Finding 520237 (2024-013)

2024- 013 Reporting- Special FFATA Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grant Program for Entitlement Communities Assistance Listing Number: 14.218 Federal Award Identification Number and Year: B-23-MC-35-0001 - 2023 Award Period: 7/1/2023 - 9/1/2030 Type of Finding • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of reporting. The City should have internal controls designed to ensure compliance with those provisions. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred 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). The key data elements are to be accurately reported and supported by the source documentation. The action is to be reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure the accuracy of the subaward project description for two of the four subawards. Also, the report was not timely for three of the four subawards. Lastly, the subaward amount was incorrect for one of the four subawards. Questioned costs: None Context: During our testing of special reporting under the requirements of the Federal Funding Accountability and Transparency Act (FFATA), we noted the following instances of noncompliance: transactions tested - 4, subawards not reported - 0; report not timely - 3; subaward amount incorrect - 1; subaward missing key elements - 2; dollar amount of tested transactions -#2,444,598.00; Subaward not reported - $0; Report not timely - $1,444,598; subaward amount incorrect - $1,179,000; Subaward missing key elements - $2,179,000.00 Cause: :tvfanagement oversight. Specific to report not timely, the delay was due to staff turnover. Specific to subaward amount incorrect, the difference was due to the amount used from the investment summary which included the Program Income. Effect: The auditor noted instances of noncompliance with special reporting under the requirements of the FF AT A Recommendation: We recommend the City establish a reporting calendar. We recommend the City periodically reviews the completeness and accuracy of and adherence to the reporting calendar. Also, we recommend the City implement a formal review process of the reporting of first-tier subawards of $30,000 or more to the FSRS. Management Response: The City concurs with the finding. The CDBG contract check list has been updated to include the FF AT A reporting requirement. The Fiscal CDBG Policies and procedures have been modified to include a section on FFATA reporting to be completed with the time frame set forth in the FF AT A requirements. Timeline and Responsible Position: December 2024 - Department of Health, Housing and Homelessness Fiscal Manager