Finding 571434 (2024-001)

The Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282, as amended by Section 6202 of Public Law 110-252, hereafter referred to as the “Transparency Act” that is codified in 2 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of Appendix A to 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management’s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management’s objectives are achieved. The City is considered a direct recipient for federal funds applicable to Transparency Act reporting and is expected to report the subawards obligated in accordance with the Transparency Act. During the audit period, the City disbursed approximately $1.34 million in funding from the AL No. 14.241 Housing Opportunities for Person with Aids (HOPWA) and $10.7 million in funding from AL No. 14.218 Community Development Block Grants/Entitlement Grants (CDBG) federal programs to 47 first-tier subawardees that exceeded $30,000. The City was required to report these subawards to the FSRS website in accordance with the Transparency Act. The Department of Community Development manages the reporting for these programs. During the period under audit, it was determined the Department did not report any of the information in the FFATA FSRS for the HOPWA and CDBG grants. Insufficient internal controls over the preparation and review of reports increase the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with Federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information.