Finding Text
Issue: Lack of Controls Surrounding Oversight of Federal Expenditures
Classification: Material Weakness
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: Community Development Block Grants/States Program
Assistance Listing Number: 14.228
Pass-Through Agency: NYS Office of Community Renewal
Criteria: Internal controls over financial reporting should be properly designed, implemented, and monitored to ensure all material
transactions are recorded properly.
Condition: No controls could be derived related to funding that was expneded by another organization after being passed through the City.
Cause: The City experienced significant turnover within key positions of the Finance and Administration department, which caused
controls for oversight of funds distributed to be overlooked, including proper recording and retention of supporting documentation.
Effect or Potential Effect: Adjustments were recorded in several funds, as discussed below under "Context", as a result of audit procedures.
Questioned Costs: None.
Context: Audit adjustments, as summarized below, were recorded in the noted funds as a result of our audit procedures. These audit
adjustments have also been communicated separately in our required communications letter.
Repeat Finding: This is not a repeat finding.
Recommendation: We recommend that the City implement processes to monitor and reconcile account balances and record transactions in the proper
period. Adjustments that are necessary should be recorded and supporting documentation should be retained when available.
Views of Responsible Officials of the Auditee:
The City experienced substantial turnover in 2021 including the departure of both the Finance Director and Deputy Director,
followed by additional retirements over the next fiscal year. With the multiple vacancies and limited succession planning, it made
it challenging for new staff to meet the demands of current operations with vacancies. Prior practices relied heavily on institutional
knowledge, year-end adjustments and audit journal entries to identify federal grant expenditures. In addition, there remains a lack
of centralized grant and contract awards which contributed to the lack of detailed tracking of information and timely reporting of
information requested by the auditor, in order to complete financial statements for submission deadlines outlined in Uniform
Guidance, §200.512.