Finding Text
CDBG Performance Reporting Type of Finding Material Weakness - Internal Control Over Compliance Material Noncompliance - Material to the Major Program New or Repeat Finding New Federal Program(s) Community Development Block Grant/State's Program (ALN 14.228) Federal Agency U.S. Department of Housing and Urban Development Pass-through Entity and Identifying Numbers Texas General Land Office (22-119-003-D373, 22-085-017-D253) Compliance Requirement(s) L. Reporting Criteria The City is required to submit the CDBG PR28 Performance and Evaluation Report (PER) to HUD through the Integrated Disbursement and Information System (IDIS). The PR28 must also be attached to the Consolidated Annual Performance and Evaluation Report (CAPER). HUD requires the PR28 and related attachments to be submitted by deadlines established in CPD Notice 21 11. Timely submission is a direct and material compliance requirement for the CDBG State Program. Condition The City did not prepare or submit the required PR28 Performance and Evaluation Report (PER) for open CDBG State Program grants for the fiscal year ended September 30, 2024. Because the PR28 is required to be submitted as an attachment to the CAPER, failure to complete the PR28 resulted in the CAPER submission also being incomplete and untimely. The PR28 and CAPER were required to be submitted by December 31, 2024, and were not submitted until November 20, 2025. This is the second consecutive year in which the City failed to submit required HUD reports by the established deadline. The recurrence of the issue demonstrates that internal controls were not implemented, not operating effectively, and not sufficient to ensure timely PR28 reporting. Cause The City did not have sufficiently formalized internal controls or a centralized compliance calendar to ensure timely PR28 preparation and submission. Responsibilities for PR28 reporting were not clearly assigned and staff were not fully trained on PR28 requirements. Effect or Potential Effect Noncompliance with HUD PR28 reporting requirements, resulting in incomplete and untimely submission of federally required performance information. Untimely or missing PR28 reports limit HUD’s ability to evaluate program performance, assess expenditure activity, and monitor compliance with program objectives, and may result in delayed reimbursements or additional oversight. Given the recurrence of the issue, the lack of effective corrective actions, and the significance of the PR28 reporting requirement, there is a reasonable possibility that material noncompliance with the major program would not be prevented or detected. Accordingly, this condition represents a material weakness in internal control and material noncompliance. Questioned Costs None Context During the audit period, the City continued to experience resource constraints within its finance and grants management functions. These conditions contributed to delays in compiling the information needed to complete the PR28 report. Because the PR28 was not completed, the CAPER package was also incomplete and submitted well after HUD deadlines. A similar issue was reported in the fiscal year 2023 single audit report dated May 15, 2024, and although the City developed a corrective action plan, the fiscal year 2024 PR28 report was not submitted timely. The recurrence of this issue indicates that the City’s reporting controls were not operating as intended. Recommendation Establish written procedures for preparing and submitting the PR28, designate personnel responsible for completing required HUD reporting, and implement a compliance calendar to track reporting deadlines. Provide training on PR28 requirements and implement review procedures to ensure the PR28 and supporting attachments are completed and submitted on time. Views of Responsible Officials City officials agree with the finding. The City will enhance internal controls over HUD reporting, designate personnel responsible for PR28 preparation, and cross train staff to provide additional coverage. Management is developing written procedures and providing training on PR28 requirements to improve reporting accuracy and timeliness.