Finding Text
FINDING 2023-002
Subject: CDBG - Entitlement Grants Cluster - Reporting
Federal Agency: Department of Housing and Urban Development
Federal Program: Community Development Block Grants/Entitlement Grants
Assistance Listings Number: 14.218
Federal Award Numbers and Years (or Other Identifying Numbers): B-18-MC-180004, B-19-MC-180004,
B-20-MC-180004, B-21-MC-180004,
B-22-MC-180004, B-23-MC-180004
Compliance Requirement: Reporting
Audit Finding: Material Weakness
Condition and Context
Recipients are required to submit quarterly the CDBG Cash on Hand Quarterly report (PR29). The
report is generated from information entered by the City into HUD's Integrated Disbursement Information
System (IDIS). The City did not have internal control procedures in place over the PR29 Quarterly Reports.
The reports were generated and submitted by one individual, without a review or oversight process to detect
and correct errors.
The lack of internal controls was isolated to the quarterly reports noted above.
Criteria
2 CFR 200.303 states in part:
"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 or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Cause
A proper system of internal controls was not designed by the management of the City. Embedded
within a properly designed and implemented internal control system should be internal controls consisting
of policies and procedures. Policies reflect the City's management statements of what should be done to
effect internal controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls over
reporting, the City cannot ensure that the reports submitted are materially accurate and correct.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the management of the City design and implement a proper system of
internal controls, including a segregation of duties, to ensure the accuracy and correctness of the PR 29
reports.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.