The Executive Director/Administrator and Accountant at the management agent will review the process and procedures in place with the new accounts payable clerk, and implement controls to ensure the appropriate facility and general ledger account coding are made going forward. In addition, they will review the review and monitoring controls in place and revise as needed to ensure the proper checks are in place to catch errors.
S3800-010 Finding Reference Number – 2025-003 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Federal Award Finding; Other Matters S3800-016 Finding Resolution Status – Resolved S3800-017 Information on Universe Population Size The total population was all disbursements from the bank accounts, 1,166 checks or transfers totaling $9,963,223. S3800-018 Sample Size Information The sample size was 59 disbursements totaling $421,877. Errors were found on 2 out of the 59 disbursements tested totaling $2,071. S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Per 2 CFR sections 200.302 and 200.303 of the Uniform Guidance, an entity must establish and maintain effective internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. Allowable cost controls of Cheney Care Community require general ledger account coding to be written on each invoice to be reviewed by the Executive Director before the invoice is processed to be paid. S3800-030 Statement of Condition – During our audit, we noted two invoices whereby the amounts paid for by Cheney Care Community did not match the split by location on the campus or the invoice was not for the business purpose of Cheney Care Community. This resulted in Cheney Care Community paying for expenditures that were unrelated to the project. In addition, we noted one invoice where the invoice did not include the general ledger account coding. S3800-032 Cause – During the year ended September 30, 2025, there was turnover in the accounts payable position. As a result, errors were made during the cash disbursement process that were not caught by management’s review and monitoring procedures. S3800-033 Effect or Potential Effect – Failure to maintain effective internal controls over compliance with federal requirements increases the risk of unauthorized or unallowable transactions occurring. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations will be implemented. S3800-050 Context – A sample of 59 checks totaling $421,877 was selected for audit from a population of 1,166 checks totaling $9,963,223. The test found 2 checks that were not in compliance with Cheney Care Community’s allowable cost controls totaling $2,071. Our sample was a statistically valid sample. S3800-080 Recommendation – We recommend the related parties reimburse Cheney Care Community for the expenditures paid on their behalf. In addition, we recommend management review the disbursements made during the periods of turnover to confirm there were no other unallowable payments made. We also recommend management of Cheney Care Community review their internal controls over the cash disbursement process with the necessary individuals involved in the process to ensure the controls are consistently performed going forward. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations - The related parties reimbursed Cheney Care Community for the expenditures paid on their behalf. Since the new accounts payable clerk started in the Summer of 2025, they have been reviewing all of the supporting documentation for disbursements made during the period of turnover, and accumulating any additional corrections that need to be made. They will continue this process for all disbursements from the period of turnover. The Executive Director/Administrator and Accountant will review the process and procedures in place with the new accounts payable clerk, and implement controls to ensure the appropriate facility and general ledger account coding are made going forward. In addition, they will review the review and monitoring controls in place and revise as needed to ensure the proper checks are in place to catch errors. S3800-130 Response Indicator – Agree S3800-140 Completion Date – November 20, 2025 S3800-150 Response – The related parties reimbursed Cheney Care Community for the expenditures paid on their behalf. Since the new accounts payable clerk started in the Summer of 2025, they have been reviewing all of the supporting documentation for disbursements made during the period of turnover, and accumulating any additional corrections that need to be made. They will continue this process for all disbursements from the period of turnover. The Executive Director/Administrator and Accountant will review the process and procedures in place with the new accounts payable clerk, and implement controls to ensure the appropriate facility and general ledger account coding are made going forward. In addition, they will review the review and monitoring controls in place and revise as needed to ensure the proper checks are in place to catch errors.
REPORTING – COMPLIANCE AND CONTROLS REPEAT FINDING: NO FEDERAL AGENCY: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; PASSED THROUGH FLORIDA DEPARTMENT OF COMMERCE PROGRAM: COMMUNITY DEVELOPMENT BLOCK GRANTS, ALN 14.228 GRANT NUMBERS: H2494, H2384, M0043, M0024, M0150, M0154, MT151 FINDING TYPE: SIGNIFICANT DEFICIENCY CRITERIA: Under 29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)), OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326; the County’s contractor is required to submit a copy of the payroll and a statement of compliance (certified payrolls) weekly for each week in which any contract work is performed. The grant agreements outline the reports required to be submitted and their due dates. Additionally, 2 CFR 200.303(a) of the Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. CONDITION: 18 of 135 total reports required under the grants were tested for compliance with this requirement. This was not a statistically valid sample. The auditor noted the following which affected 7 of the reports tested: - For 5 reports, there was no evidence of a second review - For 1 monthly progress report, the report was submitted later than the due date - For 1 quarterly progress report, the funds used through the report date were not included at the correct amount and there were other mathematical errors - For 2 reports, the client could not show when the reports were submitted to the grantor CAUSE: Management has not established procedures for reviewing all program reports and/or the reviews failed to identify reporting errors and ensure reports were submitted timely. EFFECT: Certain reports were not submitted timely or may not have been submitted to the grantor, and certain reports were inaccurate. QUESTIONED COSTS: None. The finding is over the reporting compliance requirement. Amounts expended and received from federal awards were not affected. RECOMMENDATION: We recommend procedures be established for review of all program reports prior to submission to the grantors and that the review be documented; procedures be established to ensure reports are submitted timely; and a reconciliations of reported amounts to the accounting records be performed. VIEW OF RESPONSIBLE OFFICIALS: See Management’s Response and Corrective Action Plan beginning on page 122.
SPECIAL TESTS AND PROVISIONS, WAGE RATE REQUIREMENTS – COMPLIANCE AND CONTROLS REPEAT FINDING: NO FEDERAL AGENCY: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; PASSED THROUGH FLORIDA DEPARTMENT OF COMMERCE PROGRAM: COMMUNITY DEVELOPMENT BLOCK GRANTS, ALN 14.228 GRANT NUMBERS: H2494, H2384, M0043, M0024, M0150, M0154, MT151 FINDING TYPE: SIGNIFICANT DEFICIENCY CRITERIA: 2 CFR 200.303(a) of the Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. CONDITION: The County relies on third-party consultants to obtain and review construction contractors’ weekly certified payrolls, and the consultants report the information to the County. In some cases, the County does not review the certified payrolls until the end of the construction contract. Additionally, the auditor tested 2 of 3 grants that had construction performed during the fiscal year for compliance with this requirement and for 1 grant tested, the County could not provide evidence that the consultant verified that the certified payrolls were submitted. The sample was not statistically valid. CAUSE: Management has not established procedures for regular monitoring of consultants’ performance related to obtaining and reviewing evidence of certified payrolls. EFFECT: Certified payrolls for a construction contract subject to wage rate requirements under the Davis-Bacon Act were not reviewed by the County during the fiscal year. QUESTIONED COSTS: None. The auditor is not aware of any amounts paid in violation of Federal statutes as a result of this finding. RECOMMENDATION: We recommend procedures be established for the County to obtain and review of certified payrolls for the construction projects on a more frequent basis to ensure compliance with the wage rate requirements. VIEW OF RESPONSIBLE OFFICIALS: See Management’s Response and Corrective Action Plan beginning on page 122.
