Finding 1120862 (2024-002)

Federal Program Title: Community Development Block Grants/Entitlements Grants Federal Catalog Number: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Category of Finding: Reporting Criteria: Pursuant to the OMB 2 CFR Part 200, Appendix XI, Compliance Supplement May 2024, Part 4 – 14.218 Community Development Block Grants/Entitlements Grants (page 4-14.218-25 & 26), the Cash on Hand Quarterly Report, must be submitted to the grantee’s HUD local field office within 30 days after the end of the reporting period. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. For subaward information, report no later than the end of the month following the month in which the subaward was issued. (For example, if the subaward was made on November 7, 2025, the subaward must be reported by no later than December 31, 2025). Condition: The City failed to submit all of the Fiscal Year 2024 Cash on Hand Quarterly Reports within the required 30-day period following each reporting quarter until February 2025. The City did not submit subaward information for subrecipients receiving federal funds of $30,000 or more from the City to the FSRS until February 2025. These reports were due by the end of the month following the issuance of each subaward. Additionally, staff responsible for financial reporting were not adequately trained on the specific requirements for reporting under federal grants, which contributed to the late submission of the reports. Cause: Lack of appropriate control over reporting. Effect or Potential Effect: Noncompliance may result in suspension, termination, or disallowance of grant funds, and delay or withhold of future grant payments. Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend that the City develop and implement policies and procedures for completeness and timely submission of reports. This may include: 1. Thoroughly review the reporting requirements each year for any possible updates, substitutions, or missing reports, and document the process, including the preparer and reviewer. 2. Prepare a listing of subaward agreements, including details such as the subrecipient, original and amended amounts, execution date (i.e., when it becomes legally binding), reporting date, name of the person who submitted the report, name of the person who reviewed the report, etc., for each program to identify and track the reporting of subaward information. 3. Staff responsible for financial reporting should receive specific training on federal reporting requirements to ensure accuracy and compliance. City's Response: The City is aware of the OMB 2 CFR Part 200 regulations that pertain to Cash on Hand Report and Federal Funding Accountability and Transparency Act (FFATA) reporting. With respect to the Cash on Hand Report, staff reviewed the published HUD guidance but needed further clarification to properly complete the report. Staff reached out to our HUD Representative and received clarification. Staff has all the information needed to properly complete the report and plan to submit the report quarterly as required. With respect to the FFATA Reporting, staff inadvertently thought the report was due annually, rather than monthly. Corrective Action Plan: The City will improve its internal controls by implementing a new policy and procedures that will: (1) require staff to annually participate in HUD trainings related to federal grant reporting, (2) require management and staff to meet monthly to discuss and track federal reporting requirements and review a listing of subaward agreements and (3) require staff to submit the Cash on Hand Report quarterly and the FFATA Report monthly. Planned Implementation Date: March 25, 2025 Responsible Person(s): Albert Ramirez, Assistant Director; Denise Ledesma, Grants Coordinator; and Adrianne Sarreal, Analyst.