Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: 14.218 Entitlement Grants Cluster: Community Development Block
Grants/Entitlement Grants
Identification Number: B-15-MC-42-0018; B-16-MC-42-0018; B-17-MC-42-0018; B-18-MC-42-0018; B-19-
MC-42-0018
Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of
Performance; Reporting; Special Tests and Provisions
Type of Finding: Material weakness in internal control over major program; Noncompliance
Criteria: Auditee responsibilities as outlined in section 2 CFR 200.508 include providing the auditor with access
to personnel, accounts, books, records, supporting documentation, and other information as needed for the
auditor to perform the audit.
Condition: Supporting documentation related to the major program was not provided to the auditor due to various
factors, all subsequent to year end, including turnover of all key personnel, the destruction of the City’s servers
and the conversion to a new accounting system leaving the old accounting system widely unused and
unsupported, the completeness and availability of all records, management has been unable to produce records
to support the following: material balances stated in the accompanying financial statements, compliance with
laws and regulations; the identification and disclosure of all laws, regulations, and provisions of contracts and
grant agreements directly and materially affecting the determination of financial statement amounts and; the
presence or absence of fraud involving management or employees with significant roles in internal control;
compliance with laws, regulations, and provisions of contracts and grant agreements, including budget laws,
compliance with any debt covenants, identification of subsequent events, commitments and contingencies, the
identification of all Federal assistance programs and compliance with Federal grant requirements. Additionally,
the amount of time which has passed since the year end under audit has further exacerbated these issues. We
were unable to satisfy ourselves by other audit procedures concerning these balances and disclosures.
Cause: Management determined sufficient information could not be provided to satisfy the audit requirements.
Effect: Noncompliance with federal regulations can result in the federal government imposing additional
requirements or withholding, disallowing or suspending grant funding.
Context: Audit evidence for direct and material compliance requirements related to the major program noted
above was not provided. This included the corresponding grant agreements for the five awards under this
program listed on the SEFA.
Recommendation: Program directors and administrators should work together to ensure supporting
documentation for federal awards is appropriately maintained.