Finding 1138054 (2023-005)

2023-005 Reporting – PR29 – CDBG Cash on Hand Quarterly and Federal Funding and Accountability and Transparency Act Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Housing and Urban Development Program: 14.218 Community Development Block Grants/Entitlement Grants 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants Pass-Through Agency: N/A - Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The PR29 – CDBG Cash on Hand Quarterly report is a required quarterly report. The basis of accounting described in the directions is a cash basis. Also, the directions list accounts to be included in the reports, including program income accounts. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, that are codified in Title 2 U.S. Code of Federal Regulations, 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 (FFATA) Subaward Reporting System (FSRS). Condition: In the sample of two quarterly PR29 – CDBG Cash on Hand Quarterly reports tested, errors were noted in both reports resulting from the County improperly including accruals in the reporting and not including all accounts, including those relating to program income. In addition, Ramsey County has not submitted subaward information in the FSRS as required by the FFATA for the Community Development Block Grant. Questioned Costs: None. Context: The PR29 – CDBG Cash on Hand Quarterly report is not used to claim reimbursement of federal funds. A subaward is any award provided by a pass-through entity to a subrecipient for the subrecipient to administer part of a federal award received by the pass-through entity. The FFATA issue was noted during the audit of the Community Development Block Grant; however, it impacts federal programs County-wide. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Ramsey County is not in compliance with the requirements for PR29 – CDBG Cash on Hand Quarterly or FFATA reporting. Cause: The County experienced staff turnover. In addition, the County missed HUD notifications that FFATA needed to be implemented. Recommendation: We recommend Ramsey County implement procedures to complete reports as required by HUD and ensure the correct accounting basis is used and all accounts are being included. We recommend Ramsey County implement procedures to complete reports required by FFATA. In addition, we recommend Ramsey County work with HUD on how best to correct PR29 – CDBG Cash on Hand Quarterly reporting. View of Responsible Official: Concur