Material Weakness in Internal Control over Compliance and Material Instance of Noncompliance (Scope Limitation) Federal Agency: U.S. Department of Health and Human Services Federal Program: Centers for Independent Living Assistance Listing Number: 93.432 Direct Award Numbers: 2322CAILCL-00 and 2338CAILCL-00 Pass-Through Entity: California Department of Rehabilitation Grant Identifying Number: 32594 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance – Payroll Expenditures, Cash Management and Reporting Criteria: Pursuant to 2 CFR §200.303, the Organization is required to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Under 2 CFR §200.403 and 2 CFR §200.405, costs charged to the Federal award must be allowable, allocable, reasonable, and adequately documented. Under 2 CFR §200.403(h) and 2 CFR §200.309, costs must be incurred within the approved period of performance. Under 2 CFR §200.305, for cash management using the reimbursement method, the Organization must maintain records sufficient to support amounts requested for reimbursement and demonstrate that reimbursement requests are based on allowable program expenditures. Under 2 CFR §200.328 (financial reporting) and §200.329 (performance reporting) recipients are responsible for monitoring activities under federal awards and must submit required performance and financial reports at the intervals required by the federal award, which may be no more frequent than quarterly and no less frequent than annually. Condition and Context: The Organization did not have adequately designed internal controls over the review and approval of allowable payroll activities and payroll expenditures, cash management activities and federal reporting requirements. Specifically, there were no documented review and approval procedures or supervisory controls in place to ensure the accuracy and completeness of time and effort tracking of payroll expenditures, reimbursement requests or financial reports under the federal program. Additionally, sufficient appropriate audit evidence was not available to support compliance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles-Payroll Expenditures, Cash Management and Reporting compliance requirements. The lack of documentation and supporting records resulted in a scope limitation that prevented the auditors from performing necessary procedures to determine whether the Organization complied with applicable federal requirements related to allowed or unallowed payroll activities and allowable costs/cost principles for payroll expenditures, cash management transactions and financial reporting submissions for the population selected for testing. The condition affected the administration of the Centers for Independent Living federal program for the fiscal year ended September 30, 2025.Cause: Management did not design and implement documented internal controls requiring supervisory review and approval of allowable payroll activities and payroll expenditures, cash management activities and federal financial reporting. In addition, management did not maintain adequate supporting documentation to demonstrate compliance with federal requirements. Effect: The lack of effective internal controls increased the risk that errors, omissions, or noncompliance related to allowed or unallowed payroll activities and allowable costs/cost principles for payroll expenditures, cash management and reporting could occur and not be detected in a timely manner. Furthermore, because sufficient appropriate audit evidence was unavailable, the auditors were unable to determine whether the auditee complied with applicable federal compliance requirements related to - allowable payroll activities and payroll expenditures, cash management and reporting. Questioned Costs: Questioned costs could not be determined due to the scope limitation. Repeat Finding: No Recommendation: We recommend that management design and implement formal internal controls over - allowable payroll activities and payroll expenditures, cash management and reporting activities, including documented supervisory review and approval procedures for all time and effort tracking of payroll expenditures, federal reimbursement requests and financial reports. Management should also establish policies and procedures to ensure adequate supporting documentation is retained and readily available to support compliance with federal program requirements and facilitate audit testing. This should include comprehensive training for staff involved in federal program administration, regular monitoring to ensure controls are consistently applied, and periodic internal audits to assess the effectiveness of compliance systems. Views of Responsible Officials: Management Position: Management agrees with this finding. Adequate internal controls over payroll, cash management, and federal reporting were not in place during FY2025 as a direct result of inconsistencies in procedures and internal controls.Corrective Actions: Accountability & Role Clarity: The Executive Director and Program Manager have mapped compliance requirements for each federal award—including expenditure review, reporting, receivables, and deliverables—and assigned clear ownership across management positions to eliminate single points of failure and reinforce segregation of duties. Training & Ongoing Monitoring: All management staff will receive annual training on federal grant requirements (allowable/unallowable costs, period of performance, cash management, and reporting) at the start of each fiscal year. Monthly monitoring meetings among the Executive Director, Program Manager, and Accountant will precede Finance Committee meetings to review grant spending. Periodic internal reviews and a final year-end reconciliation will be conducted. Documentation & Continuity: All grant-related records will be maintained on a shared organizational drive accessible to all responsible staff. Formal onboarding and off boarding procedures for federal grant management will be developed to ensure continuity regardless of personnel changes. The Finance Manual will be updated to reflect all procedures. Hood & Strong has been retained suggests proper internal controls necessary to achieve full federal compliance. All federal award information will be regularly reported to the Board of Directors.
