Finding Text
Finding Number: 2024‐001
Repeat Finding: No
Program Names/Assistance Listing Titles:
Assistance
Listing
Numbers:
Federal
Award
Numbers:
Questioned
Costs:
Housing Voucher Cluster 14.871 N/A N/A
Coronavirus State and Local Fiscal Recovery Fund 21.207 N/A N/A
Federal Agency(ies): Department of Housing and Urban Development, Department of Treasury
Pass‐Through Agency(ies): Direct, Arizona Governor’s Office
Type of Finding: Noncompliance, Material Weakness
Compliance Requirements: Reporting
Criteria
Under 2 CFR §200.303, the City is required to establish and maintain effective internal controls over
Federal awards that provide reasonable assurance that the City is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In
addition, PHAs submit HUD‐52681‐B monthly to HUD electronically via the VMS. Critical information
from this report including unit months leased, HAP expenses, unrestricted net position
(administrative fee reserves), restricted net position (HAP reserves), and cash in investments should
be accurate and supported. In addition, recipients of Coronavirus Local Fiscal Recovery Fund monies
are required to submit Project and Expenditure Reports either quarterly or annually in accordance
with the SLFRF Compliance and Reporting Guidance issued by the Department of Treasury. In
addition, in accordance with 2 CFR §200.512, the single audit must be completed, and the data
collection form and reporting package must be submitted within the earlier of 30 calendar days after
receipt of the auditor's report(s), or nine months after the end of the audit period.
Condition
The City did not have consistent processes and procedures to track federal grant information and
expenditures. In addition, adequate supporting documentation for amounts reported was not
maintained and the single audit was not submitted timely.
Cause
The City's internal controls were not adequately designed to track federal grant information needed
for the Schedule of Expenditures of Federal Awards (SEFA). In addition, controls over document
retention and report submission did not function as designed.
Effect
The City was not in compliance with federal regulations and guidelines for reporting. Context
The following items were noted:
The City does not have a consistent process to track federal grant information and
expenditures. As a result, $113,998 of Coronavirus Local Fiscal Recovery Fund expenditures
were not reported on the fiscal year 2023 SEFA.
For all three Housing Voucher Cluster monthly financial reports reviewed, the City could not
support how unrestricted net position and restricted net position agreed to the financial
reporting software.
The annual Project and Expenditures Report for the Coronavirus State and Local Fiscal Recovery
Funds program did not have accurately reported obligation or expenditures amounts.
The City's Single Audit Report was not completed and submitted within nine months of fiscal
year‐end.
The sample was not intended to be, and was not, a statistically valid sample.
Recommendation
The City should standardize its process for tracking federal grant information, including the
expenditure amount necessary for SEFA reporting. The City should design and implement effective
internal controls over the review and retention of supporting documentation regarding the amounts
reported. In addition, the City should implement better controls over financial reporting to ensure all
documents are prepared and available for the timely completion of the financial and single audit
reports.
Views of Responsible Officials
See Corrective Action Plan.