Finding Text
Federal Program Title: Community Development Block Grants/Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3.2-L-1 and 4-14.218-10:
"Recipients must use the standard financial reporting forms or such other forms as may be authorized by
OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the
Federal awarding agency. Each recipient must report program outlays and program income on a cash or
accrual basis, as prescribed by the Federal awarding agency."
For CDBG, the City is required to submit the following reports:
SF-425 - Federal Financial Report
C04PR03 - Activity Summary Report
C04PR26 - CDBG Financial Summary
HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income
Persons, (OMB No. 2529-0043)
Per HUD Notice CPD-12-012, submission of Federal Financal Report - Standard Form 425: "A hard copy (or a pdf file if transmitted electronically) of the SF-425 report shall be submitted to the CDBG recipient's local field office, which will review it for completeness and accuracy... Quarterly Federal
Financial Reports (FFRs) must be submitted to the respective field office within 30 days after the end of
the reporting period. The following reporting-period end dates shall be used for quarterly reports: 3/31, 6/30, 9/30, or 12/31."
Per HUD Section 3 Overview for Recipients of HUD Housing & Community Development Funding:
"Annually, each direct recipient of Housing and Community Development funding is required to submit form HUD-60002 to HUD's Economic Opportunity Division in Washington DC. Where the program
providing Section 3 covered funding requires the submission of an annual performance report (e.g.,
Condition: The required quarterly SF-425 Federal Financial Reports and HUD 60002, Section 3
Summary Report were filed after the required deadline.
Cause: Lack of sufficient internal control over the timely preparation, review, and submission of the
financial and performance reports.
Effect or Potential Effect: The City's failure to comply with stated rules and regulations over the required
reports increases the risk that inaccurate or incomplete information will be reported.
Questioned Cost: None
Context: The SF-425 Federal Financial Reports and HUD 60002, Section 3 Summary Report were
prepared and submitted after we requested them, which was after these reports were due to HUD.
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2020-003, 2019-006, 2018-005, and 2017-006
Recommendation: The City should strengthen its process over the preparation of its reports to ensure
the reports are based on the applicable accounting and performance records. City staff should ensure
that these reports are not only prepared, but also reviewed for accuracy and completeness prior to
submission. The City should have a process to ensure that all required reports are prepared, reviewed,
and submitted on a timely basis.
Management Response and Corrective Action Plan
City's Response: The City submitted the reports late that can cause federal and state funding to
be affected.
Corrective Action Plan: The City has contracted with third party vendors to ensure timeliness of
filing reports. Departments are aware of deadlines and have organized records to meet the
deadlines.
Planned Implementation Date: Implemented during Fiscal Year 2023.
Responsible Person: Finance & Community Development department.