FY 2019 Audit Finding Clearance from U.S. Department of Housing & Copyrighted
J uly 20, 2020
City of Dubuque Consent Items # 22.
City Council Meeting
ITEM TITLE: FY2019 Audit Finding Clearance from U.S. Department of Housing &
Urban Development
SUM MARY: City Manager transmitting information regarding the U.S. Department of
Housing & Urban Development (HUD)Audit Finding Clearance.
SUGGESTED Suggested Disposition: Receive and File
DISPOSITION:
ATTACHMENTS:
Description Type
HUD Audit Finding Clearance-MVM Memo City Manager Memo
Staff Memo Staff Memo
City of Dubuque Audit Finding Clearance Letter Supporting Documentation
Dubuque
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: U.S. Department of Housing & Urban Development (HUD) Audit Finding
Clearance
DATE: July 16, 2020
Housing and Community Development Director Alexis Steger is transmitting information
regarding the U.S. Department of Housing & Urban Development (HUD) Audit Finding
Clearance.
The City of Dubuque Comprehensive Annual Financial Report (CAFR) and audit report
were reviewed by the City Council on April 20, 2020. Noted in the audit report were
findings of a material weakness in the Single Audit for the Community Development
Block Grant. These findings are required to be submitted to the Federal Agency
overseeing the program (HUD) with corrective actions that resolve any continuing
weakness. HUD completed a due diligence follow-up to this submission to ensure the
City of Dubuque's new procedures would correct the material weakness.
The City of Dubuque Housing Department had taken immediate steps to correct
weaknesses the auditors found, even before the official report was released. The
Housing and Community Development Department contracted with the National
Community Development Association to hold a training in Dubuque for CDBG. Holding
the training in Dubuque allowed several City Staff to attend this training, including the
City Attorney, Senior Counsel, Housing and Community Development Staff, Leisure
Services Staff and the City Manager's Office Staff.
Additionally, new procedures for time allocation were put into place. These procedures
were reviewed by HUD and an Audit Finding Clearance Letter was issued to the City of
Dubuque. This letter indicates that the City of Dubuque is ensuring weaknesses in the
program are being corrected, and HUD agrees that the City remains in good standing
based on these corrective actions.
v
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Teri Goodmann, Assistant City Manager
Cori Burbach, Assistant City Manager
Alexis M. Steger, Housing & Community Development Director
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Dubuque City of Dubuque
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TO: Michael C. Van Milligen, City Manager
FROM: Alexis M. Steger, Housing & Community Development Director
DATE: July 15, 2020
RE: U.S. Department of Housing & Urban Development (HUD) Audit Finding Clearance
BACKGROUND
The City of Dubuque Comprehensive Annual Financial Report (CAFR) and audit report were
reviewed by the City Council on April 20, 2020. Noted in the audit report were findings of a material
weakness in the Single Audit for the Community Development Block Grant. These findings are
required to be submitted to the Federal Agency overseeing the program (HUD) with corrective actions
that resolve any continuing weakness. HUD completed a due diligence follow-up to this submission to
ensure the City of Dubuque's new procedures would correct the material weakness.
DISCUSSION
The City of Dubuque Housing Department had taken immediate steps to correct weaknesses that
auditors found, even before the official report was released. The Housing Department contracted with
the National Community Development Association to hold a training in Dubuque for CDBG. Holding
the training in Dubuque allowed several City Staff to attend this training, including the City Attorney,
Senior Counsel, Housing & Community Development Staff, Leisure Services Staff and the City
Manager's Office Staff.
Additionally, new procedures for time allocation were put into place. These procedures were reviewed
by HUD and the attached Audit Finding Clearance Letter was issued to the City of Dubuque. This
letter indicates that the City of Dubuque is ensuring weaknesses in the program are being corrected,
and HUD agrees that the City remains in good standing based on these corrective actions.
REQUESTED ACTION
No action is requested by the City Council. This memorandum is for information purposes only.
Cc: Jenny Larson, Finance and Budget Director
Teri Goodmann, Assistant City Manager
Service People Integrity Responsibility Innovation Teamwork
��e�n�Nr o.r
tiaP , yo, U.S.Department of Housing and Urban Development
; ��oo�;�ll � � Omaha Field Office
°� IIIIIIII n� Edward Zorinsky Federal Building
Gy q� 1616 Capitol Avenue,Suite 329
g�"oE��`� Omaha, Nebraska 68102-4908
July 13, 2020
Ms. Alexis Steger
Housing and Community Dev Director
City of Dubuque
350 West 6th Street
Suite 312
Dubuque, IA 52001
Dear Ms. Steger:
Subject: 2 CFR Part 200 Audit Findings
Audit for Fiscal Year ending June 30, 2019
City of Dubuque
We are in receipt of your June 26, 2020 letter responding to our May 27, 2020 letter
regarding one of the two findings identified in the agency's Single Audit for the fiscal year ending
June 30, 2019 that relates to the Community Development Block Grant (CDBG) program (the
other finding was cleared in our May 27, 20201etter). We accept your response and consider the
audit closed for our purposes.
