Finding 1106125 (2024-001)

Assistance Listing Number, Federal Agency, and Program Name - ALN 14.218, U.S. Department of Housing and Urban Development Community Development Block Grant Entitlement Grant Federal Award Identification Number and Year - B23MC260015 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303 (a), 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. 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). Condition - The community development manager’s payroll expenses charged to the grant were supported by time records, but these records were not reviewed or approved by another individual. Questioned Costs - Unknown Identification of How Questioned Costs Were Computed - Not applicable Context - Recipients of federal awards must have internal control procedures in place to ensure payroll expenses allocated to the grant are accurate. During our audit testing, we confirmed that the community development manager reviews all payroll expenses charged to the grant, but nobody reviews or approves the managers allocated payroll expenses. Cause and Effect - The City did not have a procedure in place to review the community development manager's allocated payroll expenses, which could cause improperly reported or ineligible grant expenses. Recommendation - We recommend that the City implement internal controls to ensure the community development manager's payroll allocation is reviewed and approved before they are charged to the grant. Views of Responsible Officials and Corrective Action Plan - The City agrees with the finding. The City will implement a secondary review and approval of time sheets submitted by the community development manager. The approval will be completed by the third party consultant or chief of staff.