Finding 1224784 (2025-002)

Finding #2025-002 – Material Weakness and Material Noncompliance. Applicable federal program: U.S. Department of Housing and Urban Development, Community Development Block Grants/Entitlement Grants, Assistance Listing #14.218, Passed through the City of Houston, Contract year: 11/07/23 – 10/31/26. Criteria: Schedule of Expenditures of Federal Awards – Management is responsible for preparing a complete and accurate schedule of expenditures of federal awards (SEFA) in accordance with Uniform Guidance §200.510. Condition and context: Management failed to include a federally funded contract on the SEFA for the last two years totaling $522,014. Omitting these expenditures from the SEFA resulted in incorrectly reported federal expenditures. Cause: The omission occurred because the auditee lacked adequate review of grant awards to ensure all federal expenditures were identified and captured. While expenditures for this grant were tracked in the general ledger, the Partnership did not identify the award as federal and therefore did not include the program on the SEFA at year end. Effect: The omission of these expenditures resulted in a material understatement of total federal awards expended on the last two SEFA. Consequently, the program was not included in the total of federal expenditures reported. Recommendation: Develop policies and procedures to identify and reflect all federal programs on the SEFA and reconcile the federal expenditures to the federal program revenue on a routine basis. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.