Finding Text
Program: Housing Opportunities for Persons with AIDS (HOPWA)
ALN #: 14.241
Federal Agency: Housing and Urban Development
Federal Award Numbers: MAH22-F005, MAH20-F005, and MAH21-F005
Award Year: July 1, 2022–June 30, 2023
Reporting
Type of finding: Material weakness and noncompliance
Prior-year finding: No
Statistically valid sample: No
Criteria
Special Reporting for Federal Funding Accountability and Transparency Act Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, herein referred to as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., 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). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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 be in compliance 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 City’s Community Development Department did not report awards granted to subrecipients for the HOPWA program by the end of the month following the month in which the City awarded the subrecipient award that is greater than or equal to $30,000 as required by FFATA. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited:
1. Subawardee name
2. Subawardee DUNS/UEI number
3. Amount of subaward
4. Subaward obligation/action date
5. Date of report submission
6. Subaward number
7. Subaward project description
8. Subawardee names and compensation of highly compensated officers
During our testing, we noted that the City did not establish control procedures to submit FFATA reports for all subawards as required by federal regulations. During our testwork of four subawards, we also noted reporting exceptions as subawards were not reported in the required time.
Cause
The condition found was due to the City not reporting any amounts passed through to subrecipients for the period from July 2022 to June 2023, as the responsible officials were not aware of the reporting timeline requirements. As a result, all subawards were reported on a one-year lag.
Effect
Failure to submit all subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government
Questioned Costs
None
Recommendation
We recommend that the City review and enhance its policies, procedures, and internal controls to ensure that all amounts passed through to subrecipients under subawards as defined in 2 CFR 200.1 are reported in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation date for FFATA reporting.
Views of Responsible Officials and Corrective Actions
HOPWA contracts have typically been obligated over the course of several or more months, as some subrecipients operate in different ways. Going forward, the City will use the contract start date (7/1) as the Obligation date, and will submit the FFATA report accordingly.
Implementation Date
8/31/2024 (representing the end of the month following the obligation of funds).
Responsible Officials
Robert Keller, Project Planner, Cambridge Community Development Department, and Judith Tumusiime, Federal Grants Manager, Cambridge Community Development Department