Finding Text
The City did not have adequate internal controls and did not comply with federal reporting requirements. Background. The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. In 2024, the City spent $2,072,422 for its CDBG program. Of this amount, it passed $1,300,118 through to subrecipients. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition. The City’s internal controls were ineffective for ensuring it submitted FFATA reports for four of its five new subawards on time as federal regulations require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition. Staff were aware of the federal FFATA reporting requirements for subawards. However, they did not dedicate adequate resources to prepare and submit the FFATA reports on time. Effect of Condition. Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. The City subsequently submitted the reports in 2025. Recommendation. We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require.