Finding 1229733 (2025-001)

Criteria: The CDFI ERP Assistance Agreement and applicable CDFI Fund reporting instructions require recipients to accurately report program activity and use of award funds through required Performance Progress Reports and Use of Award Reports. Condition: During our testing of the Credit Union’s compliance with the reporting requirements of the CDFI ERP grant, we noted that $400,000 of ERP funds used to fund the allowance for credit losses was not included in the Credit Union’s Performance Progress and Use of Award Reports submitted to the CDFI Fund. The underlying use of the funds was in compliance with the ERP grant; however, the related activity was omitted from the required reporting. Cause: The Credit Union’s review process over federal grant reporting did not identify that the allowance for credit losses activity had been omitted from the required CDFI reports prior to submission. Effect: The reports submitted to the CDFI Fund did not completely reflect the Credit Union’s use of ERP award funds. Although the omitted expenditures were allowable and no questioned costs were identified, the reporting omission resulted in noncompliance with the program’s reporting requirements. Recommendation: We recommend that the Credit Union strengthen its review procedures over federal award reporting to ensure that all reportable uses of grant funds are included in required submissions. Such procedures should include a reconciliation of amounts reported to the CDFI Fund to the Credit Union’s general ledger, grant activity records, and other support prior to submission. Questioned costs: None. Views of responsible officials and planned corrective action: Management agrees with the finding. The Credit Union will enhance its review process over CDFI reporting by performing a documented reconciliation of grant activity prior to submission to the CDFI Fund.