Finding Text
2024-004 – Inaccurate Reporting/Lack of Independent Review and Approval of Reporting
Finding Type. Immaterial Noncompliance; Significant Deficiency in Internal Controls over Compliance (Reporting).
Federal program(s)
U.S. Department of Housing and Urban Development -
Community Development Block Grants/Entitlement Grants (ALN 14.218); Direct award; All project numbers.
Criteria. Recipients of federal awards are required to report periodically on financial information, as specified by the 2 CFR 200 Compliance Supplement or grant agreement. Reported information should be supported by the entity’s accounting records and subjected to an independent review and approval prior to submission in order to detect and correct any errors or omissions. Additionally, the PR-26 financial summary reports are submitted as part of the Consolidated Annual Performance Evaluation Report (CAPER). This report should include all expenditures for the program year, including accrued expenditures.
Condition. During our audit procedures over the City's annual PR-26 reports and the annual CAPER, we noted that none of the reports were subject to an independent review and approval prior to submission in order to detect and correct potential errors or omissions. We also noted that the CAPER was submitted as required, but contained financial data that did not agree to the City's underlying accounting records for the reporting period as required. The City's annual PR-26 report did not agree to the annual CAPER by approximately $435,000 and needed to be resubmitted to HUD.
Cause. This condition appears to have been caused by a lack of complete knowledge of applicable federal compliance requirements and employee turnover in the economic development department.
Effect. As a result of this condition, the City did not fully comply with the requirements of the grant and filed reports that contained financial errors.
Questioned Costs. No costs have been questioned as a result of this finding as the reports did not serve as a basis for cost-reimbursement.
Recommendation. We recommend that reports required to be submitted to the oversight agency that contain financial information be reviewed and approved by the finance department to ensure accuracy of the financial information.
View of Responsible Officials. The City acknowledges the issues noted with reporting in the Community Development Block Grant Program. Finance and Community Development will work together to strengthen programmatic and financial reporting so that it is both timely and accurate. Staff working on this grant are new to their positions since the last time the program was audited, and are committed to reviewing policies and procedures to make sure reporting is completed appropriately.
Responsible Officials. Revenue Services Director and Community Services Director
Estimated Completion Date. June 30, 2025