Finding Text
2025-008: Monthly Reporting Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirement Affected: L. Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: 2CFR § 200.303 Internal controls require a recipient of federal awards to: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City's system of internal control includes a process where grant management staff prepare, review and approve monthly reports for upload to HUD’s VMS system. However, the City was unable to provide documentation about the employee who performed each process or when each process was performed. In addition, the City did not retain documentation that supported the balances reported as part of the original submission to the VMS. Questioned Costs: None noted. Context: The City was unable to provide any evidence of who reviewed and approved the monthly reports prior to submission. Additionally, we were unable to trace certain significant information contained in the monthly reports to supporting underlying data due to the City not retaining GL reports used to prepare the reports. Cause: Due to staff turnover in the Housing Department, evidence of internal controls over compliance and the supporting underlying data were not retained. Effect: Breakdowns in the internal controls over compliance may lead to inaccurate information being reported to HUD. Recommendation: We recommend that the City review and update internal controls over the completion and submission of monthly program reports to ensure the accuracy of the information being reported and to ensure that supporting underlying documentation is properly retained. As part of this process, the City should consider utilizing members of the Finance Department as the monthly reports contain certain financial information. Views of Responsible Officials and Corrective Action: The RBHA established a process by which Housing staff generate the reports required to prepare the VMS and provide the Finance Department staff a copy in order to document timing and ensure additional review. Also, the RBHA and Finance revised the City’s account structure for Housing-related expenses to align with the City’s account setup with VMS reporting. The RBHA will provide monthly reports to the Finance Department and the financial consultant to document the timing of the reports and facilitate an independent review and ensure the monthly submissions are properly reviewed, approved, and retained for audit purposes.