City of Aurora, ColoradoLocal Government

Reporting – Special Reports for FFATA and Subrecipient Monitoring Assistance Listing Number 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants U.S. Department of Housing and Urban Development (HUD) Federal Award Identification Number(s): B-22-CP-CO-0165 Award Year – 2022 Criteria or specific requirement(s): In accordance with the Federal Funding Accountability and Transparency Act (FFATA) and 2 CFR Part 170, recipients are required to report applicable first-tier subawards of $30,000 or more, including required data elements, in SAM.gov by the end of the month following the month in which the subaward obligation was made. Furthermore, pursuant to 2 CFR § 200.332(a), pass-through entities are required to clearly identify federal award information and communicate all applicable federal requirements, terms and conditions, and compliance requirements to subrecipients at the time of the subaward. Required information includes, among other items, the Assistance Listing number and name, federal award identification information, indirect cost rate and any additional requirements imposed by the pass-through entity so that subrecipients can properly administer the federal award and comply with applicable federal requirements. Condition: During testing of FFATA reporting requirements, we noted that the City had one applicable first-tier subrecipient; however, the City did not report the subaward information in SAM.gov. Additionally during testing of subrecipient monitoring, we noted the City did not communicate required federal award information or increase in funding to its sole subrecipient as required by 2 CFR § 200.332(a). Cause: The City experienced a delay in receiving the federal award and initially funded the subaward with nonfederal resources. After the federal award was received and the related expenditures were identified as federally funded, the City did not have a process to update the subaward, communicate the federal award information and funding increase to the subrecipient, or evaluate FFATA reporting requirements. As a result, the required subaward information was not reported in SAM.gov or communicated to the subrecipient. Effect or potential effect: Failure to report the applicable first-tier subaward in accordance with FFATA requirements resulted in noncompliance with federal reporting requirements and reduced transparency over the use of federal funds by preventing complete and accurate subaward information from being available through federal transparency reporting systems. In addition, failure to communicate required federal award information to the subrecipient increases the risk that the subrecipient would be unaware of applicable federal requirements and unable to properly administer the award in accordance with federal regulations and the terms and conditions of the subaward. Questioned costs: None Context: The City had one subrecipient during the audit period. The following testing was performed related to FFATA reporting: Transactions Tested -1 Subaward not reported -1 Report not timely -1 Subaward amount incorrect - Unable to test due to subaward no tbeing reported Subaward missing key elements -Unable to test due to subaward not being reported Dollar Amount of Tested Transactions - $1,045,014 Subaward not reported - $1,045,014 Report not timely - $ 1,045,014 Subaward amount incorrect -Unable to test due to subaward not being reported Subaward missing key elements - Unable to test due to subaward not being reported Additionally, we performed subrecipient monitoring testing over the sole subrecipient and identified the compliance exception described above. Identification as a repeat finding, if applicable: N/A Recommendation: We recommend the City submit any outstanding FFATA reporting information and formally notify the subrecipient of the increase in funding, applicable federal requirements, and terms and conditions of the award. We also recommend the City implement procedures to identify and assess compliance requirements when funding sources and award amounts change, including procedures to ensure required reporting, documentation, and subrecipient communications are updated timely and accurately. Views of responsible officials and planned corrective actions: Agree. See separate corrective action plan.

Reporting – Financial and Performance Assistance Listing Number 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants U.S. Department of Housing and Urban Development (HUD) Federal Award Identification Number(s): B-22-CP-CO-0165 and B-23-CP-CO-0280 Award Year – 2022 and 2023 Criteria or specific requirement: 2 CFR §§200.328 and 200.329 require recipients to submit timely financial and performance reports that are supported by underlying records and accurately reflect financial activity and program accomplishments. In addition, the grant agreement requires the grantee to submit a combined semiannual performance and financial report in the Disaster Recovery Grant Reporting (DRGR) system. The report must include a narrative describing accomplishments during the reporting period and must be submitted within 30 calendar days after the end of each six-month reporting period. Condition: During testing, we noted that the semiannual performance reports required to be submitted during calendar year 2025 were not submitted by the required deadlines. The reports, which were due in January 2025 and July 2025, were not submitted until September 2025. As a result, the Grantee did not submit required financial and performance reports within the timeframe prescribed by the grant agreement and 2 CFR §§ 200.328 and 200.329. Additionally, management could not provide evidence of review for one of the reports. Cause: Management was not aware of the semiannual reporting deadlines established by the grant agreement and did not maintain a process to track reporting due dates. As a result, required reports were not submitted within the prescribed timeframes. In addition, the documentation pertaining to the evidence of reviews and the evidence of report submission was not retained. Effect: Failure to submit required financial and performance reports timely reduced the ability of the federal awarding agency to monitor grant activities, evaluate program progress, and ensure compliance with award requirements. In addition, because the federal grant system does not permit drawdowns when required reports are overdue, the delayed submissions prevented the City from requesting reimbursement of eligible grant expenditures on a timely basis, which could adversely affect cash flow and delay project activities funded by the grant. The lack of retained review documentation prevents management from demonstrating that required reviews were performed and increases the risk that errors, omissions, or noncompliance may not be identified and corrected timely. Questioned Costs: None Context: We tested 2 of 4 required semiannual reports and found both were submitted late. A non-statistical sampling methodology was used to select the sample. Identification of a repeat finding, if applicable: N/A Recommendation: We recommend management establish and maintain a formal grant compliance tracking process that identifies all required financial and performance reports, their due dates, and responsible personnel. Management should monitor the tracking schedule throughout the year and implement reminder and review procedures to help ensure all required reports are submitted accurately and timely in accordance with federal requirements and the terms and conditions of the grant award. Additionally, management should retain documentation evidencing the review of reports and supporting records, including the reviewer and date of review, to demonstrate compliance with established review procedures. Views of responsible officials and planned corrective actions: Agree. See separate corrective action plan.