2019-002 US Department of Housing and Urban Development
CDBG—Entitlement Grants Cluster
CFDA# 14.218 Community Development Block Grant/Entitlement Grants
Federal Award Numbers B-17-MC-19-0004, B-17-MC-19-0004, B-17-MC-19-0004, and
B-17-MC-19-0004 for the fiscal year ended June 30, 2019
Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: A properly designed system of internal control over compliance with the requirements
of federal programs allows entities to meet those requirements set forth by the federal government
in administering federal grants. The Uniform Guidance (2 CFR 200.430) requires charges to
Federal awards for salaries and wages must be based on records that accurately reflect the work
performed. Records must support the distribution of the employee's salaries or wages among
specific activities or cost objectives.
Condition: During our testing of payroll expenditures and related time sheets, we noted that the
time sheets maintained as part of the City's records did not reflect the specific activities being
performed by the employee.
Cause: The City's internal controls over compliance are not properly designed to capture the
information required by Uniform Guidance.
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Effect: The City did not comply with the Uniform Guidance regarding employee records.
Questioned Costs: Salaries and benefits of$246,995 were included in program eXpenditures. We
were unable to determine the amount of questioned costs, if any, because we were unable to
determine the actual time incurred by the employees.
Context/Sampling: A non-statistical sample of 60 transactions, which included 10 payroll related
items were selected for testing. The 10 payroll items tested accounted for$32,000 of the$246,995
of salaries and benefits included in program expenditures.
Repeat Finding from Prior Year(s): No
Recommendation: We recommend the City develop, document, and retain a formal time study that
complies with the requirements of the Uniform Guidance.
Views of Responsible O�cials: We agree with the auditor's comments. The following action will
be taken to improve the situation. The City of Dubuque is recording salary and wages based on
actual activities performed in a day on timesheets, backed by outlook calendar attachments until
another time study can be completed. The time study completed in FY 2019 was over 3 months
and was documented by 30-minute intervals for each activity completed. Unfortunately,not every
employee's documentation was placed in the permanent payroll files and was therefore unavailable
for review and needs to be re-created in a new time study.
Responsible Individuals: Alexis Steger, Housing and Community Development Director
Anticipated Completion Date: June 30, 2020
HUD Management Decision: HUD sustains the Audit Finding.
HUD Required Corrective Action: The City is advised to submit a written policy that addresses
the allocation of staff wages to the CDBG program. Include samples of timesheets and
descriptions of systems that are used to track staff time by activity. Also describe the training
policy that includes who was trained and when they were trained.
Grantee's Response: The agency submitted details concerning training completed with staff,
specifically identifying who was trained and the nature of the training. Also, attached to the
letter were examples of timesheets and supporting documentation for time allocated to the
CDBG program. Please send us the updated Standard Operating Procedures for
timekeeping when completed.
2019-003 US Department of Housing and Urban Development
CDBG—Entitlement Grants Cluster
CFDA# 14.218 Community Development Block Grant/Entitlement Grants
Federal Award Numbers B-17-MC-19-0004, B-17-MC-19-0004, B-17-MC-19-0004, and
B-17-MC-19-0004 for the fiscal year ended June 30, 2019
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Reporting
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: Federal regulations require the submission of quarterly financial reports of the program.
Condition: Required quarterly reports for September 30, 2018 and December 31, 2018 were not
filed with the granting agency.
Cause: Staff turnover resulted in a miscommunication on the responsibility for submitting the
quarterly reports (SF-425).
Effect.• The City did not comply with the reporting requirements.
Questioned Costs: None.
Context/Sampling: 2 of the 4 quarterly reports were not filed.
Repeat Finding from PNior Year(s): No
Recommendation: We recommend the City develop and implement procedures to ensure reports
are prepared and reviewed in compliance with the reporting requirements of the grant.
Views of Responsible Officials: We agree with the Auditor's comments. Officials found that HUD
informs only those on the distribution list when a report is missing. This allowed a single employee
to ignore the requests for quarterly reporting, without raising the awareness of anyone else in the
organization that the reports were not completed. The following action will be taken to improve
the situation. The City of Dubuque has mandated two employees receive notifications from HUD.
Additionally, one employee is responsible for the preparation of the report, another is responsible
for review and submission of the report. The Director is then responsible for the signature of
approval. This ensures that three employees have responsibility and sign offto check the quarterly
report has been submitted. Additionally, the Community Development Advisory Commission
adopted a schedule of Federally Required Submissions, so they can monitor the status of those
submissions. Employees that prepare the agenda for the Commission are not part of the submission
process, and therefore are a secondary control to ensure the Commission receives documentation
that required reports are filed. Commission meeting minutes from the Community Development
Advisory Commission are placed on the City Council agenda far review and approval; therefore,
a third control mechanism for ensuring required documentation is submitted timely.
Responsible Individuals: Alexis Steger, Housing and Community Development Director
Anticipated Completion Date: June 30, 2020
HUD Management Decision: HUD sustains the Audit Finding.
HUD Required Corrective Action: We accept the City's corrective action as outlined in the
audit. No further response is required.
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If you have any questions regarding this letter, please contact Mr. Greg Cecil, Senior
Financial Analyst, at 402-492-3148.
Sincerely,
Digitally signed by:
��� �Francis Tim Severin
l
( Date: 2020.07.13
07:27:15-05'00'
Tim Severin
Director
Community Planning and
Development Division