Finding Text
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: CA0802L9D012416, CA0802L9D012315, CA1348L9D012410, CA1348L9D012309, CA1510L9D012409, CA1510L9D012308, CA1883L9D012405, CA1883L9D012304, SIHI-25-07, HHI-26-08, SIHI-25-18, HHI-26-11 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 24 CFR §578.73(b): “Notwithstanding 2 CFR 200.306(b)(5), a recipient or subrecipient may use funds from any source, including any other federal sources (excluding Continuum of Care program funds), as well as State, local, and private sources, provided that funds from the source are not statutorily prohibited to be used as a match. The recipient must ensure that any funds used to satisfy the matching requirements of this section are eligible under the laws governing the funds in order to be used as matching funds for a grant awarded under this program.” 2 CFR 200.306(c) states: “Unrecovered indirect costs, including indirect costs on cost sharing, may be included as part of cost sharing with the prior approval of the Federal agency or pass-through entity. Unrecovered indirect cost means the difference between the amount charged to the Federal award and the amount which could have been charged to the Federal award under the recipient's or subrecipient's approved indirect cost rate." Condition: We noted that the Village’s controls did not identify unrecovered indirect costs that were not pre-approved and were determined to be unallowable by the Federal agency. One out of six grants that ended during 2025 did not meet the required 25% match as a result of excluding these unallowable costs. Cause: The Village did not have adequate policies and procedures in place to ensure that only allowable costs were included in the matching pool used to satisfy matching requirements. Effect of Potential Effect: Due to inadequate controls, for one grant, the Village did not meet the matching requirements for the grant period. Not meeting matching requirements may result in repayment of funds and could affect future funding. Questioned Costs: Known Questioned Costs: $41,729 Likely Questioned Costs: $41,729 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Six out of 12 grants ended during 2025. Total required matching costs on the ended grants amount to $1,275,698. Repeat Finding: 2024-008 Recommendation: We recommend Village enhance their policies and procedures to ensure that only allowable costs are utilized to satisfy matching requirements. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures to ensure that the costs in matching pools are appropriately reviewed.