Finding 1223676 (2025-003)

2025-003 Reporting – PR29 CDBG Cash on Hand Quarterly Report Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Housing and Urban Development Program: 14.218 Community Development Block Grants/Entitlement Grants Award Number and Year: B-20-MC-27-003, 2020; B-20-MW-27-003, 2020; B-21-MC-27-0003, 2021; B-22-MC-27-0003, 2022; B-23-MC-27-0003, 2023; B-24-MC-27-0003, 2024; B-25-MC-27-0003, 2025 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The PR29 – CDBG Cash on Hand Quarterly Report is a required report. The basis of accounting described in the directions is the cash basis. The instructions also state that program income received by the grantee from the beginning date of the reporting period through the end date of the reporting period should be reported under line 8 of the report. Condition: In the sample of two quarterly PR29– CDBG Cash on Hand Quarterly Reports tested, errors were noted in both reports resulting from the City reporting program income as received during the reporting period when it was applied to a project, not when it was received by the City. Questioned Costs: None. Context: The PR29 – CDBG Cash on Hand Quarterly Report is not used to claim reimbursement of federal funds. The population consisted of four PR29 – CDBG Cash on Hand Quarterly Reports submitted during the fiscal year. The sample size of two was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City of Minneapolis is not in compliance with the reporting requirements for the PR29 – CDBG Cash on Hand Quarterly Reports. Cause: The PR29 – CDBG Cash on Hand Quarterly Reports were prepared by a new employee. The new preparer was following earlier guidance provided to the previous preparer by HUD. Recommendation: We recommend that the City of Minneapolis implement procedures to complete reports as required by HUD in its instructions for the preparation of the PR29 – CDBG Cash on Hand Quarterly Report. View of Responsible Official: Acknowledge