Finding 1240594 (2024-001)

Finding 2024-001: Subrecipient Monitoring Federal Agency: U.S. Department of Housing and Urban Development Program Name: COVID 19 — HOME Investment Partnerships Program and HOME Investment Partnerships Program (HOME) - ALN 14.239; Award Identification Number: MC420501 Criteria of Specific Requirement: Per 2 CFR 200.332, a pass-through entity must monitor the activities of subrecipients as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Condition: During our testing of subrecipient monitoring, we noted that the City did not perform required monitoring procedures during the year. Questioned Costs: Unknown Cause: The City did not have adequate internal controls in place to ensure compliance with subrecipient monitoring requirements, and staffing turnover contributed to the lack of oversight. Effect: The City was not in compliance with subrecipient monitoring requirements. Identification as a Repeat Finding: This is not a repeat finding from the prior audit. Recommendation: We recommend the City implement controls to ensure compliance with subrecipient monitoring, documenting monitoring activities performed and following up on any identified deficiencies in a timely manner. Views of Responsible Officials and Planned Corrective Actions: Management agrees; see corrective action plan below. History The City initiated monitoring of the HOME program in March 2023, and the local office of the Department of Housing and Urban Development (HUD) initiated its own monitoring in June 2023. To avoid duplicative work, the City shifted its approach and reviewed closed programs while HUD monitored open programs. These monitoring efforts resulted in significant updates to program policies and procedures. The City's monitoring was completed in October 2023 and HUD's monitoring was finalized in October 2024. Corrective Action Plan Since October 2024, the City has collaborated with its subrecipient, the Urban Redevelopment Authority (URA), to implement a streamlined, informal quarterly review process. While formal HOME monitoring has not occurred since the end of the HUD monitoring, the City will initiate a review before the end of 2025 to return to compliance. Monitoring will occur annually moving forward.