Material Weakness in Internal Control Over Compliance and Instance of Noncompliance - Missing Supporting Documentation for Tested Expenditures Federal Agency: U.S. Department of Health and Human Services Federal Program: Centers for Independent Living Assistance Listing Number: 93.432 Direct Award Numbers: 2322CAILCL-00 and 2338CAILCL-00 Pass-Through Entity: California Department of Rehabilitation Grant Identifying Number: 32594 Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance – Nonpayroll Expenditures Criteria: Pursuant to 2 CFR §200.303, the Organization is required to establish and maintain effective internal control over the federal award that provides reasonable assurance that the Organization is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Under 2 CFR §200.403 and 2 CFR §200.405, costs charged to the Federal award must be allowable, allocable, reasonable, and adequately documented. Under 2 CFR §200.403(h) and 2 CFR §200.309, costs must be incurred within the approved period of performance. Condition and Context: The Organization lacked documented review and approval controls over activities allowed or unallowed, allowable costs/cost principles, and period of performance for nonpayroll expenditures. In addition, 3 of 40 nonpayroll expenditure transactions tested were not supported by adequate documentation to demonstrate the costs were allowable and incurred within the approved period of performance. Cause: Management did not design and implement documented review and approval controls over the applicable compliance requirements or procedures to ensure supporting documentation was obtained and retained for Federal expenditures. Effect: The lack of effective internal controls increased the risk that errors, omissions, or noncompliance related to activities allowed or unallowed, allowable costs/cost principles, and period of performance for nonpayroll expenditures could occur and not be detected in a timely manner, resulting in questioned costs and potential repayment of Federal funds. Questioned Costs: Undetermined. Repeat Finding: Yes. Reference number 2024-002. Recommendation: We recommend management design and implement documented review and approval controls over the applicable compliance requirements and require supporting documentation for Federal expenditures before costs are charged to the Federal award. This should include comprehensive training for staff involved in federal program administration, regular monitoring to ensure controls are consistently applied, and periodic internal audits to assess the effectiveness of compliance systems. Views of Responsible Officials: Management Position: Management agrees with this finding and acknowledges it as a repeat of Finding 2024-002. Systemic gaps in documentation practices under prior financial management resulted in insufficient supporting documentation for three of forty transactions tested. Corrective Actions: Immediate Control Reinforcement & Training: The Executive Director and Program Manager reviewed each federal award to identify allowable cost categories, applicable periods of performance, and required documentation standards. Funders were engaged directly to clarify documentation requirements; at the April 14 all-staff meeting, a funder provided comprehensive training on reporting and compliance. Additional funder-led training sessions for management and all staff are underway. Monitoring & Internal Audit: Monthly meetings among the Executive Director, Program Manager, and Accountant review grant spending and federal compliance. Written corrective action plans are developed for each identified noncompliance area. The Accountant will maintain current budget tracking with immediate notification to the Executive Director of discrepancies. All findings are reported to the Board monthly or by special session. Federal grant compliance is incorporated into relevant staff performance evaluations. Documentation & Formalization: CID will implement a dual-storage documentation methodology combining a shared drive and a document management system (DMS) to ensure that all grantrelated expenditures are fully supported and readily retrievable. All financial files will be organized within a confidential folder structure using a standardized naming convention that includes vendor name, date, and grant code, with subfolders categorized by expense type. Copies of all supporting documentation including invoices, receipts, timesheets, and allocation records will be maintained in both the shared drive and the DMS to ensure redundancy and accessibility. The Executive Director, Accountant, and Program Manager will share responsibility for filing grant documentation in accordance with each grant's reporting deadline, with no costs posted to a grant prior to confirmation that adequate support has been filed and is retrievable. This structured methodology will ensure that CID can readily produce complete documentation for any audited expenditure and that unsupported costs are not charged against any grant funding source. Finance documentation processes have been reviewed with the Accountant; Hood & Strong is providing Executive Director training on the FundEZ cloud platform. All updated procedures will be reflected in the Finance Manual.
Reporting – HUD 50058 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster ALN: 14.871 14.879 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: October 1, 2024 – September 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per HUD PIH guidance (e.g., Notice PIH 2011 65), Public Housing Agencies are required to submit Form HUD 50058 data to HUD’s PIC system in a timely manner, within 60 days of the effective date of the transaction, to ensure accurate and current program reporting. Condition: Of the 40 HUD 50058 transactions tested, three were not submitted to the HUD Public and Indian Housing Information Center (PIC) system within 60 days of the effective date, as required by HUD PIH guidance (e.g., Notice PIH 2011 65), resulting in untimely reporting of program data. Questioned costs: None. Context: See “Condition.” Cause: Lack of automated controls and monitoring over submission deadlines, combined with insufficient staff awareness and resource constraints, resulted in untimely HUD 50058 submissions. Effect: Untimely submission of HUD 50058 reports results in outdated or inaccurate data in HUD’s PIC system, which may impair HUD’s ability to effectively monitor program performance and compliance, and increases the risk of noncompliance with HUD PIH reporting requirements. Repeat Finding: No Recommendation: The City should implement procedures and controls to ensure timely submission of HUD 50058 transactions, including establishing a tracking mechanism for due dates, enhancing supervisory review of submission timeliness, and providing training to staff on HUD PIH reporting requirements to ensure compliance with the 60 day standard. Views of responsible officials: See management response on corrective action plan.
Reporting - SEMAP Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster ALN: 14.871 14.879 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: October 1, 2024 – September 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 24 CFR 985.101(a), SEMAP certifications must be formally approved by the City’s governing board (or authorized official) and signed by appropriate management prior to submission. Additionally, in accordance with 2 CFR 200.303(a), the City must maintain effective internal controls, including documented review and approval, to ensure the accuracy and completeness of reports submitted to HUD. Condition: The City did not maintain documentation evidencing that the SEMAP certification report was reviewed and approved prior to submission to HUD; therefore, we were unable to determine whether the review and approval controls were performed before submission. Questioned costs: None. Context: See “Condition.” Cause: The condition occurred because the City had not formalized procedures requiring documentation and retention of SEMAP review and approval prior to submission. Effect: Without documented review and approval, there is an increased risk that inaccurate, incomplete, or unsupported SEMAP certifications could be submitted to HUD, which could affect HUD’s assessment of the City’s Housing Choice Voucher program performance and result in noncompliance with SEMAP certification requirements. Repeat Finding: No. Recommendation: The City should formalize SEMAP review and approval procedures, require documented evidence of supervisory or authorized official approval prior to submission, and retain such documentation to support compliance with SEMAP certification and internal control requirements. Views of responsible officials: See management response on corrective action plan.
Special Test – Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster ALN: 14.871 14.879 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: October 1, 2024 – September 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 24 CFR 982.507(a)(1), the City must determine that the rent to owner is reasonable prior to approving the lease and executing the HAP contract; therefore, housing assistance payments should not be made before a rent reasonableness determination is completed. Condition: For one of 40 samples tested, the City issued a housing assistance payment before completing and documenting the required rent reasonableness determination. As a result, the City did not demonstrate compliance with Housing Choice Voucher program requirements requiring rent reasonableness to be determined prior to approval of the lease and execution of the HAP contract. Questioned costs: None. Context: See “Condition.” Cause: The City did not have sufficient control procedures in place to ensure rent reasonableness determinations were completed, documented, and reviewed before housing assistance payments were issued. Effect: Failure to complete rent reasonableness determinations prior to payment increases the risk that housing assistance payments may be made for units with rents that are not properly supported as reasonable, which could result in improper payments and noncompliance with Housing Choice Voucher program requirements. Repeat Finding: No. Recommendation: The City should strengthen controls over the lease-up and payment process to ensure rent reasonableness determinations are completed, documented, and reviewed before lease approval, HAP contract execution, and issuance of housing assistance payments. This may include using a formal checklist or workflow control, requiring supervisory review, and providing staff training on program requirements. Views of responsible officials: See management response on corrective action plan.
