Finding Text
Agency:
U.S. Department of Housing and Urban Development (HUD)
Federal Program:
Community Development Block Grant – Disaster Recovery (CDBG-DR)
Compliance Requirement:
Reporting
Category:
Significant Deficiency and Noncompliance
Criteria:
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Part 200.512, Report Submission, (a) General, (1) states that the audit must be completed, and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period.
Condition:
The Organization did not comply with the required due date for the submission of the Single Audit Report Package. The Organization as a non-Federal entity, must have a single audit when it has $750,000 or more in expenditure of federal funds.
Cause of Condition:
The Organization failed to comply with the requirements stipulated in its Agreement with the PRDH. Even though, the Organization formally contracted a Firm to conduct the Single Audit, the inherent complexity and scope of the process caused significant delays.
Effect of Condition:
The Organization is considered delinquent in the submission of the Single Audit Report Package and if it does not respond to follow-up procedures from federal agencies, may face sanctions such as:
• Draw-Down Restrictions
• Reimbursable Draw Down
• Withholding a Percentage of Federal Funds
• Suspension of Federal Funds
• Termination of Grant
Questioned Costs:
None CENTER FOR THE RECONSTRUCTION OF THE HABITAT, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS - CONTINUED YEAR ENDED DECEMBER 31, 2023
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Recommendation:
The Organization must designate work teams amongst all relevant areas which serve as liaisons with auditors and be responsible for the delivery of information and documentation to ensure compliance with due dates. The Organization should maintain a clear line of communication throughout areas and follow up accordingly to maintain a continuous flow of information during audit procedures. In addition, the Organization should request periodic follow-up meetings with auditors to address any audit issues encountered which may affect meeting established deadlines.
Management’s Response:
The Organization initially had difficulty identifying a qualified firm to carry out the Single Audit for the year ended December 31, 2023. During the first half of 2024, the Organization contacted a total of 17 firms to request quotes, in a process that proved especially difficult given that many did not have experience auditing Non-Profit entities or did not respond. The Organization also consulted with peer Non-Profits entities with similar budgets to obtain recommendations, and from all these efforts only one proposal was received. This prolonged search process significantly delayed the start of the audit. Nevertheless, the Organization entered into a formal agreement with a certified public accounting (CPA) firm to perform the Single Audit. In addition, as this was the Organization’s first audit, additional time was required to compile the requested documents. With a clear understanding now of the documentation requirements, the process is expected to be significantly quicker in future audits. Furthermore, the Organization has already agreed with the same firm to perform the Single Audit for subsequent years going forward.