Finding Text
Finding Reference Number: SA 2021-002 Accurate Financial Reporting in the Annual PR26 Report and Quarterly PR29 Reports
AL Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants (CDBG)
Federal Agency: Department of Housing and Urban Development
Federal Award Identification Number: B-14-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037
Criteria: OMB No. 2506-0077 requires all grantees to submit a PR26 – CDBG Financial Summary Report for the CDBG entitlement Program within 90 days after the year end of the grantee’s program year. The PR26 – CDBG Financial Summary Report is a report that contains summary information from the Integrated Disbursement Information System (IDIS) for the grantee’s program year.
The City is also required to file a C04PR29 Cash on Hand Quarterly Report in the IDIS system within 30 days of the end of each quarter. The report details cash drawdowns and expenditures made during each quarter.
Finally, the City is required to file the PR29, CDBG-CV Cash on Hand Quarterly Report within 10 days after the end of each calendar quarter. The report details cash drawdowns and expenditures made during each quarter.
Condition: During our review of the Program Year 2020 (fiscal year 2021) PR26 report for fiscal year 2021 for the CDBG program, we noted that the data in the PR26 report was inconsistent with the data extracted from IDIS and the Consolidated Annual Performance and Evaluation Report (CAPER) and the City’s general ledger. The exceptions noted were:
• Line 01 - Unexpended CDBG funds at end of previous program year was reported as zero, but the ending unexpended balance in the Program Year 2019 PR26 report was $821,153.
• Line 02 - the entitlement grant included in the PR26 report was $743,872, but it should have been $743,986, which affected other amounts and calculations reported.
• Line 05 – included program income of $165,537, but the City did not have program income during fiscal year 2021. This amount also affects other amounts and calculations reported.
• Line 15 – Total expenditures in the PR26 of $544,405 could not be reconciled to the program expenditures on the SEFA of $485,210.
For the PR26 report for the CDBG-CV program, we understand that the IDIS program does not generate the report by program year, which means the report includes expenditures to the date the report is generated. However, City staff was unable to reconcile the total expenditures on Line 08 of $725,171 to the fiscal year 2021 program expenditures on the SEFA of $414,828.
During our review of the four C04PR29 Cash on Hand Quarterly Reports for fiscal year 2021, we noted that the City was not able to reconcile the cash disbursed total of $723,288 to the program expenditures reported on the SEFA of $485,210 and was not able to reconcile the ending cash balance in the “Summary for 4 Quarters” of $336,748 to the June 30, 2021 general ledger cash balance of $177,768. It was also unclear why the ending cash balance in the Summary of 4 Quarters total of $336,374 did not agree to the cash balance in the fourth quarter report ending balance of $168,374. In addition, the quarterly reports included current year program income of $168,374, although as noted above the City did not receive any program income during fiscal year 2021.
During our review of the PR29, CDBG-CV Cash on Hand Quarterly Reports for fiscal year 2021, City staff was not able to reconcile the cash disbursed total of $254,474 to the program expenditures reported on the SEFA of $414,828.
Effect: The City is not in compliance with the performance reporting requirements of the CDBG program.
Cause: We understand the errors were due to staff oversight.
Recommendation: The City should develop procedures to ensure that all financial reports are reviewed for accuracy prior to submission. In addition, the City should work with the grantor to determine if the City should submit corrected Program Year 2020 PR26 report and fiscal year 2021 Cash on Hand Quarterly Reports, or if the reports can be corrected on a prospective basis during the next reporting period.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.