Finding: Allowable Costs Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Sponsoring Agency: Department of Treasury Sponsoring Award Number: None provided Award Year: 2021 "Criteria: Per the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) Final Rule and Frequently Asked Questions, recipients may use SLFRF funds for various reasons including respoinding to the Public Health Emergency and negative economic impacts from the pandemic, which includes bolstering the public sector capacity and workforce such as payroll and covered benefits for employees of a recipient government for the portion of the employee's time spent responding to COVID-19. " Condition: The City of Aurora (the City) charged payroll and benefits for one employee subsequent to time in which the employee no longer was working on COVID-19 related projects for the City. Questioned Costs: $22,602 Context: The City charged three employees payroll and benefits to the SLFRF program for at total of $299,169. We compared 100% of the payroll to underlying employee contracts and cost allocation reports and noted one employee's payroll and benefits should have been charged to the SLFRF program from January to September 9, 2023, however all payroll through December 2023 was charged to the program. Effect: Unallowable costs were charged to the SLFRF program. Failure to ensure compliance with federal requirements for the SLFRF program program requirements could result in disallowed costs and federal sanctions, including the termination of the federal program. Cause: The City did not have proper internal controls in place to identify and communicate the change in employees job duties. In addition, the City's time and effort certifications happen on an annual basis which does not provide adqueate time to correct changes in employees job functions/allocations of cost. Identification as a repeat finding: Not Applicable Recommendation: We recommend City staff implement internal controls to identify changes in employee job duties and allocations of costs. In addition, we recommend the City increase the frequency of time and effort certifications in order to identify changes on a more timely basis. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the finding. See separate report for planned corrective actions.

Finding: Reporting Program: Emergency Rental Assistance Program Assistance Listing Number: 21.023 Sponsoring Agency: Department of Treasury Sponsor Award Number: ERA1 1505-0266 and ERA2 1505-0270 Criteria: The Emergency Rental Assistance (ERA) Program Reporting Guide requires that all ERA1 and ERA2 Recipients gather and track required information throughout each reporting period and submit required reports using Treasury?s online reporting portal.The ERA program requires ERA Recipients to certify and submit quarterly reports. The reporting guide further outlines the submission deadline for each required quarterly report. Condition: The City of Aurora was unable to submit the quarterly reports due in October 2021. Questioned Costs: None Context: Three Quarterly Reports under the ERA1 grant award and two Quarterly Reports under the ERA 2 grant award were required to be submitted by October 29, 2021. None of the quarterly ports due in October 2021 have been submitted by the City. Effect: The City has not complied with reporting requirements associated with the ERA1 and ERA2 grant awards and therefore the Department of Treasury may not have all the information associated with the activity of the program they need to monitor the program. Cause: The City has attempted to file the reports; however, issues within the Department of Treasury portal have prevented the City from being able to finalize the reports due in October 2021. The City has submitted and has several open tickets for assistance from the Department of Treasury; however, the issue has not been resolved. Identification as a repeat finding: Not applicable. Recommendation: We recommend the City continue to work with the Department of Treasury to attempt to resolve the issues preventing the submission of the reports and submit the past-due reports as soon as possible. Views of Responsible Officials: The City agrees with the finding. See separate report for planned corrective actions.

Finding: Eligibility Program: Emergency Rental Assistance Program Assistance Listing Number: 21.023 Sponsoring Agency: Department of Treasury Sponsor Award Number: ERA1 1505-0266 Criteria: The Emergency Rental Assistance (ERA) funds may be used for rent and rental arrears. The Treasury ERA Frequently Asked Questions (FAQs) dated August of 2021 outline the requirements grantees are to follow in making eligibility determinations and how those determinations should be documented. Question 5 of the FAQs addresses how a grantee should document where an applicant resides and the amount of rent or rental arrears owed. It specifically states "Grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount. If a household does not have a signed lease, documentation of residence may include evidence of paying utilities for the residential unit, an attestation by a landlord who can be identified as the verified owner or management agent of the unit, or other reasonable documentation as determined by the grantee. In the absence of a signed lease, evidence of the amount of a rental payment may include bank statements, check stubs, or other documentation that reasonably establishes a pattern of paying rent, a written attestation by a landlord who can be verified as the legitimate owner or management agent of the unit, or other reasonable documentation as defined by the grantee in its policies and procedures." Condition: The City of Aurora did not have formal documentation supporting the residence was verified prior to making a rental assistance payment to one recipient whose application was supported by an expired lease. Questioned Costs: $2,550 Context: The City of Aurora paid rental assistance of $3,129,167 to 618 recipients. We selected a sample of 25 recipients for testing and noted the above condition. A non-statistical sampling methodology was used to select the samples. Effect: The recipient may not have qualified for the level of funding they received. Cause: The City did not formally document the steps it took to confirm the recipients documentation of residence after receiving an expired lease. Identification as a repeat finding: Not applicable. Recommendation: We recommend the City ensure formal documentation is received and retained to support all eligibility determinations. Views of Responsible Officials: The City agrees with the finding. See separate report for planned corrective actions.

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