Finding 480930 (2018-001)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2018
Accepted
2024-08-12
Audit: 317044
Organization: City of Compton (CA)

AI Summary

  • Core Issue: The City did not submit the required SF-425 Federal Financial Report, preventing accuracy testing of report information.
  • Impacted Requirements: Non-compliance with OMB regulations and HUD guidance regarding financial reporting and CAPER submission.
  • Recommended Follow-Up: Strengthen internal controls for report preparation and ensure timely submission of all required reports, including the SF-425 and CAPER.

Finding Text

Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI sections 3.2-L-1 and 4-14.218-10 states: "Recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the Federal awarding agency. Each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency." For CDBG, the City is required to submit the following reports. * SF-425 - Federal Financial Report * C04PR03 - Activity Summary Report * C04PR26 - CDBG Financial Summary * HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low- Income Persons, (OMB No. 2529-0043) U.S. Department of Housing and Urban Development (HUD) guidance titled, "Using IDIS to Prepare the Consolidated Plan, Annual Action Plan, and CAPER/PER," states: "Within 90 days after the end of its program year, a grantee must submit a Consolidated Annual Performance and Evaluation Report (CAPER). The primary purpose of the CAPER is to report on progress in meeting one-year goals described in the Annual Action Plan and long-term goals described in the Consolidated Plan." Condition: The City was unable to provide the required SF-425 Federal Financial Report. We were therefore unable to perform testing on report information accuracy. Cause: Lack of internal control over the preparation, review, and submission of the financial reports. Effect or Potential Effect: The City's failure to comply with stated rules and regulations over the required reports increases the risk that inaccurate or incomplete information will be reported. Questioned Cost: No costs identified Context: The SF-425 Federal Financial Report was not available for review. Auditor therefore cannot perform reporting testing on the SF-425 report. Upon search made in hudexchange.info, the online platform for HUD program information, no CAPER appears to have been submitted for the 2016 program year (FY 2016-2017). The CAPER was completed and timely submitted for the 2017 program year (FY 2017-2018). The City was able to provide the C04PR03 and C04PR26 reports. Repeat of a Prior-Year Finding: 2017-001, 2016-002, 2015-003, 2014-005

Corrective Action Plan

Recommendation: The City should strengthen its process over the preparation of its reports to ensure the reports are based on the applicable accounting and performance records. City staff should ensure that these reports are not only prepared, but also reviewed for accuracy and completeness prior to submission. The City should have a process to ensure that all required reports are prepared, reviewed, and submitted on a timely basis. This addresses COSO's Control Activities, Principle 10: selects & develops control activities and Information & Communication, Principle 15: communicates externally. Management Response and Corrective Action Plan City's Response: The City concurs with the recommendation. Corrective Action Plan: submission of all financial reporting and reimbursement requests. Also, procedures will be established to ensure these are revisited and given attention to on a monthly basis. This will include training of a grant coordinator and training of various grant program personnel to establish policies and procedures for compliance with terms of the grant. These procedures will also include review of reports and maintaining required documentation show proof of performance reporting. In the meantime, the Grants and City Controller department will take steps to address the specific finding noted above. Planned Implementation Date: June 30, 2020 Responsible Person: Aubrey Relf, Grants Manager and Rafaela King, Controller

Categories

Reporting

Other Findings in this Audit

  • 480931 2018-002
    Material Weakness Repeat
  • 480932 2018-003
    Material Weakness Repeat
  • 480933 2018-004
    Material Weakness
  • 480934 2018-005
    Material Weakness
  • 480935 2018-006
    Material Weakness Repeat
  • 480936 2018-007
    Material Weakness Repeat
  • 480937 2018-008
    Material Weakness Repeat
  • 480938 2018-009
    Significant Deficiency Repeat
  • 480939 2018-010
    Material Weakness Repeat
  • 1057372 2018-001
    Material Weakness Repeat
  • 1057373 2018-002
    Material Weakness Repeat
  • 1057374 2018-003
    Material Weakness Repeat
  • 1057375 2018-004
    Material Weakness
  • 1057376 2018-005
    Material Weakness
  • 1057377 2018-006
    Material Weakness Repeat
  • 1057378 2018-007
    Material Weakness Repeat
  • 1057379 2018-008
    Material Weakness Repeat
  • 1057380 2018-009
    Significant Deficiency Repeat
  • 1057381 2018-010
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $8.17M
14.218 Community Development Block Grants/entitlement Grants $614,545
14.239 Home Investment Partnership Program $282,232
14.218 Community Development Block Grants/state's Program $12,142
14.231 Emergency Shelter Grants Program $10,091
16.738 Edward Byrne Memorial Justice Assistance Grant $6,227