Finding 388521 (2023-004)

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grants ALN: 14.218 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Prior Year Finding: Yes Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with 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 Department of Housing and Urban Development did not report subaward information timely to FSRS during FY 2023. Context: Forty out of forty subawards selected for testing were due on 8/31/2022 and were not reported to FSRS until 11/3/2022, or 76 days late. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 5 0 5 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $ $0 $ $0 $0 Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.