Special Test – Utility Allowance Schedule Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster ALN: 14.871 14.879 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: October 1, 2024 – September 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 24 CFR 982.517 requires the City to maintain and update utility allowance schedules based on current data, further implying the need for accurate and reliable calculations supported by effective internal controls. Condition: The City updated and finalized the utility allowance schedule without documented independent review of the underlying utility rate data, assumptions, and calculations. As a result, duties over preparation and approval of the schedule were not adequately segregated. Questioned costs: None. Context: See “Condition.” Cause: The City had not established a formal control requiring documented independent review and approval of the utility allowance schedule prior to finalization. Effect: Without documented independent review, errors in utility rate data, assumptions, or calculations may not be prevented or detected timely, increasing the risk of inaccurate utility allowances, improper housing assistance payments, and noncompliance with Housing Choice Voucher program requirements. Repeat Finding: No. Recommendation: The City should establish and implement a formal review and approval control over the utility allowance schedule. The review should be performed by an individual independent of preparation, documented prior to finalization, and include verification of utility rate data, assumptions, calculations, and compliance with applicable Housing Choice Voucher program requirements. Views of responsible officials: See management response on corrective action plan.
Equipment and Real Property Management Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3-48-0007-056-2024, 3-48-0007-057-2024, 3-48-0007-058-2024, 3-48-0007-059-2024, 3-48-0007-060-2025, 3-48-0007-061-2025 December 29, 2023 – December 29, 2027, December 27, 2023 – December 27, 2027, August 16, 2024 – August 16, 2028, August 16, 2024 – August 16, 2028, September 18, 2025 – September 18, 2029, September 10, 2025 – September 10, 2029 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Pursuant to 2 CFR 200.313(d), the City is required to maintain property records for equipment acquired with federal funds that include, among other elements, the source of funding and the percentage of federal participation. Condition: The City’s fixed asset ledger does not identify or distinguish assets acquired with federal award funds from assets acquired with other funding sources. As a result, the City’s property records do not readily identify the source of funding or percentage of federal participation for individual assets, as required by 2 CFR 200.313(d). Questioned costs: None. Context: See “Condition.” Cause: The City’s fixed asset system was not configured to capture funding source and federal participation information, and related procedures did not require this information to be recorded when assets were added to the ledger. Effect: Without complete property records, the City cannot readily demonstrate compliance with federal property management requirements. This increases the risk that federally funded assets may not be properly identified, safeguarded, reported, or disposed of in accordance with federal requirements. Repeat Finding: No Recommendation: The City should configure its fixed asset system, or implement an equivalent tracking mechanism, to identify assets acquired with federal award funds and document the related funding source and percentage of federal participation. The City should also update written procedures and perform periodic reviews to ensure property records remain complete, accurate, and compliant with federal requirements. Views of responsible officials: See management response on corrective action plan.
Reporting – FAA Form 5100-127 Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3-48-0007-056-2024, 3-48-0007-057-2024, 3-48-0007-058-2024, 3-48-0007-059-2024 December 29, 2023 – December 29, 2027, December 27, 2023 – December 27, 2027, August 16, 2024 – August 16, 2028, August 16, 2024 – August 16, 2028 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Pursuant to 49 U.S.C. § 47107(a)(15) and Federal Aviation Administration (FAA) guidance, including AC 150/5100-19, requires airport sponsors to prepare FAA Form 5100-127 using financial information that is accurate, complete, and supported by underlying accounting records. Additionally, in accordance with 2 CFR 200.302(b)(3), the City must maintain financial management systems and internal controls that ensure reported data is complete, accurate, and reconcilable to the general ledger. Condition: During testing of FAA Form 5100-127 submitted in March 2025, which reported financial information for the fiscal year ended September 30, 2024, with comparative amounts for the fiscal year ended September 30, 2023, we noted that several line items did not agree to the City’s general ledger or supporting documentation. As a result, certain amounts reported on the form were not fully supported by the underlying accounting records. The specific line items and variances are summarized in the table below. The large variances noted were attributable primarily to reporting input/mapping errors and did not result in questioned costs; however, the errors indicate that the reconciliation and review controls did not operate at a sufficient level of precision. Questioned costs: None. Context: See “Condition.” Cause: The condition occurred because reconciliation procedures were not sufficiently detailed or consistently documented, supporting general ledger documentation was not maintained for all reported amounts, and the review process was not performed at a level of precision sufficient to identify variances prior to submission. Effect: As a result, the FAA may rely on financial information that is inaccurate or not fully supported by the City’s accounting records, which could impair monitoring of airport financial operations and compliance with grant assurances. The condition also increases the risk of future reporting errors and additional FAA oversight. Repeat Finding: No. Recommendation: The City should enhance its existing reconciliation and review procedures by requiring documented tie-outs of FAA Form 5100-127 amounts to the general ledger, retention of supporting documentation for all reported amounts, and evidence of supervisory review prior to submission. Views of responsible officials: See management response on corrective action plan.
Special Tests and Provisions – Revenue Diversion Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3-48-0007-056-2024, 3-48-0007-057-2024, 3-48-0007-058-2024, 3-48-0007-059-2024, 3-48-0007-060-2025, 3-48-0007-061-2025 December 29, 2023 – December 29, 2027, December 27, 2023 – December 27, 2027, August 16, 2024 – August 16, 2028, August 16, 2024 – August 16, 2028, September 18, 2025 – September 18, 2029, September 10, 2025 – September 10, 2029 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 49 U.S.C.47107(b), The Secretary of Transportation may approve a project grant application under this subchapter for an airport development project only if the Secretary receives written assurances, satisfactory to the Secretary, that local taxes on aviation fuel (except taxes in effect on December 30, 1987) and the revenues generated by a public airport will be expended for the capital or operating costs of— • the airport; • the local airport system; or • other local facilities owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property. Condition: The City did not maintain a formal written policy or documented procedure to ensure airport-generated revenues are used only for allowable airport-related purposes in accordance with federal revenue-use restrictions. Questioned costs: None. Context: See “Condition.” Cause: The City had not formalized its process for translating federal airport revenue-use requirements into written policies and control procedures. Effect: The absence of a written policy increases the risk that airport revenues could be used for unallowable purposes or that federal revenue-use requirements may be applied inconsistently. Although no specific instances of revenue diversion were identified, the lack of formalized guidance and related controls increases the risk of noncompliance with 49 U.S.C. § 47107(b). Repeat Finding: No Recommendation: The City should develop, formally adopt, and implement a written airport revenue policy that defines allowable and unallowable uses of airport-generated revenues, aligns with federal revenue-use requirements and applicable FAA guidance, establishes expenditure review and approval procedures, and requires periodic monitoring for compliance. Relevant personnel should be trained on the policy. Views of responsible officials: See management response on corrective action plan.
