Finding Text
2023-006 – Lack of Oversight Due to Management Turnover (SD)
Federal Program Title: Section 8 Housing Choice Vouchers
Assistance Listing Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting/Special Tests and Provisions
Criteria: Under 2 CFR §200.303 of the Uniform Guidance, non-federal entities are required to establish and
maintain effective internal control over compliance, including appropriate oversight of federal programs to ensure
compliance with applicable laws, regulations, and the terms and conditions of the federal awards. Effective
internal controls rely on strong management oversight to ensure that compliance responsibilities are met, even
during periods of organizational change.
Condition: We noted that the entity experienced significant turnover in key management positions responsible
for overseeing compliance with federal awards during FY 2023. As a result, there was insufficient oversight of
federal programs and internal controls. Critical duties related to compliance monitoring, reporting, and financial
management were not performed adequately during the transition period, and there was a lack of continuity in
management practices.
Cause: The entity did not have adequate processes in place to ensure continuity of oversight and management
responsibilities during periods of turnover. There were no succession plans or interim measures to ensure that
compliance duties were properly transitioned and maintained.
Effect or Potential Effect: The lack of oversight during the management turnover period increases the risk of
non-compliance with federal award requirements. It can lead to gaps in monitoring, failure to meet reporting
deadlines, inaccurate financial management, and the potential for disallowed costs or other negative
consequences.
Questioned Cost: None.
Context: The deficiency was found during our testing of reporting and special tests and provisions.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: 2022-007.
Recommendation: The entity should establish policies and procedures to ensure continuity of oversight and
compliance monitoring during management transitions. This should include:
1. Developing a formal succession plan for key management positions responsible for overseeing federal
programs.
2. Implementing interim oversight measures, such as assigning temporary leadership or redistributing
compliance responsibilities during periods of transition.
3. Ensuring that new management receives timely training on compliance responsibilities and internal
controls related to federal awards.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The recommendations are included in the new grants policy. The City Manager
shall review and approve it for implementation by September 2025.
Planned Implementation Date: September 2025
Responsible Person(s): City Manager