Finding Text
Federal Agency: Department of Housing and Urban Development
Federal Program Title: Community Development Block Grants
Assistance Listing Number: 14.228
Federal Award Identification Number and Year: B-21-DC-08-0001 2021
Pass-Through Agency: Colorado Department of Local Affairs
Pass-Through Number: F20CDBG20630
Award Period: April 1, 2020 – March 31, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter
Criteria or Specific Requirement: In accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), the Council should report all federal expenditures in the schedule of expenditures of federal awards (SEFA) each fiscal year. Additionally, per 2 CFR section 200.502(a)-(d), the determination of when a federal award is expended must be based on when the activity related to the federal award occurs, including the value of new loans made during the audit period.
Condition: In reviewing the expenditure detail and supporting documentation for the 2023 SEFA, the Council included $150,000 of excess federal expenditures that were not disbursed in 2023.
Questioned Costs: None
Context: The inclusion of excess expenditures to be reported in 2024 was identified during completeness testing of the current year major program.
Cause: SEFA expenditures for the CDBG program were not reconciled to loan disbursements in 2023. Management misinterpreted the loan amount report provided by NLF’s loan management software. One loan for $150,000 was disbursed during 2023 and another $150,000 loan was disbursed to the same borrower in 2024. However, all $300,000 was initially reported on the 2023 SEFA.
Effect: The 2023 SEFA was initially overstated by $150,000, and was subsequently adjusted.
Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-003.
Recommendation: We recommend that the Council record federal expenditures on the SEFA under the program in the year upon which the loan disbursement occurs using the proper report from NLF’s loan management software.
Views of Responsible Officials: There is no disagreement with the audit finding.