Finding Text
2023-005 - Reporting – Internal Control and Compliance over Reporting (Material Weakness)
Information of the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-21-MC-06-0554
B-20-MW-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Community Development Block Grants-Entitlement Grants Cluster
The OMB Compliance Supplement requires that reports submitted to the Federal awarding agency include all activity of the reporting period, are supported by underlying accounting information and are presented in accordance with program requirements.
Pursuant to the Guidance on Cash on Hand Quarterly Report (replaced the Federal Financial Report, SF-425) and financial reporting requirements in the cooperative agreement provisions, and 2 CFR 200.327:
Quarterly reports: Program award recipients must submit Cash on Hand Quarterly Report reports to HUD quarterly, 30 days after the reporting period end date. Each report must cover all expenditures on the cooperative agreement from the start date of the reporting period to the reporting period end date. The following federal fiscal year quarter reporting period will be used for all quarterly reports, are due to HUD 30 days after the period end dates noted below:
Reporting Period: Quarter 1: 7/1-9/30 Quarter 2: 10/1-12/31 Quarter 3: 1/1-3/31 Quarter 4: 4/1-6/30
Due Date of Report: October 30 January 30 April 30 July 30
Community Development Block Grants-Entitlement Grants Cluster (Continued)
Pursuant to Guidance on Section 15011 of the CARES Act requires that recipients of $150,000 or more of CARES Act funding submit, not later than 10 days after the end of each calendar quarter, a report containing: information regarding the amount of funds received; the amount of funds obligated or expended for each project or activity; a detailed list of all such projects or activities, including a description of the project or activity; and detailed information on any subcontracts or subgrants awarded by the recipient. This report is limited to Community Development Block Grants/Entitlement Grants Cluster - COVID-19 funding and does not include other Community Development Block Grants/Entitlement Grants Cluster funds that may be used to address coronavirus. Grantees and subrecipients have reported data meeting the Section 15011 requirements at usaspending.gov. The Pandemic Response Accountability Committee (PRAC), an independent oversight committee within the Council of the Inspectors General on Integrity and Efficiency, has determined that the data reported in usaspending.gov has fulfilled these reporting requests. (“Section 15011 Report”).
Housing Voucher Cluster
Per 24 CFR § 5.801(d)(1) - Uniform financial reporting standards, unaudited financial statements will be required 60 days after the Public Housing Authority’s (“PHA”) fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA's fiscal year end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F.
The PHA is required to submit the HUD-52681-B, Voucher for Payment of Annual Contributions and Operating Statement form monthly to HUD electronically via the Voucher Management System (VMS). Congress has instructed HUD to use VMS data to determine renewal funding levels. HUD also uses VMS data for other funding, monitoring, and SEMAP- related decisions.
Condition:
As a result of our test work, we noted the following exceptions:
Community Development Block Grants-Entitlement Grants Cluster
The City did not submit the required Cash on Hand Quarterly Report in a timely manner. The quarterly Cash on Hand Quarterly Report for the all of the four (4) reporting periods were submitted on February 26, 2024.
The City did not submit any of the four (4) quarterly Section 15011 Reports for the year ended June 30, 2023.
Housing Voucher Cluster
The audited Financial Data Schedule (FDS) for the fiscal year ended June 30, 2022 was not submitted on or before the March 31, 2023 due date. The unaudited Financial Data Schedule (FDS) for the fiscal year ended June 30, 2023 was not submitted on or before the August 31, 2023 due date.
Housing Voucher Cluster (Continued)
We also noted for 2 out of 4 VMS reports tested, there was no evidence of review and approval prior to submission to HUD. A nonstatistical sample of 4 out of 12 VMS reports were selected for test work.
Cause:
Community Development Block Grants-Entitlement Grants Cluster
There was a change in personnel monitoring the compliance requirements for CDBG reporting, and there was no proper task delegation and turnover made upon separation of the previously assigned staff. Hence, the staff assuming the post was unable to meet the due date to ensure filing the Cash on Hand quarterly reports timely, and also was not aware of the Section 15011 CARES reporting.
Housing Voucher Cluster
Due to the effects of COVID-19 and staff turnover, the program’s procedures did not consistently ensure that the reports were submitted timely in accordance with the timelines in the Uniform Guidance, or properly reviewed and approved prior to submission.
The City has implemented internal controls designed to review the VMS report prior to submission, effective starting in March 2023, in an effort to address the finding noted during the audit for the year ended June 30, 2022. Due to the timing of implementation, any VMS report prior to March 2023 do not have any evidence of approval before submission.
Effect or Potential Effect:
Community Development Block Grants-Entitlement Grants Cluster
Delay in filing and not filing the reports resulted in noncompliance with the compliance requirements.
Housing Voucher Cluster
Failure to submit the audited FDS timely results in noncompliance with the compliance requirements. Failure to review the VMS reports prior to submittal can result in errors going undetected by management.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2022-005.
Recommendation:
We recommend that the City strengthen their report submission process and procedures to ensure all required reports are properly reviewed and approved and submitted timely. When a report cannot be submitted by the due date, the City should request an extension from the funding agency and maintain a record of the approval.
Views of Responsible Officials:
Management concurs the finding.