Program: Community Development Block Grant (CDBG)
ALN #: 14.218
Pass-through Entity: N/A- Direct Award
Federal Agency: Department of Housing and Urban Development
Federal Award Year: July 1, 2023–June 30, 2024
Compliance Requirement: Performance Reporting
Type of finding: Material weakness and noncompliance
Criteria
Special Reporting for Federal Funding Accountability and Transparency Act
Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, herein referred to 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). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts.
Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the
federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City’s Community Development Department (CDBG) did not report awards granted to subrecipients for the CDBG program by the end of the month following the month in which the City awarded the subrecipient award. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited:
1. Subawardee name
2. Subawardee DUNS/UEI number
3. Amount of subaward
4. Subaward obligation/action date
5. Date of report submission
6. Subaward number
7. Subaward project description
8. Subawardee names and compensation of highly compensated officers
During our testing, we noted that the City did not establish control procedures to submit FFATA reports for
all subawards as required by federal regulations.
Cause
The condition found was due to the City not reporting amounts passed through to subrecipients for the period from July 2023 to June 2024, as the City typically reports these on a one-year lag due to the timing of when the contract starts and its final execution.
Proper perspective
During our testing of the three selected subawards, we noted reporting exceptions as subawards were not reported within the one month following the month that the City awarded the subrecipient contract. Additionally, there was a control exception to ensure that the data submitted is complete and accurate.
Possible asserted effect
Failure to submit subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government.
Questioned costs
None noted
Statistical sampling
The sample was not intended to be, and was not, a statistically valid sample.
Repeat finding
A similar finding was not reported in the prior year.
Recommendation
We recommend that the City review and enhance its policies, procedures, and internal controls to ensure
that all amounts passed through to subrecipients under subawards, as defined in 2 CFR 200.1 are reported
in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation
date for FFATA reporting.
Views of responsible officials and corrective actions
The City has taken several steps to strengthen its FFATA compliance. Historically, FFATA reporting posed
challenges for many recipients, including the City, due to legacy reporting systems that did not fully align
with the requirements of SAM.gov. As part of its compliance improvement efforts, the City has transitioned
to directly reporting subaward data in SAM.gov. This shift necessitated a thorough review of internal
processes, particularly because many of the City's subrecipient contracts are designed to begin on July 1 of
each fiscal year but are not fully executed until months later, after the HUD-signed grant agreement is
received, which generally occurs between late September and November. These timing discrepancies
previously made it difficult to consistently identify and use the correct obligation date for FFATA reporting.
The Federal Grants team initially used a manual Excel-based system to compile FFATA data from fully
executed contracts. Each contract contains the essential elements required for FFATA reporting, including the Assistance Listing (CFDA) number, the City's and subrecipient's UEI numbers, agency name and
address, award amount, and a brief program description. This spreadsheet served as the foundation for
reporting subawards in SAM.gov. To address these issues, the City has established an updated
standardized data collection and tracking mechanism.
In response to this audit finding, the City has implemented the following corrective actions:
1.Standardized Data Collection:
An updated subrecipient data collection form has been developed to ensure consistent and complete
capture of all required FFATA elements prior to contract execution.
2.Formal Tracking System:
The City created a FFATA Tracking Spreadsheet to systematically document and monitor all required
reporting elements, including the correct obligation date, which is now tied to the legal execution date of the
subaward.
3.Policy and Procedure Development:
FFATA reporting policy and procedures have been developed to codify roles, timelines, and compliance
responsibilities. This includes guidance on identifying the proper obligation date, data verification steps,
and the timeline for submission to SAM.gov (within 30 days of obligation).
4.Staff Training and Oversight:
Relevant staff will be trained on FFATA compliance requirements, and the Grants Management Division
will conduct quarterly spot checks to ensure accuracy and timeliness of reporting.
These corrective actions reflect the City's commitment to strengthening its federal grant oversight and
ensuring full compliance with FFATA regulations.