Finding 1179435 (2025-004)

Finding Reference 2025-004 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) This finding is similar to prior-year finding 2023-004 and 2024-004. Statement of Condition In our reporting test, we evaluate four (4) quarterly reports and two (2) of them were not submitted and one (1) was submitted late. Additionally, two (2) quarterly reports that were submitted do not agree with the accounting records. Criteria Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process. § 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Cause of Condition The Municipality does not have the necessary personnel assigned to prepare and present reports in a timely manner. Effect of Condition The program is not in compliance with the reporting requirements as established in the contract agreement. Recommendation We recommend that the Municipality maintain constant monitoring to improve program controls. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with the reporting requirements under the Community Development Block Grants/State’s Program and Non-entitlement Grant in Hawaii agreement. Questioned Cost None Prior Year Finding Yes. This finding is similar to prior-year finding 2023-004 and 2024-004. Views of Responsible Officials and Planned Corrective Action We concur with the findings. The Municipality will be implementing the following measures to address the finding related to the late filing of the quarterly reports of the CDBG Program: 1. An accountant was hired to assume direct responsibility for the preparation, review, and filing of the CDBG Program's financial and programmatic reports. 2. Technical guidance was requested and received from the Department of Housing to ensure proper preparation and compliance with applicable reporting requirements. 3. All overdue quarterly reports and corresponding reports were filed until December 2025, including the reconciliation of the requisitioned balances versus the paid balances. 4. An internal compliance calendar was established, with deadlines and administrative supervision, to ensure timely filing in future periods. Implementation Date: December 31, 2025 Responsible Person: Pedro Santiago Federal Programs Director