Reporting – Semi-Annual Performance Report Federal Agency: U.S. Department of Homeland Security Federal Program Title: Staffing for Adequate Fire and Emergency Response (SAFER) ALN: 97.083 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: EMW-2022-FF-01428 February 26, 2024 – February 25, 2027 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The City should have controls designed to ensure proper financial and performance reporting, including adequate review prior to submission. Condition: The City did not maintain documented evidence of an independent review and approval of the semi-annual SAFER Hiring Performance Progress Report prior to submission. The same individual prepared, reviewed, and submitted the report, which limited segregation of duties and independent oversight over the reporting process. Questioned costs: None. Context: See “Condition.” Cause: The City had not established a formal review and approval procedure requiring independent supervisory review of SAFER performance reports prior to submission. Effect: Without documented independent review, there is an increased risk that errors, omissions, or unsupported information in the SAFER performance report may not be detected and corrected before submission, which could reduce the reliability of information reported to FEMA. Repeat Finding: No. Recommendation: The City should establish and document a formal review and approval process for SAFER performance reports prior to submission. The process should require independent review by an individual other than the preparer, or, if staffing limitations prevent full segregation of duties, a documented compensating supervisory review. Views of responsible officials: See management response on corrective action plan.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlements Grants ALN: 14.218 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: B-18-MC-48-0002, B-19-MC-48-0002, B-20-MC-48-0002, B-21-MC-48-0002, B-22-MC-48-0002, B-23-MC-48-0002, B-24-MC-48-0002 October 1, 2018 – September 1, 2025, October 1, 2019 – September 1, 2026, October 1, 2020 – September 1, 2027, October 1, 2021 – September 1, 2028, October 1, 2022 – September 1, 2029, October 1, 2023 – September 1, 2030, October 1, 2024 – September 1, 2031 Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). As of March 8, 2025, fsrs.gov was retired, and all subaward reporting data and functionality are now on SAM.gov. Condition: During the fiscal year, the City issued multiple first-tier subawards under the Community Development Block Grants/Entitlement Grants program that exceeded the $30,000 reporting threshold. However, the City did not report any of the applicable subawards in the FFATA Subaward Reporting System/SAM.gov as required. Questioned costs: None. Context: See “Condition.” Cause: The City had not established sufficient procedures or oversight controls to identify first-tier subawards subject to FFATA reporting requirements and ensure the required subaward information was submitted timely. Additionally, personnel responsible for grant administration were not sufficiently aware of the applicable FFATA reporting requirements. Effect: Failure to report required subaward information resulted in noncompliance with federal transparency reporting requirements and reduced public visibility into the use of federal funds. The lack of reporting may also subject the City to increased federal monitoring, enforcement actions, or other administrative remedies. Repeat Finding: No. Recommendation: The City should establish and implement formal procedures to identify subawards subject to FFATA reporting, track applicable reporting deadlines, and ensure required submissions are completed timely in SAM.gov. The City should also provide training to grant administration personnel and perform corrective reporting for previously omitted subawards, as applicable. Views of responsible officials: See management response on corrective action plan.
Criteria 2 CFR 200.303 requires that the non-Federal entity must "(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States and the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." Uniform Guidance 2 CFR Section 200.320 (a)(2) states regarding the applicability of simplified acquisition procedures: "The aggregate dollar amount of the procurement transaction is higher than the micro_x0002_purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate." AIHEC's procurement policy requires that for procurement by small purchase ($10,000 - $249,000), where the aggregate dollar amount is higher than the micro-purchase threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented. Condition/Context During our testing of procurement transactions, we noted that AIHEC did not provide supporting procurement documentation for certain sampled transactions. In addition, for procurements identified as sole-source, AIHEC did not provide approved sole-source justification documentation. As a result, we were unable to verify compliance with the applicable federal procurement requirements. Cause Management does not have sufficient internal controls in place to ensure that AIHEC's procurement policies are followed for all procurement transactions prior to entering the procurement. Effect AIHEC entered into a procurement that did not go through a competitive solicitation process. Recommendation Management should review its policies and procedures to ensure all procurement transactions are in accordance with AIHEC's procurement policies and have the appropriate supporting documentation.
Finding No.: 2025-014 Identification of Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) AL Program: 14.850 Public Housing Operating Fund Federal Award No.: GQ00100000125D, GQ00100000225D, GQ00100000325D, GQ00100000425D Area: Eligibility Criteria or specific requirement (including statutory, regulatory or other citation): 24 CFR 5.905(a)(1) states: A PHA that administers a Section 8 or public housing program under an Annual Contributions Contract with HUD must carry out background checks necessary to determine whether a member of a household applying for admission to any federally assisted housing program is subject to a lifetime sex offender registration requirement under a State sex offender registration program. This check must be carried out with respect to the State in which the housing is located and with respect to States where members of the applicant household are known to have resided. Section 9 I.E, Other Considerations – Criminal Background Checks, of GHURA Admissions and Continued Occupancy Policy (ACOP) states: Each household member age 18 and over will be required to execute a consent form for a criminal background check as part of the annual reexamination process. Additionally, HUD recommends that at annual reexaminations PHAs ask whether the tenant, or any member of the tenant’s household, is subject to a lifetime sex offender registration requirement in any state [Notice PIH 2012-28]. At the annual reexamination, the PHA will ask whether the tenant, or any member of the tenant’s household, is subject to a lifetime sex offender registration requirement in any state. The PHA will use the Dru Sjodin National Sex Offender database to verify the information provided by the tenant. Finding No.: 2025-014, continued Criteria or specific requirement (including statutory, regulatory or other citation), continued: Section 3‑II.E, EIV System Searches – EIV Income Report of GHURA Admissions and Continued Occupancy Policy (ACOP) states: For each new admission, the PHA is required to review income information in EIV to confirm and validate family reported income within 120 days after the move-in information is transmitted to HUD. The PHA must print and maintain copies of the reports in the tenant file and resolve any discrepancies with the family EIV Income Report. Section 7-I.E. Level 5 and 6 Verifications: Up-Front Income Verification (UIV) of GHURA Admissions and Continued Occupancy Policy (ACOP) states: PHAs are required to obtain an EIV Income report for each family anytime the PHA conducts an annual reexamination. However, PHAs are not required to use the EIV Income report: • At annual reexamination if the PHA used Safe Harbor verification from another means-test federal assistance program to determine the family’s income; or • During any interim reexaminations. The EIV Income Report is also not available for program applicants at admission. When required to use the EIV Income Report, in order for the report to be considered current, the PHA must pull the report within 120 days of the effective date of the annual reexamination. 