Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Project Funding (CPF) Program Assistance Listing Number: 14.251 Federal Award Identification Number and Year: B-22-CP-MN-0492, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The Uniform Guidance (2 CFR §200.303) requires non‑federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the award. For the Community Project Funding program, reporting is a compliance requirement and includes submission of required performance and financial reports. Condition: The City did not maintain documentation demonstrating that required reports for the Community Project Funding program were reviewed by someone other than the preparer prior to submission, including the DRGR Performance Report and the DRGR Financial Report. Questioned costs: None. Context: Reporting is a compliance requirement for the Community Project Funding program and includes submission of multiple reports during the award period. The City’s internal control over compliance related to reporting consists of review of reports prior to submission. Instances were identified where evidence of such review was not documented. Cause: Due to limited staffing levels, the City Administrator/Finance Director is responsible for both preparing and reviewing required program reports. As a result, independent review and documentation of report approval is limited. Effect: Lack of documented review of required reports increases the risk that errors or noncompliance in program reporting may occur and not be identified prior to submission, which could result in noncompliance with federal reporting requirements. Repeat Finding: No. Recommendation: We recommend the City implement procedures to ensure appropriate internal controls over compliance related to reporting, including documentation of review and approval of all required reports by someone other than the preparer prior to submission. Views of responsible officials: There is no disagreement with the audit finding. City management acknowledges that limited staffing and experience constrain segregation of duties; however, the City will evaluate and implement procedures to improve documentation of review and approval of required reports for the Community Project Funding program.