Finding Text
Finding 2024-014: Material Weakness in Internal Control and Material Noncompliance – Reporting Assistance Listing Program Title and Number: Community Development Block Grants (CDBG) Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-through Entity: N/A Award year: 2023 – 2024 Criteria or specific requirement: Section 15011 of the CARES Act requires that recipients of $150,000 or more of CARES Act funding submit, not later than 10 days after the end of each calendar quarter, a report containing: information regarding the amount of funds received; the amount of funds obligated or expended for each project or activity; a detailed list of all such projects or activities, including a description of the project or activity; and detailed information on any subcontracts or subgrants awarded by the recipient. For the entitlement funding, quarterly Cash on Hand reports and an annual performance and evaluation report is required. Condition: For the entitlement funding allocated to the City, they were required to submit four quarterly reports during the year and two annual reports. Of the three entitlement reports selected for testing, each one was submitted after the deadline. For the COVID-19 funding allocated to the City, they were required to submit quarterly reports during the year for two separate awards, for a total of eight quarterly reports, and one annual report. None of the required COVID-19 funding reports were submitted during the current year. Cause: The City made their regular appropriation of CDBG monies their primary focus including coming up with a spending plan and completing and submitting the required reports. As a result, none of the reports required to be submitted for the COVID-19 funding were submitted during the current year and the other reports were submitted late or not submitted. Effect: The City is out of compliance relating to various required reports and deadlines. In turn, HUD could deny future requests for reimbursement of eligible expenses or require the City to remit portions of funding back to them. Context: The City was required to submit 15 reports during the year related to the CDBG Cluster, nine of which related to COVID-19 funding. We selected and tested three out of six reports for the non COVID-19 funding and noted they were submitted between 1 day and 3 months beyond the due date. We selected a COVID-19 funding report and noted that it was not submitted, and upon further inquiry we noted that none of the nine reports relating to COVID-19 funding were prepared and submitted. The sample was not intended to be, and was not, a statistically valid sample. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls to ensure all reports are prepared, reviewed and submitted by the due date to the requisite agency. Views of Responsible Officials: Management agrees with the finding.