Finding 1221507 (2025-003)

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grants (CDBG) Assistance Listing Number: 14.228 Pass-Through Agency: State Department of Housing and Community Development Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Compliance Requirement: Allowable Costs/Cost Principles Criteria: Under the CDBG program requirements and HOME affordability/occupancy provisions, the County is required to ensure that assisted properties remain owner-occupied as a primary residence for the applicable affordability period. This includes maintaining documentation, such as certificates of occupancy or equivalent verification, to support ongoing compliance. Condition: During testing of continued compliance requirements, we noted that the department did not obtain a certificate of occupancy to verify that the loan recipient continues to occupy the property as their primary residence. Questioned Costs: None Context: Out of 8 loan files tested, 1 loan did not include documentation verifying continued occupancy of the assisted property. Cause: The condition appears to be due to insufficient procedures or oversight to ensure that required occupancy documentation is obtained and retained as part of ongoing monitoring activities. Effect: Failure to verify and document continued occupancy may result in noncompliance with program requirements and could increase the risk of ineligible use of program funds. This may also lead to increased monitoring or potential repayment of funds. Repeat Finding: No Recommendation: CLA recommends that the County establish and implement procedures to ensure continued compliance with occupancy requirements, including:  Obtaining and retaining certificates of occupancy or other appropriate documentation to verify primary residence status as part of the CDBG/HOME loan reconciliation workbook process.  Implementing periodic monitoring procedures for loan recipients.  Maintaining documentation in loan files to support compliance throughout the affordability period. View of Responsible Officials: There is no disagreement with the audit finding.