24 CFR 5.618(b), Acceptable documentation; confidentiality, states: (i) A PHA or owner may determine the net assets of a family based on a certification by the family that the net family assets (as defined in § 5.603) do not exceed $50,000, which amount will be adjusted annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, without taking additional steps to verify the accuracy of the declaration. The declaration must state the amount of income the family expects to receive from such assets; this amount must be included in the family's income. (ii) A PHA or owner may determine compliance with paragraph (a)(1)(ii) of this section based on a certification by a family that certifies that such family does not have any present ownership interest in any real property at the time of the income determination or review. Finding No.: 2025-014, continued Criteria or specific requirement (including statutory, regulatory or other citation), continued: Section 7 I.F. of GHURA’s Admissions and Continued Occupancy Policy (ACOP) states: When HUD requires third-party verification, self-certification, or “tenant declaration,” is used as a last resort when the PHA is unable to obtain third-party verification. Self-certification, however, is an acceptable form of verification when: 1. A source of income is fully excluded 2. Net family assets total $5,000 or less and the PHA has adopted a policy to accept self-certification at annual recertification, when applicable 3. The PHA has adopted a policy to implement streamlined annual recertifications for fixed sources of income 24 CFR 5.508(b)(2-3), Evidence of citizenship or eligible immigration status, states: For noncitizens who are 62 years of age or older or who will be 62 years of age or older and receiving assistance under a Section 214 covered program on September 30, 1996 or applying for assistance on or after that date, the evidence consists of: (i) A signed declaration of eligible immigration status; and (ii) Proof of age document For all other noncitizens, the evidence consists of: (i) A signed declaration of eligible immigration status; (ii) One of the INS documents referred to in § 5.510; and (iii) A signed verification consent form. 24 CFR 960.259(c)(1), PHA responsibility for reexamination and verification, states: Except as provided in paragraph (c)(2) of this section, the PHA must obtain and document in the family file third-party verification of the following factors, or must document in the file why third-party verification was not available: (i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income or income-based rent 24 CFR 960.253(b) requires Public Housing Agencies (PHAs) to accurately calculate tenant rent by applying the appropriate rent formula based on verified family income and ensuring the tenant’s rent share is correctly determined in accordance with HUD requirements. Finding No.: 2025-014, continued Criteria or specific requirement (including statutory, regulatory or other citation), continued: 24 CFR 908.101 requires PHAs to maintain complete, accurate, and current records to comply with HUD requirements. Specifically, PHAs must retain complete and accurate data for the most recent three years, including the HUD 50058 (Family Report) and all supporting documentation. 2 CFR 200.303 requires the implementation and monitoring of effective internal controls to provide reasonable assurance that data reported to HUD is accurate, complete, and compliant with Federal requirements. Condition: For thirteen (33%) of forty participants tested, deficiencies were noted, as follows: Item No. Unit Certification Effective Date Criminal History/Sex Offender Registry Search Enterprise Income Verification (EIV) Report Date Other Required PHA Forms Variance (HUD-50058 - Tenant Register) Utility Allowance Variance (HUD-50058 - Register) 1 ALC 05/01/25 Not in file - - - - 2 LTJ 02/01/25 Not in file - - - - 3 EM 09/01/25 10/18/25 - - - - 4 GMM 05/22/25 - 03/19/26 - - - 5 MJA 10/16/24 - 05/30/25 - - - 6 POD 08/27/25 - Not In File - - - 7 SS 08/01/25 - - D-214 Form - - 8 SB 11/01/24 - 09/03/24 D-214 Form - - 9 KL 04/01/25 - 12/10/24 - - - 10 YR 06/01/24 - 05/04/24 - - - 11 SJL 07/01/25 - 04/04/25 - 36 - 12 GJA 07/01/25 - 03/11/25 - (151) 151 13 RJ 04/01/25 Not signed Not signed Self-certification of Assets 49 (210) Finding No.: 2025-014, continued Condition, continued: For item #s 1 and 2, no documentation was on file (e.g. sexual registry clearance form) to support if the PHA verified for lifetime sex offender registration requirements. For item # 3, eligibility determinations were not adequately supported, as the required sex offender checks was not conducted at annual reexamination. For item # 13, the sexual registry clearance form was not certified by the PHA, resulting in insufficient support for eligibility determination. For item #s 4 and 5, the newly admitted participants’ Enterprise Income Verification (EIV) report used to support income eligibility was not processed within 120 days after move in. For item # 6, no documentation was on file to support that the PHA processed the participant’s EIV report. For item # 13, the participant’s EIV report was not certified by the PHA, resulting in insufficient support for income eligibility determination. For item #s 7 and 13, documentation indicating verification of assets (e.g. self-certification forms, tenant declaration, and third-party bank statements) were not on file to support eligibility determination. For item #s 8 and 9, no documentation (e.g. declaration of eligible immigration status form) was on file to support whether non-citizen household members are eligible to receive housing assistance. For item #s 10 through 13, discrepancies which affect eligibility determination and assistance amounts were identified. For item # 10, the tenant rent amount that was agreed to and documented in the lease agreement was lower than the amount calculated by the PHA before annual recertification. For item #s 11 through 13, independently calculated tenant rent and utility allowance amounts differed from the amounts recorded in the PHA’s system and received by participants. Finding No.: 2025-014, continued Condition, continued: For item # 13, the participant’s verified income was understated by the PHA when determining eligibility and calculating housing assistance amounts. Cause: GHURA did not effectively implement monitoring controls to ensure compliance with applicable eligibility requirements. Effect or potential effect: GHURA is in noncompliance with applicable eligibility requirements. Questioned costs: $0 Identification as a repeat finding: Not applicable. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable eligibility requirements. Specifically, procedures should be enforced requiring staff to obtain and properly document all required verification documentation prior to the recertification of benefits. In addition, supervisory personnel should perform periodic reviews to verify that these procedures are consistently followed and that all required verification activities have been completed and properly documented. Views of Responsible Officials: Management partially concurs with the finding. Refer to Management’s position as outlined in the Corrective Action Plan. Conclusion: Management submitted additional information on June 28, 2026; however, due to time constraints, we were unable to sufficiently corroborate and evaluate the documentation provided. Accordingly, the finding remains, as there was insufficient evidence to support a determination of compliance as of the audit date.
