Finding Text
Section 3 – Federal Award Findings and Questioned Costs Finding 2025-001 Identification of Federal Program: Department of Housing and Urban Development AL Number: 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants. Type of Finding: Significant Deficiency in Internal Control over Compliance - Reporting. Criteria / Requirement: 2 CFR section §200.303 requires that non-federal entities receiving federal awards establish, document and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per the program requirements and 2 CFR §200.328, non-federal entities must submit accurate and complete federal financial reports in accordance with the terms and conditions of the federal award. Condition / Context: The Department of Housing and Urban Development (HUD) requires a Performance Report to be submitted, which must include a completed Federal Financial Report as an attachment. The required Progress Report was filed timely and accepted by HUD, however the required Federal Financial Report was omitted from the submission. Cause: The entity did not have adequate controls in place to ensure that required reports were submitted in their entirety. Effect: Failure to submit required the required Federal Financial Report results in noncompliance with federal program requirements and limits the federal awarding agency’s ability to monitor program performance and use of federal funds. Questioned Costs: None. Recommendation: The entity should implement and document internal controls to ensure all required reports are prepared, reviewed, and submitted in accordance with federal award requirements. Management’s Response: Management concurs with the audit finding regarding the omission of the Federal Financial Report (FFR) from the Performance Report submission. We acknowledge that while the narrative Progress Report was submitted promptly, the accompanying financial data was inadvertently excluded due to a lapse in our final review process.