Finding Text
FINDING REFERENCE 2025-005 FEDERAL AGENCY U.S. Department of Housing and Urban Development FEDERAL PROGRAM TITLE AND ALN: Community Development Block Grants / State’s Program and Non Entitlement Grants in Hawaii (ALN 14.228) COMPLIANCE REQUIREMENT TYPE OF FINDING Reporting – Financial Reporting (L) (MW) TYPE OF FINDING Material weaknesses in Internal Control (MW), Instance of Noncompliance (NC) CONDITION The Municipality, as a subrecipient of Community Development Block Grant (CDBG) State Program and CDBG-CV funds, did not submit any of the required quarterly financial reports titled “Relación de Ingresos y Desembolsos” to the pass-through entity during fiscal year 2024–2025. Specifically, none of the four (4) quarterly reports required for the fiscal year were submitted, despite the existence of program expenditures and financial activity subject to reporting. CRITERIA Title 2 U.S. Code of Federal Regulations (CFR) 200.328 and 200.329 require subrecipients to submit accurate, complete, and timely performance and financial reports in accordance with the terms andconditions of the Federal award. Additionally, 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal programs to provide reasonable assurance that Federal awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the award. CAUSE OF CONDITION The program staff faced performance challenges due to a lack of staff which caused the accounting records to be delayed. EFFECT OF CONDITION Because the required quarterly financial reports were not submitted, the pass-through entity did not receive timely financial information necessary to monitor program expenditures and compliance with CDBG State Program requirements. RECOMMENDATION We recommend establishing a formal compliance calendar identifying all required CDBG quarterly reports, due dates, and responsible personnel. Also, we recommend the Municipality’s management implement proper internal controls in order to ensure that the reports are submitted timely. QUESTIONED COSTS None. PRIOR YEAR FINDING This finding is new. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The Municipality provides training to personnel responsible for gran reporting, covering the preparation and timely submission of all CDBG financial reports, including proper documentation and reconciliation of program expenditures. The Municipality has assigned a staff member to monitor all grant reporting deadlines and coordinate with the pass-through entity to ensure timely report submissions. IMPLEMENTATION DATE February 23, 2026 RESPONSIBLE PERSON Mrs. Omayra Báez Caraballo Finance Department Director