Finding No.: 2025-016 Identification of Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) AL Program: 14.850 Public Housing Operating Fund Federal Award No.: GQ00100000125D, GQ00100000225D, GQ00100000325D, GQ00100000425D Area: Special Tests and Provisions – UEL (Utility Expense Level) Formula Criteria or specific requirement (including statutory, regulatory or other citation): GHURA is required to maintain and annually submit the Utility Expense Level (UEL) Formula Report (HUD Form 52722) for each project to HUD. 24 CFR 990.170(f)(1) states: 1. Appropriate utility records, satisfactory to HUD, shall be developed and maintained, so that consumption and rate data can be determined. 2 CFR 200.303 requires the implementation and monitoring of effective internal controls to provide reasonable assurance that data reported to HUD is accurate, complete, and compliant with Federal requirements. Condition: We examined the 4 reports required to be submitted during the fiscal year. For eight (14%) of total 56 key line reporting items required for testing within the Utility Expense Level (UEL) Formula Report (HUD Form 52722), the amounts were inconsistent from prior audited report submissions as follows: Item No. Project Line No. Utility Expense Level Formula Reported Utilities Reported Amount Per Audited Submission Variance Over (Under) Reported Variance Over (Under) Reported (%) 1 GQ001000001 03 Water and Sewer (Gal) 8,874 8,035 839 9% 2 GQ001000001 04 Water and Sewer (Gal) 5,647 6,486 (839) 15% 3 GQ001000002 03 Water and Sewer (Gal) 410,885 374,845 36,040 9% 4 GQ001000002 04 Water and Sewer (Gal) 383,707 419,747 (36,040) 9% 5 GQ001000003 03 Water and Sewer (Gal) 1,824,296 1,671,242 153,054 8% 6 GQ001000003 04 Water and Sewer (Gal) 2,719,307 2,872,361 (153,054) 6% 7 GQ001000003 03 Water and Sewer (Gal) 3,585,789 3,094,259 491,530 14% 8 GQ001000004 04 Water and Sewer (Gal) 2,663,490 3,155,020 (491,530) 18% Finding No.: 2025-016, continued Condition, continued: For items #s 1 and 2, the Asset Management Project (AMP) 1 reported in excess of amounts for key line items in Rolling base year 2 - actual consumption (12- month period 7/1/2021 to 6/30/2022) for water and sewer gallon consumption, and underreported for Rolling base year 3 - actual consumption (12-month period 7/1/2020 to 6/30/2021) for water gallon consumption than prior year amounts as reported on HUD Form 5722, respectively. For items #s 2 through 4, the Asset Management Project (AMP) 2 reported in excess of amounts for key line items in Rolling base year 2 - actual consumption (12- month period 7/1/2021 to 6/30/2022) for water and sewer gallon consumption, and underreported for Rolling base year 3 - actual consumption (12-month period 7/1/2020 to 6/30/2021) for water gallon consumption than prior year amounts as reported on HUD Form 5722, respectively. For items #s 3 through 6, the Asset Management Project (AMP) 3 reported in excess of amounts for key line items in Rolling base year 2 - actual consumption (12- month period 7/1/2021 to 6/30/2022) for water and sewer gallon consumption, and underreported for Rolling base year 3 - actual consumption (12-month period 7/1/2020 to 6/30/2021) for water gallon consumption than prior year amounts as reported on HUD Form 5722, respectively. For items #$ 7 and 8, the Asset Management Project (AMP) 4 reported in excess of amounts for key line items in Rolling base year 2 - actual consumption (12- month period 7/1/2021 to 6/30/2022) for water and sewer gallon consumption, and underreported for Rolling base year 3 - actual consumption (12-month period 7/1/2020 to 6/30/2021) for water gallon consumption than prior year amounts as reported on HUD Form 5722, respectively. Cause: Management did not implement adequate procedures to agree corrections on the Utility Expense Level (UEL) reporting submissions with underlying utility consumption and cost records prior to submission to HUD. In addition, supervisory review procedures were not sufficient to identify discrepancies, omissions, or reporting-period errors in the data accumulated for UEL reporting purposes. Effect or potential effect: GHURA is in noncompliance with applicable special tests and provisions for UEL Formula requirements. Questioned costs: $0 Finding No.: 2025-016, continued Identification as a repeat finding: Not applicable. Recommendation: Management should implement formal procedures to reconcile UEL reporting submissions to underlying utility consumption and cost records prior to submission to HUD. This should include preparing documented roll-forward reconciliations that ensure current-year reported amounts agree with prior submissions and are accurately carried forward. In addition, management should strengthen supervisory review controls by requiring an independent review of compiled UEL data to verify completeness, accuracy, and proper reporting period classification, with evidence of review retained. Views of Responsible Officials: Management did not provide a response to the finding. The finding was not included in management’s corrective action plan.
Inadequate Tenant File Documentation in MTW Housing Choice Vouchers (ALN 14.881) (Repeat of Finding 2024-005) Condition: During tenant file testing for the Housing Choice Voucher (HCV) component of the MTW Demonstration Program, we identified the following deficiencies. This condition is a repeat of prior year finding 2024-005: 1. For one port-out tenant, the tenant file did not contain the required HUD Form 50058 or the Enterprise Income Verification (EIV) documentation. As a result, the family’s eligibility, income determination, and assistance could not be substantiated from the file. 2. For one tenant, the Authority was unable to provide the HUD Form 50058; the form was not retained in the tenant file and only tenant balances from the Authority’s housing software were available. The data is reportedly retrievable from HUD’s IMS/PIC system but could not be reproduced from the Authority’s records. 3. For one tenant, the income determination was incorrect. Social Security income was not recalculated based on the prior-year recertification; although an updated Social Security benefit letter was received indicating a change in the monthly benefit, the income reported on the HUD Form 50058 was not updated accordingly, resulting in an inaccurate rent and housing assistance payment (HAP) calculation. Criteria: Under 2 CFR §200.302 and §200.303, the Authority must maintain financial management systems and internal controls sufficient to ensure that costs are allowable, supported, and compliant with program requirements. The 2025 Compliance Supplement (4-14.881) identifies Eligibility (Type E) as subject to audit and requires that the HUD Form 50058-MTW key line items be “documented in the recipient’s file.” HUD program rules require PHAs to complete and retain accurate HUD Forms 50058, to verify income through HUD’s EIV system, and to recalculate income upon receipt of updated benefit information. Records supporting federal program compliance must be retained and accessible (2 CFR §200.334). Cause: The Authority lacked effective internal controls over tenant file documentation, income verification (including use of EIV and updated benefit information), HUD Form 50058 completion and retention, and reexamination procedures. Effect: Missing Forms 50058 and EIV documentation leave family eligibility and assistance payments unsupported; the failure to recalculate income based on updated Social Security benefit information resulted in an inaccurate income determination and rent/HAP calculation. These deficiencies increase the risk of over- or under-payment of housing assistance and questioned costs under the MTW program. Questioned Costs: $395,581 Recommendation: The Authority should ensure the executed HUD Form 50058 (and supporting income/EIV documentation) is completed and retained in each tenant file; recalculate income promptly upon receipt of updated benefit information and reflect the change on the Form 50058; perform EIV verification and reconciliation at each admission and reexamination; conduct a file-completeness review before sign-off; provide staff training on income determination, EIV, and federal recordkeeping; and, where forms were not retained, download and refile them from IMS/PIC. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of $395,581 and acknowledges it is a repeat of finding 2024-005. Ensure Forms 50058 and supporting documentation are retained; recalculate household income when required; retrieve or reconstruct missing records; resolve questioned costs with HUD; conduct file reviews; and provide staff training.
