Finding 540429 (2024-002)

Finding 2024-002: Continuing Loan Compliance Significant Deficiency - Noncompliance Federal Award Information: Assistance Listing Number: 14.218 Program Title: CDBG – Entitlement Grants Cluster Federal Award Year(s): FY 2023-24 Name of Federal Agency: U.S. Department of Housing and Urban Development SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement: The City was unable to provide compliance supporting documentation for the CDBG loan proof of insurance and/or residency compliance requirements for the year ended June 30, 2024. Condition: We noted that of the loan balances that we sampled, the City was unable to provide supporting documentation for proof of insurance and/or residency for 2 of the selected loans. Cause of the Condition: Per our inquiries with the City, due to the significant age of the selected loans, City personnel were unable to obtain the supporting documentation as a significant number of the selected loans had inception dates of ten years or more. Additionally, there wasn’t a clear understanding of the compliance requirements to be performed by the grant administrator. Effect or Possible Effect: Adequate supporting documentation of outstanding loans are not being effectively maintained and archived by City personnel. Context: Out of the loans selected, City was unable to provide documentation on the monitoring procedures. Repeat Finding: N/A Recommendation: We recommend that management monitors each loan to ensure that the City maintains the most up-to-date information. Management Response The City acknowledges the finding regarding the lack of supporting documentation for ongoing compliance with the CDBG loans. The City will implement audit recommendations and maintain all compliance-related documentation on a regular basis to ensure all necessary documents are maintained such as proof of insurance and/or residency compliance requirements.