ompliance Deficiencies Identified in HUD Monitoring Review (ALN 14.881) Condition: The compliance deficiencies identified in the U.S. Department of Housing and Urban Development (HUD) Compliance Monitoring Review conducted June 24–28, 2024 (formalized in HUD’s letter dated March 24, 2025) remained unresolved as of September 30, 2025. The open items span multiple program areas, including governance and internal controls, Housing Choice Voucher (HCV) program compliance, Project-Based Voucher (PBV) documentation, Public Housing operations, ROSS grant administration, Violence Against Women Act (VAWA) policy, and Section 3 compliance. This condition is a repeat of prior year finding 2024-006. Criteria: The HUD findings cite noncompliance with various federal regulations, including 2 CFR Part 200 and 24 CFR Parts 5, 35, 75, 960, 982, and 983, as well as HUD Notices PIH 2016-22, 2017-13, 2022-10, and 2023-03. Under 2 CFR §200.303 and §200.521, the Authority is responsible for taking timely and appropriate corrective action on identified deficiencies. Cause: The Authority had not fully implemented or updated the policies, procedures, and documentation necessary to resolve the open HUD monitoring findings and align with current HUD requirements. Effect: Failure to resolve these deficiencies on a timely basis results in continued noncompliance with federal program requirements, may lead to disallowed costs or HUD sanctions, and increases the risk of recurring audit findings in future periods. Questioned Costs: None. Recommendation: The Authority should prioritize timely resolution of all open HUD monitoring findings; implement the corrective actions outlined in HUD’s letter (policy updates, staff training, file reviews, and required certifications); assign responsibility and target completion dates for each open item; and maintain ongoing communication with HUD to confirm closure. Reply and Corrective Action Plan: The Authority concurs with the finding and acknowledges it is a repeat of finding 2024-006. Maintain a remediation tracker; implement corrective actions identified by HUD; conduct training and file reviews; submit required certifications; and provide progress updates until all items are closed.
Finding Number 2025-002: Inadequate Tenant File Documentation in MTW Housing Choice Vouchers (ALN 14.881) (Repeat of Finding 2024-005) Condition: During tenant file testing for the Housing Choice Voucher (HCV) component of the MTW Demonstration Program, we identified the following deficiencies. This condition is a repeat of prior year finding 2024-005: 1. For one port-out tenant, the tenant file did not contain the required HUD Form 50058 or the Enterprise Income Verification (EIV) documentation. As a result, the family’s eligibility, income determination, and assistance could not be substantiated from the file. 2. For one tenant, the Authority was unable to provide the HUD Form 50058; the form was not retained in the tenant file and only tenant balances from the Authority’s housing software were available. The data is reportedly retrievable from HUD’s IMS/PIC system but could not be reproduced from the Authority’s records. 3. For one tenant, the income determination was incorrect. Social Security income was not recalculated based on the prior-year recertification; although an updated Social Security benefit letter was received indicating a change in the monthly benefit, the income reported on the HUD Form 50058 was not updated accordingly, resulting in an inaccurate rent and housing assistance payment (HAP) calculation. Criteria: Under 2 CFR §200.302 and §200.303, the Authority must maintain financial management systems and internal controls sufficient to ensure that costs are allowable, supported, and compliant with program requirements. The 2025 Compliance Supplement (4-14.881) identifies Eligibility (Type E) as subject to audit and requires that the HUD Form 50058-MTW key line items be “documented in the recipient’s file.” HUD program rules require PHAs to complete and retain accurate HUD Forms 50058, to verify income through HUD’s EIV system, and to recalculate income upon receipt of updated benefit information. Records supporting federal program compliance must be retained and accessible (2 CFR §200.334). Cause: The Authority lacked effective internal controls over tenant file documentation, income verification (including use of EIV and updated benefit information), HUD Form 50058 completion and retention, and reexamination procedures. Effect: Missing Forms 50058 and EIV documentation leave family eligibility and assistance payments unsupported; the failure to recalculate income based on updated Social Security benefit information resulted in an inaccurate income determination and rent/HAP calculation. These deficiencies increase the risk of over- or under-payment of housing assistance and questioned costs under the MTW program. Questioned Costs: $395,581 Recommendation: The Authority should ensure the executed HUD Form 50058 (and supporting income/EIV documentation) is completed and retained in each tenant file; recalculate income promptly upon receipt of updated benefit information and reflect the change on the Form 50058; perform EIV verification and reconciliation at each admission and reexamination; conduct a file-completeness review before sign-off; provide staff training on income determination, EIV, and federal recordkeeping; and, where forms were not retained, download and refile them from IMS/PIC. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of $395,581 and acknowledges it is a repeat of finding 2024-005. Ensure Forms 50058 and supporting documentation are retained; recalculate household income when required; retrieve or reconstruct missing records; resolve questioned costs with HUD; conduct file reviews; and provide staff training.
Compliance Deficiencies Identified in HUD Monitoring Review (ALN 14.881) Condition: The compliance deficiencies identified in the U.S. Department of Housing and Urban Development (HUD) Compliance Monitoring Review conducted June 24–28, 2024 (formalized in HUD’s letter dated March 24, 2025) remained unresolved as of September 30, 2025. The open items span multiple program areas, including governance and internal controls, Housing Choice Voucher (HCV) program compliance, Project-Based Voucher (PBV) documentation, Public Housing operations, ROSS grant administration, Violence Against Women Act (VAWA) policy, and Section 3 compliance. This condition is a repeat of prior year finding 2024-006. Criteria: The HUD findings cite noncompliance with various federal regulations, including 2 CFR Part 200 and 24 CFR Parts 5, 35, 75, 960, 982, and 983, as well as HUD Notices PIH 2016-22, 2017-13, 2022-10, and 2023-03. Under 2 CFR §200.303 and §200.521, the Authority is responsible for taking timely and appropriate corrective action on identified deficiencies. Cause: The Authority had not fully implemented or updated the policies, procedures, and documentation necessary to resolve the open HUD monitoring findings and align with current HUD requirements. Effect: Failure to resolve these deficiencies on a timely basis results in continued noncompliance with federal program requirements, may lead to disallowed costs or HUD sanctions, and increases the risk of recurring audit findings in future periods. Questioned Costs: None. Recommendation: The Authority should prioritize timely resolution of all open HUD monitoring findings; implement the corrective actions outlined in HUD’s letter (policy updates, staff training, file reviews, and required certifications); assign responsibility and target completion dates for each open item; and maintain ongoing communication with HUD to confirm closure. Reply and Corrective Action Plan: The Authority concurs with the finding and acknowledges it is a repeat of finding 2024-006. Maintain a remediation tracker; implement corrective actions identified by HUD; conduct training and file reviews; submit required certifications; and provide progress updates until all items are closed.